topic Effects of High Utilization in Understanding FICO® Scoring

Effects of High Utilization

degs138 — Thu, 23 Apr 2015 16:28:23 GMT

I had a lot of bills this tax month and I am going to carry a balance for the first time ever. It's on a 0% APR card which is the only reason I'm carring a balance. Keeping the cash I could pay it off in a 3.25% APY account.

My utilization was always 4-8% each month. For this month my statements cut and I had 35% utilization. The following happened to my scores

FICO TU reported by Barclay 696 dropped to a 674

FAKO TU by Credit Karma 684 droped to a 635

I'm going to pay all my cards off at the end of this billing cycle except for my 0 APR card. I will pay that off the following month. I'll repost my scores as they change.

Re: Effects of High Utilization

Anonymous — Thu, 23 Apr 2015 18:44:04 GMT

For many years I had high utilization, very low credit lines and ran 80-90% of my CL's per month through cards. I did not worry about when I paid, although I PIF, I would pay before the due date and not watch when they reported. After learning more about how credit works this last December I decided I would work my cards and get to a low reported balance as I was interested in refinancing my car and boat. My scores sat around 650-680 for many years, by the end of January I had all of my cards reporting 1% or less Util and my scores went to 760-780. I did the refinances and decided I needed new credit card limits, now I have enough line that I can once again not worry about when I pay, but my Util stays below 10%. My scores are staying in the mid to high 700's now, even with several new accounts and HP's.

Re: Effects of High Utilization

ddemari — Thu, 23 Apr 2015 21:34:35 GMT

My utilization was recently at 12%. I have one cc that was reporting a 51% balance (slate bt card)

I made a payment and got the card down to 38% utilzation. My fico score debt ingredient went from good to very good. No score change though ;(

Re: Effects of High Utilization

zerbherb — Thu, 23 Apr 2015 21:43:31 GMT

no clis. and fico hates you. this is me right now.

Re: Effects of High Utilization

Anonymous — Fri, 24 Apr 2015 14:58:30 GMT

yup, happened to me too. i usually pay my cards every friday to keep a low util but i was traveling on business for over a week and i didn't make payments for 2 weeks. my reported util on my CO QS went from about 4-5% to 31% and my scores dropped by an average of 17 points across the board. i've since asked for and recieved some CLIs to prevent this in the future but that was bitter pill nonetheless.

Re: Effects of High Utilization

Anonymous — Fri, 24 Apr 2015 15:04:59 GMT

My overall is around 3-5%, but my DC has risen to 50% utilization. I've noticed it hit of about 7 points because of the change from 35% to 55% for the DC.

Re: Effects of High Utilization

Dw4250 — Fri, 24 Apr 2015 15:16:50 GMT

UTL definitely has an impact on scores. Other than baddies and late payments, it's the biggest factor in determining your fico. It's always interesting to see how scores move up and down.

However many people on this blog may WAY too big a deal out of month to month score changes. The truth is most people have at least a small balance. Personally I wouldn't sweat it unless you are applying for something major over the next month OR UTL gets so high as to create concern on the part of your CCC (or more importantly you become a slave to CC interest payments). Life is way too short and interesting to stress over small variations in scores!

Sounds like you have everything under control ;-). Let us know how quickly your score bounces back.

Re: Effects of High Utilization

zerbherb — Fri, 24 Apr 2015 19:34:33 GMT

discover is so annoying raise my ^%$%^ limit so 166$ is not a big deal. so tired of them. i think amex will become my go to card. transunion dropped to 709.

Re: Effects of High Utilization

degs138 — Fri, 24 Apr 2015 19:52:19 GMT

Thanks Herb,

I just started this thread as a way to share some stories of using 0%APR cards. I don't much care about my score right now because I'm just waiting for my student loan rehab to finish. I was in the 700s for a while until I decided to fix my student loan. As soon as i had new activity on my student loan my scores all dropped significantly. This is the first time I will ever carry a balance. I am hoping that Chase will give me a CLI for carring the balance, some people have told me they will.....

I figure when I pay it off in July and my utlilzation is back around 4-8% like it always is I will be back to the 690-710 range. My student loan will rehab in October so I'm hoping rates stay as low as they are though the end of the year. I've got the down payment ready to go.

One other thing that I might do is transfer $8000 of my car loan onto a 0APY balance transfer card if I get a good offer. My loan is at a terrible 8.46% so I could save some money that way.

Re: Effects of High Utilization

RussianPassion — Fri, 24 Apr 2015 20:34:36 GMT

It has huge impact. I have perfect history with no derog or lates what so ever. 4-5 paid car loans. 2 open autos. 6 credit cards and Amazon account. My util is very high at the moment at about 85%... Scores in the very low 600's... I am tackling the debt right now and I am just antsy in anticipation to see my scores baloon to high 700's maybe even 800s when I get my util to 15%...

Re: Effects of High Utilization

Anonymous — Fri, 24 Apr 2015 20:38:55 GMT

@zerbherb wrote:
discover is so annoying raise my ^%$%^ limit so 166$ is not a big deal. so tired of them. i think amex will become my go to card. transunion dropped to 709.

Discover has been really slow to give me CLI's, however recently with all of the CLI luv button threads I have followed suit and they have finally started opening up the CL. I started at $500 many years ago, but in the last 2 months I have seen 2k in increases and my line is at 4.15k now.

Re: Effects of High Utilization

zerbherb — Fri, 24 Apr 2015 20:57:24 GMT

i approve of my nickname guys. the herb. its fits.

Re: Effects of High Utilization

degs138 — Fri, 26 Jun 2015 14:47:37 GMT

So here is where I am at. I was at 35% utilization in May with one card at 85% utilization. My score dropped to 651 at the worst. FICO score reported by Barclays. I paid off my cards in June so I was reporting a 16% utilization. My score went up to 699. Next month I will end up paying off my balances and get my utilization down to under 10%. hoping to be back in the 700s. I'll update the thread when I get my next score update.

I couldn't believe I went form 709 to 651 with high utilization on one card. That is a drop of 58 points for using close to the limit on one card.

Re: Effects of High Utilization

Anonymous — Fri, 26 Jun 2015 15:01:28 GMT

@degs138 wrote:
I had a lot of bills this tax month and I am going to carry a balance for the first time ever. It's on a 0% APR card which is the only reason I'm carring a balance. Keeping the cash I could pay it off in a 3.25% APY account.

My utilization was always 4-8% each month. For this month my statements cut and I had 35% utilization. The following happened to my scores

FICO TU reported by Barclay 696 dropped to a 674
FAKO TU by Credit Karma 684 droped to a 635

I'm going to pay all my cards off at the end of this billing cycle except for my 0 APR card. I will pay that off the following month. I'll repost my scores as they change.

If you could get the utilization on that card fro 35% to about 29% or less it will make a huge difference on your score.

Re: Effects of High Utilization

masscredit — Fri, 26 Jun 2015 15:25:39 GMT

@degs138 wrote:
So here is where I am at. I was at 35% utilization in May with one card at 85% utilization. My score dropped to 651 at the worst. FICO score reported by Barclays. I paid off my cards in June so I was reporting a 16% utilization. My score went up to 699. Next month I will end up paying off my balances and get my utilization down to under 10%. hoping to be back in the 700s. I'll update the thread when I get my next score update.

I couldn't believe I went form 709 to 651 with high utilization on one card. That is a drop of 58 points for using close to the limit on one card.

I see that you have two Cap 1 cards. Take a look at their balance transfer offers. I also have a Venture and QS. Each one provides me with no fee balance transfers. Depending on when your statements close, it might be beneficial for you to transfer the balance onto one of them if there is no fee. That could movet the balance early and increase your scores when the other card reports zero. Then pay the Cap 1 down before it reports the higher balance. I have my statement closing dates spread out. This has helped me when I wanted to float something for a month. Didn't have to pay intrerest or see a score decrease.

Re: Effects of High Utilization

taxi818 — Fri, 26 Jun 2015 15:31:19 GMT

Would never worry of the month to month changes. Unless applying.

Re: Effects of High Utilization

degs138 — Fri, 26 Jun 2015 16:29:12 GMT

Thanks for the advice everyone but I was just doing this to see how it affects score. I saw a huge decrese when all my credit card debt was on one card. 85% on one card and 2-5% on the others. I has over 30% total util so I understood the score drop. When I got back under 30% my score increased. It didn't increase as much until I got my 0 APR card back under 30%. Next months I'll report under 10% util. All my cards will be under 10% except my 0APR card will be between 10-20%. I don't need the credit, just wanted to see how it affects my score.

Re: Effects of High Utilization

Anonymous — Fri, 26 Jun 2015 16:33:37 GMT

0% APR offers are awesome - you can keep your money earning interest, while the CCC loans you money for free. I'll carry a balance, and pay it down in the final few months of the 0% promo period.

I usually don't let the utilization get too high on a 0% APR card, but it's not really a big deal if you do (unless you get it so high your CCC takes action, lowering your limit) - your score will be lower temporarily, but unless you're applying for new credit, that's not an issue. Once you eventually pay down the card, your score will bounce back almost immediately, since FICO scores don't have "memory" of utilization.

For me, the main benefit of an improved credit score is to save money - whether by obtaining better rewards cards or getting lower rates on home/car loans, or taking advantage of 0% APR offers - unless you're in the process of the former, take advantage of the latter.

Re: Effects of High Utilization

masscredit — Sat, 04 Jul 2015 02:12:12 GMT

I let a few cards report. They are -

Card.... Balance..... Credit Line

Cap 1 $694.00 $9000.00

Walmart $77.14 $3000.00

Target $1.01 $3000.00

Yup, I got a little wild with the Target card Total utilization is just under 2%. None of my scores went down with the three cards reporting.

Re: Effects of High Utilization

Revelate — Mon, 06 Jul 2015 23:35:22 GMT

@Anonymous wrote:
@degs138 wrote:
I had a lot of bills this tax month and I am going to carry a balance for the first time ever. It's on a 0% APR card which is the only reason I'm carring a balance. Keeping the cash I could pay it off in a 3.25% APY account.

My utilization was always 4-8% each month. For this month my statements cut and I had 35% utilization. The following happened to my scores

FICO TU reported by Barclay 696 dropped to a 674
FAKO TU by Credit Karma 684 droped to a 635

I'm going to pay all my cards off at the end of this billing cycle except for my 0 APR card. I will pay that off the following month. I'll repost my scores as they change.
If you could get the utilization on that card fro 35% to about 29% or less it will make a huge difference on your score.

Hrm not on my file; had one card go from <1% to ~67% and score didn't budge but I don't have a clean file. Aggregate seems to dominate until you get to the >80% or >90% of individual balances on a card in my personal experience.

Something go to test on a stupid SDFCU $250 secured card eventually for me.