topic Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter? in Understanding FICO® Scoring

FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 03:34:38 GMT

This topic was created for those who are using their high credit scores to get attractive credit card offers involving 0% balance transfer periods, with the aim of using the available credit to "transfer" money to yourself and earn interest on the credit card company's money until the promotional (0%) rate expires and the loans must be repaid.

Everyone seems to agree that under 10% overall utilization (and absence of extremely high individual utilization) is a positive for your score; it also seems to be a conventional wisdom that FICO uses 50% as another benchmark worth staying under to avoid a score hit. But for those looking to earn interest on their credit card company's money, the return for using 10% vs 50% vs 90% are obviously huge. My question is what level of utilization anyone playing this game recommends, and how significant the consequences are for going from, say, 45% overall utilization to 85% overall utilization.

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

smallfry — Wed, 15 Aug 2007 04:18:04 GMT

@Anonymous wrote:
This topic was created for those who are using their high credit scores to get attractive credit card offers involving 0% balance transfer periods, with the aim of using the available credit to "transfer" money to yourself and earn interest on the credit card company's money until the promotional (0%) rate expires and the loans must be repaid.
Everyone seems to agree that under 10% overall utilization (and absence of extremely high individual utilization) is a positive for your score; it also seems to be a conventional wisdom that FICO uses 50% as another benchmark worth staying under to avoid a score hit. But for those looking to earn interest on their credit card company's money, the return for using 10% vs 50% vs 90% are obviously huge. My question is what level of utilization anyone playing this game recommends, and how significant the consequences are for going from, say, 45% overall utilization to 85% overall utilization.

Huge? How much money do you want to borrow? 500K? At 5% you'll make 25K. Eventually you have to repay the money. This BT game leaves me cold. Do yourself a favor. Stay out of debt.

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 14:05:49 GMT

Pangloss1980 wrote:

This topic was created for those who are using their high credit scores to get attractive credit card offers involving 0% balance transfer periods, with the aim of using the available credit to "transfer" money to yourself and earn interest on the credit card company's money until the promotional (0%) rate expires and the loans must be repaid.

Everyone seems to agree that under 10% overall utilization (and absence of extremely high individual utilization) is a positive for your score; it also seems to be a conventional wisdom that FICO uses 50% as another benchmark worth staying under to avoid a score hit. But for those looking to earn interest on their credit card company's money, the return for using 10% vs 50% vs 90% are obviously huge. My question is what level of utilization anyone playing this game recommends, and how significant the consequences are for going from, say, 45% overall utilization to 85% overall utilization.

You just said yourself that 40% is one benchmark 75 is another and 90% can affect you as badly as a collection. that being sai, it seems that the FICO scores utillization can be somewhat fluid as it does nothing more but compare your utilization against the general population. If there are drastic changes in the general population, such as a mad ush to reduce the amoutn of credit card debt, the utilization factor will change.

It also depends on where you are in the scoring model. For the longest time I was advised 30% utilization by the reports themselves but realized that this was only to get me to the next tier. Once that was reached my reccommendations changed giving me the numbers to reach the highest teir, now 7%.

I would try NEVER to have utilization overall greater than 35% and moreover never to have a single card at 90% or above 50% if it can be helped.

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 14:20:19 GMT

I'm playing the game now.

I don't care about my utilization on the one card where I've taken the cash advance because I'm not planning to apply for credit before I have to pay back the balance. There is no such thing as "historical utilization."

The only possible downside to having high util on this one card is that my car insurer may get nosy and hike the premium. I think it's unlikely since I've been playing for 9 months and they haven't done a soft pull. If they do, I'll tell them I'm paying off the balance shortly and they'll lose me as a customer.

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

MidnightVoice — Wed, 15 Aug 2007 14:37:04 GMT

masdeocho wrote:

There is no such thing as "historical utilization."

But:

Tuscani wrote:

For example, lenders can see the progression of a person's credit score

???

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 15:01:49 GMT

I dont believe lenders can see the progression of your scoring but what they CAN see isthe progression of your limits or lack thereof. If a new creditor sees that you have had regular increases with another card, they are more likely to want you on their team because that alsoshows a hsitory of responsibility. They can also see your historical balances if they eyeball it.

If you were maxed out for the year before you applied, they may be skittish about welcoming you to the team

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 15:11:51 GMT

Lenders can see the progression of your balances, but I don't see how they could know the progression of your CLs.

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 15:12:35 GMT

Lenders can see on cr's high balance to know if one pushes their limits. Also EX keeps historical data on bal/payments.

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

MidnightVoice — Wed, 15 Aug 2007 15:13:11 GMT

Brammy wrote:
I dont believe lenders can see the progression of your scoring but what they CAN see is the progression of your limits or lack thereof.

How?

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

MidnightVoice — Wed, 15 Aug 2007 15:14:47 GMT

ilovepizza wrote:
Also EX keeps historical data on bal/payments.

Where?

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 15:17:52 GMT

I personally use 100% of available credit for 0% apr offers. I don't care about credit score in UTL cases because once they are paid back my score rebounds. During the time when I take advantage of a 0% apr offer I will be denied for all credit because score will drop too much. It is only temporary. I think the opposite. I think that it shows that you can handle large amounts of credit, use it and pay it back with out being late. It has never hurt me as far as history. The lenders will always see High Credit limit and maybe date of last high credit. So if you max, they should know when and how high. I max every opportunity at 0% apr.

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 15:17:55 GMT

Pull report directly from experian and under each account it wil lshow your balance on each reporting date. I know they can see your limits or at least they used to be able to. Haven't seen a bank pulled report in a few years

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 15:20:01 GMT

ilovepizza wrote:
I personally use 100% of available credit for 0% apr offers. I don't care about credit score in UTL cases because once they are paid back my score rebounds. During the time when I take advantage of a 0% apr offer I will be denied for all credit because score will drop too much. It is only temporary. I think the opposite. I think that it shows that you can handle large amounts of credit, use it and pay it back with out being late. It has never hurt me as far as history. The lenders will always see High Credit limit and maybe date of last high credit. So if you max, they should know when and how high. I max every opportunity at 0% apr.

Your method is tried and true if you are not in the market for seeking new credit. I also near-max but never over 90% on good BTs. I dont go over 910 simply because I don't want to take the chance that a nother lender may perceive that score drop as financial trouble.

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 15:21:52 GMT

I have a card with an initial CL of $10k. I advanced $6k. After a few months, the bank automatically increased my CL to $12k. So my report shows only that my high balance was $6k and my limit is $12k.

If I pulled my score today, it would certainly be affected by one card with a util just under 50% (I've been making the monthly payments). But the score wouldn't show that my util was ever 60%, and I don't see where a manual review performed today would show that my initial CL was $10k. It would show only that the CL is $12k and my balance has been declining slowly from $6k. Please let me know if I'm missing something.

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 15:22:43 GMT

@MidnightVoice wrote:

@Anonymous wrote:
Also EX keeps historical data on bal/payments.

Where?

Yep. You get more data when you pull it directly from the CRA's them selves. Even TC doesn't include all the data from TU. If you pull your EX cr directly, it will list balance history going way back. You can easily subtract one month from another to get payment.

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 15:28:01 GMT

masdeocho wrote:

I have a card with an initial CL of $10k. I advanced $6k. After a few months, the bank automatically increased my CL to $12k. So my report shows only that my high balance was $6k and my limit is $12k.

If I pulled my score today, it would certainly be affected by one card with a util just under 50% (I've been making the monthly payments). But the score wouldn't show that my util was ever 60%, and I don't see where a manual review performed today would show that my initial CL was $10k. It would show only that the CL is $12k and my balance has been declining slowly from $6k. Please let me know if I'm missing something.

No you're not missing anything and it really doesn't matter a whole lot. todays new credit is issued simply on an auto-socre generatede approval or decline in most cases. Period. If the historical limits are stil lshowing on bank gemrated reposrts, someone could pull your report for a boderline eyeballing and do the math for the month that the balnce was 6K and the limit was 10. Most won't bother t go that far into detail with it.

Once your limit increased, your utilization decreased and your score should have reflected that. cant eyeball in 60 seconds or less

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

MidnightVoice — Wed, 15 Aug 2007 15:31:03 GMT

You are correct - EX lists monthly balances for the last two years and credit limits and credit limit changes. From that is is possible to calculate historical utilization patterns.

MY CSC/EQ does not seem as informative

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 15:32:49 GMT

I maxed and used to get phone calls from the banks to chat, how are you doing, are you happy with the bank, ect... eventually getting around to politely pushing for a F/R. I have a long history taking all I can get at 0%, they don't call anymore. I have been denied credit also because of my "history" on my CR for High Balance to Credit Limit. It scares some lenders to see that I have maxed out in the past.

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Wed, 15 Aug 2007 15:34:41 GMT

Not sure how long that High Credit stays on your CR. But it is years. I wonder if that is factored in to the score?

Re: FICO Scores and Utilization - Where are the cutoff points and how much do they matter?

Anonymous — Thu, 16 Aug 2007 00:17:15 GMT

An additional question: Say you have 10 cards each with 10k limits. If you stay at 0% on 5 cards but go to 80% on 5, does that hurt your score more or less than going to 40% on all 10 cards? 40% util overall, but differently distributed, and in a way that affects the profitability of the BT game. (Not all cards are created equal, etc.)