topic Re: High CLs (>$40K or so) don't factor into utilization calculation? in Understanding FICO® Scoring

High CLs (>$40K or so) don't factor into utilization calculation?

BoSox617 — Tue, 30 Nov 2010 18:18:52 GMT

Hello all,

In this thread, a few folks mention that high CLs (somewhere above $30K and $40K) are not factored into scoring utilization http://http://ficoforums.myfico.com/t5/Credit-Cards/I-Love-PenFed/td-p/753438/highlight/true

Is this true? If yes, does this "maximum" CL differ from one Credit Bureau to another? Is there a resource that details the precise maximum by CB (or does anyone have any personal experience)?

The thread suggests that once a CL exceeds some maximum, it's no longer included in scoring utilization - so if you are carrying any balances on other cards, your overall utilization % will increase. But what about the individual utilization on such a CL - is that no longer factored either?

I've never heard of this until today! This definitely would impact my "gardening" approach were I to learn it is true.

Thanks in advance!

Re: High CLs (>$40K or so) don't factor into utilization calculation?

MarineVietVet — Tue, 30 Nov 2010 18:23:06 GMT

Our resident expert on this is HTSU aka haulingthescoreup.

Oh HTSU where are you???

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Re: High CLs (>$40K or so) don't factor into utilization calculation?

haulingthescoreup — Wed, 01 Dec 2010 05:40:25 GMT

Eh? I've been working.

I always thought that it was $40K, but then I started seeing posts indicating that at least for some people, it was more like $30K. And I wish that I could tell you which CRA's, but if I knew in the first place, it's long gone.

I used to have a $32K CL on a USAA card, and I'm semi-kinda-reasonably sure that it still factored into util on EQ. But I do remember that my util figures were all over the map about that time with TU, so maybe TU's cutoff is lower. No clue about Experian.

If you don't have a humongous number of cards, you can experiment with letting balances post on other cards and checking the reported util, if that shows on screen 2 as either a positive or negative. Calculate your total util with and without the high-limit card, and see which matches the one on the screen. You can do the same with letting a balance report on the high-util card, of course.

But if a card has "too high" of a limit, it's ignored for both individual util on that card, and also for total, meaning that it doesn't contribute to your total CL, so yes, if other balances report, your util might rise. We've had some irate posts by those with several high-limit cards and only one or two lower CL cards who got dinged for high util.

Sorry, I know that's kind of vague; OK, really vague! but that's the best I've got. You'll probably have to do some experimenting to find out how it affects your scores. Do remember that the TU score here is pretty outdated. If it's the only score with a problem, you might want to just ignore it, in hopes that TU04 has a higher limit.

But they all have a limit somewhere or other.

Re: High CLs (>$40K or so) don't factor into utilization calculation?

BoSox617 — Wed, 01 Dec 2010 12:36:06 GMT

Thank you, Hauling!

I don't have any cards with CLs in this range so I'm afraid that I cannot experiment - I'm just thinking ahead for the future.

I'll research further and see what I come up with - and hopfully other folks can chime in with their experiences as well. I was just shocked to read that it is possible to have a non-charge account limit excluded from scoring consideration! I sure am glad to be tipped off to this now before anything hit the fan down the line!

It appears that one possible way to maximize utilization would be to ensure that one has several cards whose limits do not exceed $30K-ish. But if one were to carry a balance for a time (say for a home improvement project), one would have to consider the interest rate, utilization %, etc. - so having a card (or several, if one has to split the charge to avoid high utilization on a single card) with a low interest rate (even temporary 0% APR) would be key. And one would also have to ensure that less than half of their lines are hosting a balance at reporting time to lessen the score hit...hmm.

I've been learning absolute LOADS on this site, I love it! So many if-thens to be aware of. Thanks again, and I'll post back with any info I find.

Re: High CLs (>$40K or so) don't factor into utilization calculation?

fused — Wed, 01 Dec 2010 17:38:40 GMT

I have a Visa card with a 40K CL and I did a balance transfer of 10K. Once it reported, my EQ FICO score dropped 20 points, my TU FICO did not change. Hauling is correct!

Re: High CLs (>$40K or so) don't factor into utilization calculation?

haulingthescoreup — Wed, 01 Dec 2010 21:36:55 GMT

@fused wrote:
I have a Visa card with a 40K CL and I did a balance transfer of 10K. Once it reported, my EQ FICO score dropped 20 points, my TU FICO did not change. Hauling is correct!

lol, even a blind squirrel finds a nut every now and then...

Thanks for the testimony. I might just go ahead and combine my USAA cards and close the AmEx. I've been holding off, fearing that it would be removed from scoring once it was over $30K, but as long as EQ behaves, that's good. I just can't get too excited about what TU98 says or does.

Re: High CLs (>$40K or so) don't factor into utilization calculation?

haulingthescoreup — Wed, 01 Dec 2010 21:38:40 GMT

OP, I just remembered another bit: $50K is definitely removed by all three. HELOC's are treated similarly to CC's in this department, and my HELOC doesn't affect my util (thank goodness, as it has a new roof, a new front porch, hardwood floors, and carpets on it.)

So it seems to get shaky somewhere in the 30's and 40's.

Re: High CLs (>$40K or so) don't factor into utilization calculation?

fused — Wed, 01 Dec 2010 22:14:30 GMT

I know the util cut off for the TU FICO score is the lowest (around 30K), and I'm pretty darn sure the util cut off for EQ and EX FICO scores is 50K.

Re: High CLs (>$40K or so) don't factor into utilization calculation?

smallfry — Thu, 02 Dec 2010 01:00:43 GMT

My 35K Penfed card does not figure into my TU but EQ picks it up for utilization. Once PSECU reports I hope to be able to see if EX counts the 35K card in the utilization figure.

Re: High CLs (>$40K or so) don't factor into utilization calculation?

fused — Thu, 02 Dec 2010 01:06:16 GMT

@smallfry wrote:
My 35K Penfed card does not figure into my TU but EQ picks it up for utilization. Once PSECU reports I hope to be able to see if EX counts the 35K card in the utilization figure.

Cool! Can we make a wager on this one, smallfry??? LOL!

Re: High CLs (>$40K or so) don't factor into utilization calculation?

smallfry — Thu, 02 Dec 2010 02:01:03 GMT

@fused wrote:

@smallfry wrote:
My 35K Penfed card does not figure into my TU but EQ picks it up for utilization. Once PSECU reports I hope to be able to see if EX counts the 35K card in the utilization figure.
Cool! Can we make a wager on this one, smallfry??? LOL!

I have a feeling we'll just see a score and a couple positive/negatives reasons for it. Doubt we will get the full FICO treatment.

Re: High CLs (>$40K or so) don't factor into utilization calculation?

BoSox617 — Thu, 02 Dec 2010 12:38:11 GMT

Thank you, Hauling, Fused, and Smallfry!

So if I were to manage my cards such that I maximize my utlization for all 3 reports, I would cap my CLs around $30K. This approach wouldn't be necessary if balances were not to be carried.

Fantastic! Really, thank you all very much

Re: High CLs (>$40K or so) don't factor into utilization calculation?

Anonymous — Thu, 02 Dec 2010 16:04:14 GMT

Intersting. I always get the comment that there are no recent balances on my revolving credit accounts and the only card I use is my NFCU card with a $32,000 Limit.

Re: High CLs (>$40K or so) don't factor into utilization calculation?

haulingthescoreup — Thu, 02 Dec 2010 17:40:27 GMT

@Anonymous wrote:
Intersting. I always get the comment that there are no recent balances on my revolving credit accounts and the only card I use is my NFCU card with a $32,000 Limit.

Do you get this comment on TU also, or just on EQ? And this is a FICO report comment, right?

Re: High CLs (>$40K or so) don't factor into utilization calculation?

haulingthescoreup — Thu, 02 Dec 2010 17:42:15 GMT

@BoSox617 wrote:
Thank you, Hauling, Fused, and Smallfry!

So if I were to manage my cards such that I maximize my utlization for all 3 reports, I would cap my CLs around $30K. This approach wouldn't be necessary if balances were not to be carried.

Fantastic! Really, thank you all very much

Again, do remember that it only seems to be TU98 that stops at $30K. We don't know how TU04 handles it, and EQ at least is higher.

When you're awash in CLI offers, consider whether pleasing an out-of-date score formula like TU98 is worth declining a humongous CL.

Re: High CLs (>$40K or so) don't factor into utilization calculation?

BoSox617 — Thu, 02 Dec 2010 18:49:15 GMT

haulinghtescoreup wrote:

Again, do remember that it only seems to be TU98 that stops at $30K. We don't know how TU04 handles it, and EQ at least is higher.

When you're awash in CLI offers, consider whether pleasing an out-of-date score formula like TU98 is worth declining a humongous CL.

Good point, Hauling!

What I wonder though is how likely I would be able to grow my existing accounts up to $30K if I have one or more with CLs over $30K. Based on what I've been reading, it might be a better approach for me to grow my accounts up to $30K (I've read some posts by folks stating they've been denied credit because "they have enough already", in the eyes of some lenders). I am a little apprehensive of the possibility that having a CL say in the $40K range might make my other issuers less willing to allow me to grow their CLs. Am I being too cautious here?

I'd like to get a house in a couple of years, so I'm trying to get all of my ducks in a row now. I'm definitely taking an ultra-conservative approach by trying to tailor my plans to better ensure that my score will be at its maximum, regardless of what FICO model is being used. I am not planning on carrying balances once I've paid everything off in a few months (unless I am pursuing something involving EQ, at which point I'd report a tiny balance), but one never knows what could happen.

I know that I don't really need to worry about maximizing my score at any given moment, but doing so has actually been great fun

Thanks!

Re: High CLs (>$40K or so) don't factor into utilization calculation?

smallfry — Thu, 02 Dec 2010 22:18:30 GMT

Bosox really all you need in the way of available credit is 50 times what you spend on your cards each month. Some might think this is a lot some not enough. That would put you at 2% utilization. I don't like to charge more than I can pay in one weeks earnings.

Re: High CLs (>$40K or so) don't factor into utilization calculation?

Anonymous — Fri, 03 Dec 2010 03:27:43 GMT

TU only actually.

Re: High CLs (>$40K or so) don't factor into utilization calculation?

haulingthescoreup — Fri, 03 Dec 2010 05:52:14 GMT

@Anonymous wrote:
TU only actually.

Oh, right, of course. I wrote that backwards. It would be TU that's ignoring the big card, and not EQ. Thanks!

Re: High CLs (>$40K or so) don't factor into utilization calculation?

vanillabean — Fri, 03 Dec 2010 06:26:07 GMT

I happened to read an old thread the other day, in which one of the oldtimers had reason to believe that a combined monthly credit limit on Amex cards exceeding one third of one's annual household income may result in a FR. I hopefully remember this correctly and don't know if it's really so, but could be. For backdating purposes, you would want to keep each of your Amex credit limits low enough that you can get the number of cards you would like for a comfortable AAoA.