@WP2020 wrote:@Aim_High ... Its kind of tough to hear that my util. is too high to get good SL or even approvals, since when I was at +80% util. my driving force was to get to under 30% util. Now, that I finally reached 27% util. after many years, its disappointing that its not good enough.
Glad to hear that the conversation has convinced you that further gardening might be the best course of action, @WP2020. Earlier in my credit experience, I had just assumed that when a lender had extended a certain amount of credit, it was okay to use 100% of that amount without question. I now better understand that (1) high utilization has a significant (although short term effect) on FICO scoring, as long as it stays high. High utilization doesn't have a lasting effect on FICO once debts are repaid. (2) FICO and lenders are well aware of utilization as it relates to not only individual accounts but also overall credit exposure, so it's wise for me to be cognizant of both variables was well. (3) While temporary high utilization of credit lines is not necessarily a bad thing (since it shows you are actively using your existing credit limits and may encourage lenders to extend higher limits,) keeping utilization high over time may make lenders question your ability to repay the debt and identify your account as higher risk. (4) Because of the above, maintaining one balance transfer at 90-100% of CL may be perceived as higher risk than three or four balance transfers at 25% of CL, even if the overall debt is similar. (5) Lenders don't care that your balance is on a 0% BT offer. They just need to be sure you're able to repay it and that you have a plan to do so. If you're lucky, you'll get a call from them to explain like you did from Chase. If you're not lucky, they may just take adverse action to minimize their risk. (6) The best time to add padding to your utilization rates is when your current utilization is low, FICOs are moderate to high, and Income/Debts are reasonable relative to profile. I carried some debts on 0% BT offers for a long time many years ago and I was careful to not apply for a lot of new credit. On the other hand, I've been easily approved for new limits well over your $100K goal since I paid off the debt. Lenders like to give you credit ... when you don't need it! 
I'm not currently carrying balances, but since using less than 10% (actually 8.9%) of credit limit has the optimal effect on FICO scoring, I usually take 10% of my CL and consider that my normal "maximum" I want to post under most circumstances. Tracking 10% is easy since I just have to remove the last digit. For example, on a $25K limit, I usually try not to let more than $2500 post any given month. Sometimes, I do let a higher amount post but I'm well aware of where all my accounts stand, and I don't do that on multiple accounts at once. I recently let $6500 post on a $25K limit due to an unusual expense, but I will pay off 100% of that by the due date. Occasionally allowing the higher charges to post and paying them off promptly shows responsibility and ability to repay to all my lenders, not just the one who had the balance. When I got my Navy Federal CU Platinum card, I transferred monthly accrued balances from other cards to the Platinum instead of paying them in full. Navy was offering a 0% APR/$0 BT fee on the new card, so I was able to post a hefty 98% utilization on the card. I didn't need the BT, but I then repaid it promptly over three months in full to show payment history to them and build relationship. It temporarily tanked my FICOs by about 30 points and then they quickly rebounded since utilization has no long term memory. That was fine since I didn't need to apply for new credit during that time. Those are some examples of how I have managed utilization as part of an overall strategy in recent years.
I would suggest waiting until you pay down the current BTs to 10% or less and then wait a couple of months before seeking new credit. While 27% may get an approval or two that 80%+ wouldn't, getting under 10% will just give you much more solid odds.
@CreditInspired wrote:First, I want to commend all my fellow MyFICOers for sharing their credit stories and providing all the excellent advice. Second, OP, thank you for your questions and wanting to genuinely understand why we're giving you our sound advice.
So, I wanted to add one more thing for you to consider while you're contemplating and digesting all the great info you've received so far. There is something called bustout fraud and I've provided a link from Experian https://www.experian.com/assets/decision-analytics/white-papers/bust-out-fraud-white-paper.pdf.
This is a great article that I read a few years ago and it's worth knowing about. Under no circumstances am I inferring you would do this. I just want to make you aware of how creditors think and/or how algorithms process data. Again, this is just something else to have in your arsenal of info going forward.
Thanks for adding that comment and link, @CreditInspired. I think I've seen you mention it before but it's a good reminder of some reasons why our credit behavior can become a concern for lenders even if we don't have bad intentions.
Still, it's hard for me to imagine someone doing this on purpose, not only for the crime of intentionally stealing from all the banks with the fraud but also what it would do to a credit profile over the long-term. It's no wonder that some lenders are known for blacklisting consumers sometimes for decades over charged-off accounts since they may assume it was avoidable, regardless of the actual circumstances of the situation. I've read that many bankruptcies are due to unexpected events like medical emergencies, loss of employment, or other mitigating factors, and it's great that we have laws that protect consumers from such disasters. It's unfortunate that criminals abuse the system which could jeopardize the protections that so many legitimately need.
And yes, many of us on My Fico sometimes behave like the bustout fraud cases with above average credit applications, inquiries, and credit-seeking, even though we have completely honorable intentions. That's why App Sprees, even for all the right reasons, can be so dangerous!
@SPChaser I agree, there is alot of info shared here which Im sure will help me and many people now and in the future. Sometimes what not do when it comes to credit can be more important, right?
@tacpoly Thx, yes I know its never easy to transfer funds. Its really our life´s savings so their really isnt any particular hurry to bring it all back quickly. It doesnt apply to our situation but your point is of course correct. As for the maxing out, you are right I have been maxed out on my Discover for most of my 5 years with them. They always give me 0%BT offers and I always take them. I really did not know this could be a negative thing as it seems it is. Is there a way to reverse this? I mean all lenders will know I have kept my debt with Disco for 5 years and as many here have said, they dont care that it was always 0%BT, so...is there really a way to reverse this? Or will my file be THAT type of credit file for the next months, years or ever?
@CreditInspired Thx for your comments and the article. I will get to it this weekend, seems like an interesting read.
@Aim_High I read more than once your detailed message and it has some particularly interesting points to me. I agree with everything you say and I guess my biggest mistake or where I was wrong is that exactly what you say about less than 10% being ideal, I thought it was less than 30%. You see, I thought once I reached the less than 30% utilization mark, and over 720 Fico that I would have again a great file and any lender will be happy to extend credit. Since everywhere you read online, it says to maintain under 30% I would bet many others make the same assumption. Furthermore, when I lowered my util. under 50% I got some automatic CLI´s, then under 40% and got more autom. CLI´s, preapproved to all Amex cards, many 0%BT offers and even a $15000 personal loan preapproved offer from Amex. Since I had none of these CLI´s, 0%BT or loan offers when I had very high util. It made sense to me if all these major banks are extending me new credit with CLI´s and large loan offers when I was still at +44% util. why would each of these same banks not give me a new credit card with 27% util? Actually, to be perfectly honest is still doesnt seem quite logical.
You also make a good point of showing responsibility and ability to repay to the lenders. I guess they must have seen that this year as I have been charging and paying in full about $7000 monthly across different cards. Easily have used for and paid for over $60,000 so far this year. Could this be helping or why Im getting all these automatic CLI´s and offers?
One last question if you dont mind, since most all of these charges are from my Tourism business it would help to put them on a business card which I dont have. If I eventually got one or two buss. cards from Amex and passed say half my debt to my business cards, wouldnt that also lower my utilization? In reality today, 100% literally of my monthly card charges are for the business. For example to make the point clear, If I were magically given, just for arguments sake, a new $33,000 buss. card then I would charge up my normal $7,000 monthly charges to it while paying down $7,000 on my personal profile´s cards. In less than 5 months I would have $0 debt on my personal profile and probably +800 Fico score, is this all correct?
I realize I will not be given that SL but is this all true? If I pass on my buss. charges to an Amex buss. card these will not show up on my personal credit report right? Since $7,000 monthly is alot at least for me, wouldnt this really help my utilization and be something to aim high for? Pun intended.
Excellent questions, @WP2020 and I'm glad to help. Sometimes I pack a lot of details into my postings and I've had members tell them they have to reread them and take notes sometimes about bits of information they find helpful. Lol
" ... you say about less than 10% being ideal, I thought it was less than 30%. You see, I thought once I reached the less than 30% utilization mark, and over 720 Fico that I would have again a great file and any lender will be happy to extend credit. Since everywhere you read online, it says to maintain under 30%"
To clarify, we're actually talking about multiple issues here when it comes to utilization. To begin with, the "30% rule" is misleading; there is nothing magical about 30% per-se. We talk on My Fico about thresholds that have been identified as likely break-points related to FICO scoring models. Those break-points on aggregate utilization (across all cards) are 8.9%, 28.9%, 48.9%, 68.9%, and 88.9%. On individual account utilization, there are scoring penalties that start at 28.9% and continue to 48.9%, 68.9%, and 88.9%. There is an archived posting in the "Understanding FICO Scoring" forum that discusses this correlation, "The Truth About Credit Card Utilization." So 30% is (roughly) 28.9% but not exactly, and it's only part of the overall picture. And that 28.9% (30%) is just ONE break-point related only to FICO Scoring, not overall risk assessment of a credit applicant. The break-points are also just an approximation "due to the “multiple score card” system, by which credit scores use different scoring factors and different weighting of the factors for different sets of credit experiences." (*credit to web link article below.)
See this My Fico thread for more details:
Here are also a couple of links to web articles that discuss utilization, including one from Experian:
https://www.experian.com/blogs/ask-experian/what-is-the-best-percentile-for-credit-utilization/
https://www.creditcards.com/credit-card-news/credit-utilization-30-percent-rule-myth-1586/
It's best to think of utilization as a sliding scale. Lower is better, at least until you get down to 1%. Showing zero utilization isn't ideal either! There's a small FICO scoring penalty for that, since FICO is based largely on using past behavior to predict future risk; if there is no behavior (use of credit), the risk is less certain. Some of our members further optimize scoring by the "AZEO" method, or All-Zero-Except-One. Allowing a small charge of somewhere between about $5? (the minimum amount that reports to the bureaus) and 1% of the trade line to report on one account only (with all others reporting zero) that is said to give an optimal short-term boost. Some of our members practice Azeo constantly but really it's only needed if a small boost might help an approval before applying for new credit. If scores are high already, it's really unnecessary.
That 10% I suggested is just a personal gouge and is a rough approximation of the 8.9% aggregate threshold above. It's just an easy and quick reference that I like to use to monitor my utilization and suggest it to others as a guideline. The way I look at it is that to keep my scores fairly close to optimal, if I allow each individual account no more than 10%, aggregate will follow. Ideally, 1% to 8.9% aggregate is the real target if you aren't taking it to the extent of Azeo. Allowing individual accounts to report a somewhat higher balance occasionally is fine.
Up until this point, we've been discussing FICO Scoring. Forget all that for the moment. Whether a computer algorithm scans your credit file or an underwriter manually reviews it, there are many factors taken into consideration. Debt (specifically Debt related to income) is major consideration beyond FICO and utilization. Each lender applies unique standards based on their corporate risk assessment models. For most consumers and generally speaking, the higher the utilization on your cards, the more a lender might question if you're in over your head. On the other hand, if credit limits are high or low relative to income and debt, that could sway the interpretation of acceptable utilization. When we give advice to others on My Fico, we generally assume that person is reporting credit card limits that are consistent with their income and overall debt load. While that's usually the case, it's not always the case. In that respect, utilization is relative and it can be taken out of context. While it's helpful, it can be misleading in terms of an overall risk assessment between different credit profiles or lenders since one size doesn't fit all. That's why lenders always ask about income and debt when reviewing an application. That said, assuming your limits are consistent with financial profile, 30% utilization could easily make many lenders uncomfortable, or might lead them to hold back on a generous offering. And that's why I suggested the 10% (8.9%) or less utilization, as it would likely lead to a more solid approval with a higher limit.
Edited to condense and break off sub-questions.
Aim_High; 09/10/2021
