Utilization Reported High Even Though PIF

[Uborrow-Upay]

Hi, bobebob!

You've got great scores.  And anything over a 760 doesn't get you a free balloon, donuts or better rates on anything...just perhaps more access to other credit products...maybe.

Don't sweat the small stuff!  It's only a score, and for what it's worth, it's only the score at the exact moment that you pull it. 

If you are getting these kinds of CLIs and CL, no worries.  Bragging rights are optional, yet don't cost a dime! 

Continued success to you!! 

[mxp114]

Is it a good idea to max your card or get it as high as possible, for the sole purpose of getting a high "high balance" reported? Doesn't it help with lenders seeing you can charge $X and pay it off? Or does a $10,000 CL with a HB of $10 suffice for lenders?

[bobebob]

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@Uborrow-Upay wrote:

Hi, bobebob!

You've got great scores.  And anything over a 760 doesn't get you a free balloon, donuts or better rates on anything...just perhaps more access to other credit products...maybe.

Don't sweat the small stuff!  It's only a score, and for what it's worth, it's only the score at the exact moment that you pull it. 

If you are getting these kinds of CLIs and CL, no worries.  Bragging rights are optional, yet don't cost a dime! 

Continued success to you!!  

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Thank you.  Unbeknownst to me, I had been gardening for years after my divorce.  I used credit just enough to show activity, but didn't open new accounts or run up balances.  My score had slowly risen over time without me even knowing it.   I'm very happy with my score.  But now that I know I can't get free donuts. . . . . 

As it happens I finally decided to PIF prior to the statement date this cycle for my AmEx.  The statement date was 9/10 and my first free DCU EQ Fico pull happened soon after on 9/16.  Dropping my util to <1% bumped my score up 12pts to 801!  The rapid feedback was a fortunate coincidence.

I may not do that everytime (but probably will for awhile).  But it's nice to know about what my score should be with low util.

[bobebob]

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@mxp114 wrote:

Is it a good idea to max your card or get it as high as possible, for the sole purpose of getting a high "high balance" reported? Doesn't it help with lenders seeing you can charge $X and pay it off? Or does a $10,000 CL with a HB of $10 suffice for lenders?

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Cliff's Notes version:  Don't do it.  It will lower your score.  And if something happens and you can't pay it back, it will REALLY hurt your score.  It's just a bad idea.

Long version:

I only know of one situation where putting a high balance on a card could possibly help your score (even though it would hurt it in the short term).

If you have a Visa Signature card, some CCC's don't report the credit limit (such as my BoA).  For purposes of util (again only with some CCC's), the highest balance reported is used in place of the CL.  Since in a perfect world your highest balance should be less than your CL, this means that your util will be calculated at a higher level than it would have if the actual CL were used.

For my situation my signature Visa CL was 17.1K, but highest balance was 5.3K.  Once my AmEx limit of 10K was factored in, this caused my util to be around 33% when in reality it should have been less than 20%.  This dropped my score a little bit (about 10-15pts for me).

So if you max out a card that otherwise wouldn't be showing the correct CL for the Util calculation, you could conceivably help your credit score in the future (once the card is paid back down and your util is <9%).  Having done that would likely help your score slightly and only in that specific case.  And note from the time you do that until you pay the balance down low or to 0, it will have an adverse effect on your score.

In the vast majority of cases the best thing you can do for your score is to keep your util <9% and keep everything clean.  I.E. no baddies, minimum INQ's, etc.

If overall util is >10% or an individual card is over 50% of limit it can start to be a neg.  And if you have one at limit it would definitely hurt your score.  Use your credit occasionally so the accounts don't go dormant, but maxing out balances to prove that you can pay them off won't reap you any benefits. (we'll, if you really do need to spend that much, it could show the CCC that you legitimately need a higher CL)

Lender's are going to be much more impressed to see that you are using your credit responsibly rather than maxing a card out.

[mxp114]

Thanks for the insight. I should've made clear that I can pay back the $10k in one month, I wouldn't go out spend that much just for a high "high balance." I currently charge everything and PIF before statement close so it reports $0. What's the point of HB info? I thought it was to show lenders the highest balance you've ever had which would establish your ability to repay it. Assuming the current balance is $0.

[bobebob]

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@mxp114 wrote:

Thanks for the insight. I should've made clear that I can pay back the $10k in one month, I wouldn't go out spend that much just for a high "high balance." I currently charge everything and PIF before statement close so it reports $0. What's the point of HB info? I thought it was to show lenders the highest balance you've ever had which would establish your ability to repay it. Assuming the current balance is $0.

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I had an account that had been dormant for a couple of years.  When I finally used it to make a purchase it actually caused my EQ Fico to jump 25pts.  So you may not want to let your account report at exactly $0 for months on end.  But I don't know if the fact that an account is dormant is reported by the CCC or assumed by the CRA given the # of reports at $0 balance.  Most posts recommend having a balance between $0 and 9%util to have the best scores.  At higher scores, even a util as low as 10% can start to bring down your score slightly.

If you have a need to spend that much anyway and can pay it back easily, you could do it and it would only impact your score negatively for the one reporting cycle.  Then the new HB would be there going forward.   I'd like to hear if there were some benefit to having a higher "highest balance reported" if anyone knows.

I don't really know what the CCC's use that little tidbit of information for (aside from using it to substitute for CL when that isn't reported). 

It may give them an idea of what you might need for a CL on a new account.  But I'd be interested to hear the answer from someone who knows for sure. 

Anyone?

[mxp114]

Thanks for info. I'm also wondering. One of my cards has a very high HB and is currently $0 closed/never late. When I spoke to Discover recon, I pointed out that my CR shows I can spend $X AND pay it off without a problem, which I think helped secure the approval.