topic Re: Choosing between Lowering Utility or Keeping Longest Account/ AAOA in General Credit Topics

Choosing between Lowering Utility or Keeping Longest Account/ AAOA

Anonymous — Wed, 29 Sep 2010 16:07:50 GMT

Hello All,

I pulled my TU report on here and my score is 664. I have 3 collections which I am working to get removed (medical related, going the HIPAA route and the hospital has agreed to contact the Collection Agency to remove from my reports) - anyway my question is this to you - My oldest account is 4 years, which is actually my brothers account that I am an AU on. The balance on the card is 9K with a CL of 12.8K. I have 5 other cards, whose total balances are 1.4K with a CL of 8.7K between all 5 of them. My AAOA with the AMEX is 26 months and without the AMEX is 22 months. If I get my brother to remove me from the AMEX, would that help me or would it hurt me???

AMEX is the longest account on my CR's at 4 years, followed by my BOFA at 3 years. With the AMEX my utility is 50% and without the AMEX my utility is 16%. Do you think I should keep the AMEX and let it be my longest card or should I remove myself and lower my utility but also lower my AAOA and loose my longest card. What would be the best for FICO boosting?

Thanks for your help...

Re: Choosing between Lowering Utility or Keeping Longest Account/ AAOA

marty56 — Wed, 29 Sep 2010 16:43:21 GMT

From a FICO standpoint, reducing util and the number of CCs that are reporting a balance usually have more of an effect then AAoA. I would remove the AU. Also I would try to only have 1 CC report a balance since that will also help your score, especialy on TU.

Re: Choosing between Lowering Utility or Keeping Longest Account/ AAOA

RobertEG — Thu, 30 Sep 2010 00:26:28 GMT

The AU card is at around 70% util now. Danger zone. Also a danger that is out of your immediate control

I would ditch it. Its high % util far surpasses any loss from its length of credit in your AAoA.

What if a monthly derog posts to that account?

I would bail, yesterday.

Re: Choosing between Lowering Utility or Keeping Longest Account/ AAOA

GregB — Thu, 30 Sep 2010 15:08:02 GMT

@RobertEG wrote:
......I would bail, yesterday.

+1

Re: Choosing between Lowering Utility or Keeping Longest Account/ AAOA

Anonymous — Thu, 30 Sep 2010 18:43:54 GMT

Marty, Robert and Greg,

Thank you very much for the advice. This is what I was thinking. So for sure remove mysef as an AU from the AMEX. I will ask my bro to make a call...

Furthermore, the other 5 cards I have show a total limit of around 8K... with around 1.4K in balances. The BofA I have has a balance of 700 on 1K CL and a Crap 1 that I have a balance of $500 on 750 CL. Do you think I should lower these utilities?

Thanks...

Re: Choosing between Lowering Utility or Keeping Longest Account/ AAOA

MarineVietVet — Thu, 30 Sep 2010 19:01:25 GMT

@Anonymous wrote:
Marty, Robert and Greg,

Thank you very much for the advice. This is what I was thinking. So for sure remove mysef as an AU from the AMEX. I will ask my bro to make a call...
Furthermore, the other 5 cards I have show a total limit of around 8K... with around 1.4K in balances. The BofA I have has a balance of 700 on 1K CL and a Crap 1 that I have a balance of $500 on 750 CL. Do you think I should lower these utilities?

Thanks...

I might as well join the group.

FICO scores both overall revolving utilization and individual account utilization. The utilzation on the BoA card is 70% and on the Cap 1 card it is 67%. Your overall utilzation is around 17%.

If you are looking for a boost in scoring try and get all those percentages lower.

From a BK years ago to:
EX - 9/09 pulled by lender 802
EQ - 7/06-663, 3/10-800
TU - 8/10-772
You can do the same thing with hard work

Re: Choosing between Lowering Utility or Keeping Longest Account/ AAOA

RobertEG — Sat, 02 Oct 2010 03:47:07 GMT

FICOPree, % util of revolving credit affects approx 30% of your total score, depending on your scoring bucket.

Fair Isaac has stated that scoring of % util basically breaks down into two major factors.

The first is overall % util of all revolving credit. That is easy to determine.They have stated that overall % util weighs in at around half of your scoring of utillization, which puts it as the biggest factor. Around 15% of your total FICO score. So that is the major focus.

The second is your utilization of individual revolving credit. That, in some combined manner that Fair Isaac does not disclose, cumulatively accounts for the other 50% of util scoring (i.e. 15% of your overall score)

To put estimates on impact of any one use of an individual card requires some assumptions. So I will pose an assumption, and the results of that assumption.

Assume you have four credit cards. Assume that FICO individually weighs your % util of each indiv card at the same level of impact . Assume also that the total number of cards showing balances scores the same as indiv card util. That gives you five factors under indiv card util.

Indiv card util counts for half of the 30% for FICO scoring, which would be 15%. That means that each indiv card util, and number of cards showing balances, would each affect credit score for around 3% each.

You can vary the assumptions I have made, but the 15% impact on score by first addressing overall % util would, under any assumption I could conconct, far outweigh the impact of around 3% due to util on any one card.

Age of credit history is, overall, only 15% if total FICO score. Drop of the one account, even though your oldest, is not significantly older. I dont see any major significant in loss of its age in your AAoA calculation.

Ditch the AU albatross, and pay down your highest indiv % util card

Re: Choosing between Lowering Utility or Keeping Longest Account/ AAOA

Anonymous — Sat, 02 Oct 2010 17:26:15 GMT

@RobertEG wrote:
FICOPree, % util of revolving credit affects approx 30% of your total score, depending on your scoring bucket.

Fair Isaac has stated that scoring of % util basically breaks down into two major factors.

The first is overall % util of all revolving credit. That is easy to determine.They have stated that overall % util weighs in at around half of your scoring of utillization, which puts it as the biggest factor. Around 15% of your total FICO score. So that is the major focus.

The second is your utilization of individual revolving credit. That, in some combined manner that Fair Isaac does not disclose, cumulatively accounts for the other 50% of util scoring (i.e. 15% of your overall score)
To put estimates on impact of any one use of an individual card requires some assumptions. So I will pose an assumption, and the results of that assumption.
Assume you have four credit cards. Assume that FICO individually weighs your % util of each indiv card at the same level of impact . Assume also that the total number of cards showing balances scores the same as indiv card util. That gives you five factors under indiv card util.
Indiv card util counts for half of the 30% for FICO scoring, which would be 15%. That means that each indiv card util, and number of cards showing balances, would each affect credit score for around 3% each.
You can vary the assumptions I have made, but the 15% impact on score by first addressing overall % util would, under any assumption I could conconct, far outweigh the impact of around 3% due to util on any one card.

Age of credit history is, overall, only 15% if total FICO score. Drop of the one account, even though your oldest, is not significantly older. I dont see any major significant in loss of its age in your AAoA calculation.

Ditch the AU albatross, and pay down your highest indiv % util card

Robert,

Thank you Sir, that totally makes sense. I am going to have the AMEX dropped and yes you are right, even though it is my oldest card, it does not really help that much with my AAOA. I will take your advise.

Out of the remaining 5 cards I have, only two have significant balances, the BofA with 700 balance on a 1K CL and the Cap1, with 550 balance on 750 CL, having said that, I can not pay these off right now, but will do over time. Through your calculations, this will only impact 6% of the total 30% dedicated to Util in Fico scoring.

I also got a letter from the hospital, with who I had 3 paid medical collections with saying that they have contacted the 3 CRA's to delete the collections account from the credit reports. I will give it a couple months and then pull my credit report to see the effect of the deletions and the removal of the AU account.