Is utilization amount spent or balance owed?

[Anonymous]

I have a Discover IT card. Recently, I noticed that my utilization rate in the TransUnion report in their app is over 30%. I have a 2k credit limit. Every month I spend at least $1700 on the card, but I pay it down before statement closes and leave like $17 to carry as a balance. I thought when they report this balance when statement closes, reported utilization rate should be 1% or less. I called customer rep, they told me utilization rate is the entire amount you spend in the month before statement closes. Meaning that utilization based on $1700 spent is 85% even though I paid it down before statement closed. Is this how utilization is calculated?

[Anonymous]

Go to TrueIdentity.com. The site is run by TransUnion. You can get a free report every day. You can see what amount Discover is reporting to TU. It should be your statement balance. Btw the amount in the Discover scorecard is your total utilization (for all your cards) not just Discover.

https://www.trueidentity.com

[Brian_Earl_Spilner]

Lenders will report it however and whenever they want. For example, chase will always update whenever you pay off a card, doesn't matter if they already updated the day before. Us bank reports at the end of the month no matter when your statement closes. You just have to learn each lender and how to work around it.

As for discover, they've always reported my statement balance, not how much I've spent in a month. If they did the latter, they would have been reporting $2000 on a $500 limit.

[Remedios]

For scoring purposes, utilization is what's reported as a statement balance. If you used your entire credit line, but paid it down before the statement closes, it would not be counted because it would not be reported.
Also, there is individual utilization , which is the amount reported on a single card, and aggregate utilization which is sum of all balances reported.
If this is your only card, those two would be same.
If you have multiple cards, look at your report and add them up.
Another thing, Discover provided TU score excludes AU accounts, so if you have any of those, their limits are not being counted towards aggregate credit line.
So, what they told you is right and wrong at the same time. You may be utilizing 85% of your limit, that's the true part, but for scoring, only what's reported on statement counts.

[Anonymous]

Thanks. I have two other credit cards with Capital One, but i never carry a balance on those; I always pay them off. But some Discover reps may not be well informed. I spoke with two reps yesterday, both told me utilization is money spent monthly on revolving accounts whether paid or not before statement closes. I called again this morning, a rep apologized that the info I got yesterday was wrong - that utilization is based on balanced owed on revolving accounts. But I think I figured it out based on further research on this forum that charge-off accounts not sold also affect utilization. Apparently, I have a Merrick account that was charged-off in 2015 with a balance of $1500. If utilization is based on balanced owed, I guess this is what is affecting the utilization even though my current active accounts balances are very low.

[Anonymous]

---

@Anonymous wrote:
But some Discover reps may not be well informed. I spoke with two reps yesterday, both told me utilization is money spent monthly on revolving accounts whether paid or not before statement closes. I called again this morning, a rep apologized that the info I got yesterday was wrong - that utilization is based on balanced owed on revolving accounts.

---

I have no problem with utilization being defined as that, but know that the definition given isn't used by the Fico algorithm and that it only looks at reported utilization... not what is "spent" or a "balance owed," which is really the same thing if you think about it as anything spent turns into a balance owed. 

Someone can spend or owe $10,000 on a card and report $5 on it.  That's low reported utilization from the perspective of Fico.

Someone else can spend only $100 on a card, but owe $10,000 on it (and have that amount report) and their utilization would be higher from the perspective of Fico.

[Remedios]

Charged off account is considered 100% utilized as long as it remains unpaid, so that's where your 30% is coming from despite the fact your open and active cards have only $17.00 aggregate utilization.

[Anonymous]

Right.  Eliminating the CO debt would be the best utilization-related improvement that the OP could make, no doubt.

[SouthJamaica]

---

@Anonymous wrote:
I have a Discover IT card. Recently, I noticed that my utilization rate in the TransUnion report in their app is over 30%. I have a 2k credit limit. Every month I spend at least $1700 on the card, but I pay it down before statement closes and leave like $17 to carry as a balance. I thought when they report this balance when statement closes, reported utilization rate should be 1% or less. I called customer rep, they told me utilization rate is the entire amount you spend in the month before statement closes. Meaning that utilization based on $1700 spent is 85% even though I paid it down before statement closed. Is this how utilization is calculated?

---

"Utilization" for FICO scoring purposes is based exclusively on the reported balances.

The reported balance for Discover is the statement balance.

If you've paid it down to $17 before the statement cut, then your utilization is less than 1%. The CSR is just wrong.