Charge card balance increase: FICO stayed, VantageScore dropped.

[Anonymous]

I made some charges to my Amex Platinum last month, and by the time the statement came my balance was around 11.7k. My Amex Platinum balance the previous month was only 1.6k. A few days after I got the statement, I made a payment of 13k to my Amex Platinum, which covered not just the statement balance, but the current balance on it.

My FICO (Experian) reported an increase in my overall balance, but it seems like it was able to detect that it was on a charge card, and my FICO score remained the same. However, CreditKarma/CapitalOne CreditWise/Chase showed a 32 point drop because of this (I guess they all use Vantage).

From what I've read, I thought charge card balances do not count against credit utilization for both FICO and VantageScore. But it's kinda of messed up that Vantage would count charge card balances against your score, when you pretty much have to pay off the entire balance every month with charge cards (which I do).

[Thomas_Thumb]

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@Anonymous wrote:

I made some charges to my Amex Platinum last month, and by the time the statement came my balance was around 11.7k. My Amex Platinum balance the previous month was only 1.6k. A few days after I got the statement, I made a payment of 13k to my Amex Platinum, which covered not just the statement balance, but the current balance on it.

My FICO (Experian) reported an increase in my overall balance, but it seems like it was able to detect that it was on a charge card, and my FICO score remained the same. However, CreditKarma/CapitalOne CreditWise/Chase showed a 32 point drop because of this (I guess they all use Vantage).

From what I've read, I thought charge card balances do not count against credit utilization for both FICO and VantageScore. But it's kinda of messed up that Vantage would count charge card balances against your score, when you pretty much have to pay off the entire balance every month with charge cards (which I do).

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Charge card balances are considered in Vantagescore AND in the older Fico 98 mortgage model used by Experian. Undoubetedly your EX Fico mortgage score took a substantial hit.

The older Fico model looks at balance/high balance for utilization on NPSL charge cards. So, if the reported balance was the highest it has ever been then your utilization for the card will compute at 100%. Your "hidden limit" is not a consideration in utilization.

[Anonymous]

There's no reason to sweat what happens to your VS's as no lenders use them in lending decisions. You could see a 200 point drop to your CK scores and it wouldn't matter so long as your FICO scores stay put.

[Anonymous]

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@Thomas_Thumb wrote:

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Charge card balances are considered in Vantagescore AND in the older Fico 98 mortgage model used by Experian. Undoubetedly your EX Fico mortgage score took a substantial hit.

The older Fico model looks at balance/high balance for utilization on NPSL charge cards. So, if the reported balance was the highest it has ever been then your utilization for the card will compute at 100%. Your "hidden limit" is not a consideration in utilization.

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Hello TT!  I want to be sure I understand how FICO 98 works (i.e. the Experian mortgage model).

Suppose Bob has exactly one Amex charge card and exactly one vanilla credit card.  His limit on the credit card is 1k with a current balance of $39.  His "high balance" on the Amex is $10,283 though currently the balance is $0.

It's clear to me that his total utilization will be considered by FICO as very low (< 5%).

Now suppose that his charge card reports a balance (the following month) of $10,000 with his credit card balance staying about the same).

Are you saying that the only scoring penalty will be an individual utilization penalty (IU > 90% on the Amex) but his total utilization will still be considered ultra low? 

[Thomas_Thumb]

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@Anonymous wrote:

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@Thomas_Thumb wrote:

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Charge card balances are considered in Vantagescore AND in the older Fico 98 mortgage model used by Experian. Undoubetedly your EX Fico mortgage score took a substantial hit.

The older Fico model looks at balance/high balance for utilization on NPSL charge cards. So, if the reported balance was the highest it has ever been then your utilization for the card will compute at 100%. Your "hidden limit" is not a consideration in utilization.

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Hello TT!  I want to be sure I understand how FICO 98 works (i.e. the Experian mortgage model).

Suppose Bob has exactly one Amex charge card and exactly one vanilla credit card.  His limit on the credit card is 1k with a current balance of $39.  His "high balance" on the Amex is $10,283 though currently the balance is $0.

It's clear to me that his total utilization will be considered by FICO as very low (< 5%).

Now suppose that his charge card reports a balance (the following month) of $10,000 with his credit card balance staying about the same).

Are you saying that the only scoring penalty will be an individual utilization penalty (IU > 90% on the Amex) but his total utilization will still be considered ultra low? 

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Here is what I know about Fico 98, Fico 04, Fico 8 and Fico 9 relative to NPSL charge cards:

1) Fico 98 looks at charge cards on an individual basis for utilization. The utilization uses high balance as a pseudo credit limit in calculating utilization.

2) Fico 04, Fico 8 and Fico 9 do not calculate utilization on NPSL charge cards (rightly so as  hidden limits are not reported)

3) All Fico models include charge cards in # of accounts with balances.

4) True charge cards are not considered in the "recent balances on your revolving credit accounts" on any Fico model (rightly so as true charge cards have one month terms - they are not revolving accounts).

5) Given #4 which I have tested, I do not believe charge cards factor into aggregate revolving utilization. Third party software may include charge cards in utilization summaries but not Fico.

6) Is there such a thing as aggregate charge card utilization?. I can't say as I only have one charge card.

Let's consider a different example:

a) The profile has 5 revolving credit cards with CLs of: $10k, $15k, $20k, $25k and $30k; Aggregate CL = $100k

b) The profile has an Amex charge card with a $50k hidden limit and a high balance of $1.2k. Recent $0.5k balance paid to zero.

c) The $25k card has a reported balance of $2k and the $10k card has a reported balance of $0.5k = $2.5k total (2.5% AG UT)

Now the Amex charge card sees some "heavy" use and statement balance reports as $3.2k, the $25k revolver updates with a $0 balance and the $10k card also updates to $0. Charge card utilization (new B)/(new HB) = 3.2/3.2 = 100%. Aggregate revolving utilization = 0/100k = 0%.

New EX Fico 98 reason statements post statement updates include:

#1 - You've made heavy use of your available revolving credit. [this does not show up on EQ, EX or TU Fico 04]

#4 - There are no recent balances on your revolving credit accounts

How to explain the above reason statements apparent contradiction.

* For #1 - Individual card utilizations are lumped into the same category for scoring in Fico 98. This category was given a generic title of "revolving credit" although charge cards have one month terms.

* For #4 - Fico recognizes the charge card is not a true revolving account and excludes it as part of recent revolving balances which suggests it would not be included in aggregate revolving utilization.

Given this analysis, total revolving utilization would calculate as low in CGID's example above. [because aggregate revolving UT would exclude charge cards]. Please note: the above is not definitive and others suggest charge cards are included in Fico 98 aggregate revolving utilization.