topic Re: High Credit Usage & Credit Score in Understanding FICO® Scoring

High Credit Usage & Credit Score

TuffyLess — Wed, 15 Feb 2012 04:19:03 GMT

Hi all,

So I have had the same c/c since 2010.

I would rack up some charges but always PIF before they reported every month.

Well, Christmas 2011 hit, I got generous, and therefore charged to death on this card.

In fact, I charged an extra 10% over the max credit limit and the entire total got reported before I could PIF.

Now, when I log into myFICO, view my FICO Quartly Monitoring, and goto tab 2 (Understanding Your Score), I see this remark:

"High Credit Usage - You've made heavy use of your available revolving credit."

"Your FICO score evaluates your revolving credit balances in relation to your credit limits on those accounts. In your case, this ratio of balances to credit limits is too high."

The only other active revolving credit account on my file has carried a $0 for over a year and is still reported monthly.

This c/c I overcharged now carries a $0 balance and if all goes as expected, will continue to for the foreseeable future.

Question is - how long will this "High Credit Usage" negativity affect my overall Credit Score?

Will the hurt inflicted diminish month over month or will it continue to hurt in full effect for a set amount of time (a year or ...)?

If the hurt remains for a set amount of time (ie...a missed pymt will remain for 7 years), then how will the heal occur afterwards? In bulk or in baby steps?

Thanks for the time

Re: High Credit Usage & Credit Score

Anonymous — Wed, 15 Feb 2012 04:24:47 GMT

Sounds like the $0 balance hasn't reported yet. I'd check back a week or so after your next statement, should update.

I understand historical "Max Balance" doesn't factor into a score, but haven't confirmed that.

Re: High Credit Usage & Credit Score

pizzadude — Wed, 15 Feb 2012 13:42:12 GMT

FICO scoring doesn't have any memory, so as soon as the payment posts on your account and reports to the CRs, your FICO score will improve immediately.

You don't have to worry about the "High Balance" field on your credit reports, it isn't used in any FICO components.

Re: High Credit Usage & Credit Score

TuffyLess — Wed, 15 Feb 2012 19:02:15 GMT

Excellent news to hear - Thanks crew.

Re: High Credit Usage & Credit Score

RobertEG — Fri, 17 Feb 2012 00:28:44 GMT

Going over the limit has possible repurcussions beyond your current % util. Credtors use their own algorithms to identify patterns of high usage on their accounts. They often use that information to assess a possible reduction of your credit limit, thus reducing their potential future risk.

Hopefully, their criteria do not base it only on a one-month blip, so returning immediately to low util could avoid any such action on their part. I would not make a practice of maintaining high util based only on the theory that you can always recover the FICO impact next month.