Question about utilization

Viper786 · ‎03-08-2012

I know that ideal utilization is 9% or below.

My question is lets say a person has two credit cards. For the sake of easy math, lets assume both credit cards have limits of $1000.

If one card is maxed out and the other one has a zero balance, is that scored the same as both cards having a $500 balance? Utilization would be 50% in both scenarios.

The reason I ask is most of my credit card balance is on my lowest interest card (10.9%) and it is very close to it's limit. I just want to make sure this isn't hurting my score.

Anonymous · ‎03-08-2012

@Viper786 wrote:
I know that ideal utilization is 9% or below.

My question is lets say a person has two credit cards. For the sake of easy math, lets assume both credit cards have limits of $1000.

If one card is maxed out and the other one has a zero balance, is that scored the same as both cards having a $500 balance? Utilization would be 50% in both scenarios.

The reason I ask is most of my credit card balance is on my lowest interest card (10.9%) and it is very close to it's limit. I just want to make sure this isn't hurting my score.

That is correct. FICO goes by total available VS. total used.

Anonymous · ‎03-08-2012

@Anonymous wrote:

That is correct. FICO goes by total available VS. total used.

I was under the impression that FICO scores both total util and card utilization - i.e. even if your utilization is low overall, it hurts if all that utilization is on one card that's almost maxed out.

But I could very well be wrong about this since I don't remember where I read that.

Anonymous · ‎03-08-2012

@Anonymous wrote:
@Anonymous wrote:

That is correct. FICO goes by total available VS. total used.
I was under the impression that FICO scores both total util and card utilization - i.e. even if your utilization is low overall, it hurts if all that utilization is on one card that's almost maxed out.

But I could very well be wrong about this since I don't remember where I read that.

+1. FICO factors in overall util as well as util of individual cards.

Viper786 · ‎03-08-2012

OK thanks, I should probably transfer some balance over to my other cards to lower the utilization on my low interest card then.

Anonymous · ‎03-09-2012

@Viper786 wrote:
OK thanks, I should probably transfer some balance over to my other cards to lower the utilization on my low interest card then.

Not necessarily, that will cost you more money. IMO, only worth it if you are planning to apply for credit.

LS2982 · ‎03-09-2012

@Viper786 wrote:
I know that ideal utilization is 9% or below.

My question is lets say a person has two credit cards. For the sake of easy math, lets assume both credit cards have limits of $1000.

If one card is maxed out and the other one has a zero balance, is that scored the same as both cards having a $500 balance? Utilization would be 50% in both scenarios.

The reason I ask is most of my credit card balance is on my lowest interest card (10.9%) and it is very close to it's limit. I just want to make sure this isn't hurting my score.

IMO, I don't think so. It may be, but you also may be dinged for maxing out.

EQ FICO 548 3/3/16