topic Re: utilization questions in General Credit Topics

utilization questions

Anonymous — Wed, 28 Jan 2015 14:54:55 GMT

I currently have like 25,000 in credit. Like 16 cards. I only owe like 1500 total, but next month it will jump to like 9000 since I made big purchases at lowes, and depot. 14 cards will basically be a 0 balance. How bad will my score drop and will they take into consideration that it's only on 2 cards and they are home improvement.

Re: utilization questions

Anonymous — Wed, 28 Jan 2015 15:02:59 GMT

@Anonymous wrote:
I currently have like 25,000 in credit. Like 16 cards. I only owe like 1500 total, but next month it will jump to like 9000 since I made big purchases at lowes, and depot. 14 cards will basically be a 0 balance. How bad will my score drop and will they take into consideration that it's only on 2 cards and they are home improvement.

No one knows how much your score will drop. Impossible to tell as utilization is just one part of your overall score. The good news though is that your scores will recover as you pay off the balances.

THE FICO scores will not take into consideration whether the balances are on 2 vs 8 cards nor what type of card. Not to be too simplistic but utilization is just that, utilization and why or how isn't considered by the scoring model

Re: utilization questions

Anonymous — Wed, 28 Jan 2015 15:35:33 GMT

Depending on how high UTIL is on each card. FICO factors individual UTIL and overall.

Re: utilization questions

Revelate — Wed, 28 Jan 2015 18:45:07 GMT

@Anonymous wrote:
@Anonymous wrote:
I currently have like 25,000 in credit. Like 16 cards. I only owe like 1500 total, but next month it will jump to like 9000 since I made big purchases at lowes, and depot. 14 cards will basically be a 0 balance. How bad will my score drop and will they take into consideration that it's only on 2 cards and they are home improvement.
No one knows how much your score will drop. Impossible to tell as utilization is just one part of your overall score. The good news though is that your scores will recover as you pay off the balances.

THE FICO scores will not take into consideration whether the balances are on 2 vs 8 cards nor what type of card. Not to be too simplistic but utilization is just that, utilization and why or how isn't considered by the scoring model

Well the algorithm does take into account how many cards are reporting non-zero; balances on 8/8 cards is worse than balances on 2/8 cards score wise. LG's famous example where she left $1 on each of her cards and took a whopping 50ish point hit for it from her lofty perch.

Re: utilization questions

Anonymous — Wed, 28 Jan 2015 19:01:27 GMT

I just got approved for a sapphire chase with a 5000 limit so that takes me a little above 30,000 cause i wanna keep the utilization under 25%. Should I try to get Increases on all my cards so utilization lowers?

Re: utilization questions

tendertan — Thu, 29 Jan 2015 01:02:37 GMT

@Anonymous wrote:
I just got approved for a sapphire chase with a 5000 limit so that takes me a little above 30,000 cause i wanna keep the utilization under 25%. Should I try to get Increases on all my cards so utilization lowers?

IMO, I think that is a smart move. Make sure they are SP's, then I say go for it!

Re: utilization questions

Revelate — Thu, 29 Jan 2015 02:54:10 GMT

@tendertan wrote:
@Anonymous wrote:
I just got approved for a sapphire chase with a 5000 limit so that takes me a little above 30,000 cause i wanna keep the utilization under 25%. Should I try to get Increases on all my cards so utilization lowers?
IMO, I think that is a smart move. Make sure they are SP's, then I say go for it!

Won't matter that much TBH, presumably the debt will be paid down post big purchase and it's not going to trigger AA. Any score hit for the home improvement will fade as the balances go down. If SP sure, HP no.

Re: utilization questions

takeshi74 — Thu, 29 Jan 2015 13:50:36 GMT

@Anonymous wrote:
How bad will my score drop and will they take into consideration that it's only on 2 cards and they are home improvement.

Home improvement doesn't matter. Note that there's no slice for Spend Category:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

As stated above, number of balances does play a part. It's why the "one balance..." recommendation exists for optimizing utilization. Keep in mind that both individual and overall utilization matter. 9K/25K is 36% overall which just a bit above the generally suggested 30% max but if you have that amount on only 2 cards then those cards will have much higher individual utilization. If you can pay down the cards relatively quickly it's no big deal. The issue with high utilization generally comes from prolonged high utilization.

Unless you're actually intending to apply for something with the balances reporting then you don't need to sweat over your score.

@Anonymous wrote:
Should I try to get Increases on all my cards so utilization lowers?

Your call to make. Not all will CLI without HP and we don't know how HP averse you are. We also don't know how quickly you can pay down your balances as well as other factors that would affect your decision. Even if you get CLI's on various cards the individual utilization on those 2 cards with balances will still matter.