Hello,
I saw a post over on the CreditBoards Forum, under the topic of "The Master $2 Reporting Trick Explained" that states that revolving credit lines that are over $50K do not count in utilization, or toward the advantage of just having one account report a small balance. Has anyone here ever heard of revolving accounts higher than $50K being excluded from utilization calculations or scoring? 
@EW800 wrote:Hello,
I saw a post over on the CreditBoards Forum, under the topic of "The Master $2 Reporting Trick Explained" that states that revolving credit lines that are over $50K do not count in utilization, or toward the advantage of just having one account report a small balance. Has anyone here ever heard of revolving accounts higher than $50K being excluded from utilization calculations or scoring?
Yes, confirmed by a few folks here over time under FICO 8. Not sure which of the two boards it originated on, actually I think the user who tested it posts on both but Bob Wang might have done the testing on that, memory is fading with age heh.
@Revelate wrote:
@EW800 wrote:Hello,
I saw a post over on the CreditBoards Forum, under the topic of "The Master $2 Reporting Trick Explained" that states that revolving credit lines that are over $50K do not count in utilization, or toward the advantage of just having one account report a small balance. Has anyone here ever heard of revolving accounts higher than $50K being excluded from utilization calculations or scoring?
Yes, confirmed by a few folks here over time under FICO 8. Not sure which of the two boards it originated on, actually I think the user who tested it posts on both but Bob Wang might have done the testing on that, memory is fading with age heh.
Thanks! I have one account that is over $50K (Discover), which is also the account that I allow $5 to $10 to report on each month. It sounds like I might be better served to have this CL lowered below $50K, or at a minimum use a different card for the small balance reporting, correct?
Thanks again!
@EW800 wrote:
@Revelate wrote:
@EW800 wrote:Hello,
I saw a post over on the CreditBoards Forum, under the topic of "The Master $2 Reporting Trick Explained" that states that revolving credit lines that are over $50K do not count in utilization, or toward the advantage of just having one account report a small balance. Has anyone here ever heard of revolving accounts higher than $50K being excluded from utilization calculations or scoring?
Yes, confirmed by a few folks here over time under FICO 8. Not sure which of the two boards it originated on, actually I think the user who tested it posts on both but Bob Wang might have done the testing on that, memory is fading with age heh.
Thanks! I have one account that is over $50K (Discover), which is also the account that I allow $5 to $10 to report on each month. It sounds like I might be better served to have this CL lowered below $50K, or at a minimum use a different card for the small balance reporting, correct?
Thanks again!
Just use a different card.
Someday you may want to hide a purchase from FICO's algorithm by dropping it on that substantial Discovrer limit. Test it and see anyway, single balance on Discover, vs. single balance on some smaller limit card... this might vary a bit by bureau too.
Wow, good data point. I was not aware of this. That's interesting.
@EW800 wrote:
@Revelate wrote:
Just use a different card.
Someday you may want to hide a purchase from FICO's algorithm by dropping it on that substantial Discovrer limit. Test it and see anyway, single balance on Discover, vs. single balance on some smaller limit card... this might vary a bit by bureau too.
Thanks again, Revelate. This is very fascinating. I have never heard about this $50K issue. I am going to use a different card to report as a result of this, but as you mentioned, there is a good chance that one of these days I will put this to a test as well.
I wonder what Fair Isaac's reasoning might be for not counting revolving accounts that are north of $50K in Util numbers??
Thanks again!
I suspect (though I have no way to test this) that 50K is simply the new discounting line for all revolvers not intrinsic to credit cards specifically.
There was a major change I want to say around 2008/2009 from old forum posts from a FICO employee that confirmed they put in exclusion for large HELOC's and the theory was around 35K at that time but it could well be 50.
The problem was people were taking out a HELOC (in large numbers) maxxing it out with whatever bigass purchase / project they were making, and took a nasty hit on the revolving utilization side.
The outsized limits here are extreme outliers in terms of general population; I don't know what the current average is but if we make a somewhat casual assertion it's around 10K and let's say they were not spending big and PIFing so had a reported balance of 2K or 20%... a little suboptimal but the bulk of the points on the scorecard, and let's further way they've got 5 years AAOA, absolutely pristine file, and call it an 800 FICO 8 score.
Suddenly they have to finance something, and they decided to go HELOC vs. HEL for a 100K vacation home or whatever... they make the purchase and they're now at 100K/100K on that line, and now their aggregate revolving utilization is 102/110K, or 92.7% and they're going to lose what, 130 points maybe overnight? Worse? It'd be ugly. HELOC's were common enough and the general practice is to make a big draw (both from some Googling and personally the DCU rep was non-trivially surprised when I suggested my own was for smaller purchases over time to cover the cash flow issue of education... so at least small sample size this is not the typical use case) and so this hit a bunch of consumers who were leveraging their equity and apparently it was a big enough kerfluffle that they were counted as installment loans since other than the variable nature of the APR, they were secured by the house and met every other standard metric via the data apparently and so they shifted it. To be clear, whether it was really counted as installment or simply excluded for everything but payment history would need to be tested and it'd be hard to do that beyond the obvious of how many people really know how installment utilization factors, or have a 50K tradeline, and then spend enough to materially change their installment utilization from sub 10% to above 10% for example. Maybe once my mortgage is paid, and maybe if I have a 50K line by that point I'll try it but we're talking what a decade from now? Odds are I'll lose focus on everything other than score maintenance at that point.
I don't personally know how a HELOC reports or if FICO can distinguish it explicitly, guess will see in the DCU case once my LP/LO stop sitting on my application and documents heh.
Anyway this was the rationale for HELOC's anyway, which are revolving accounts, and I suspect it's just the same for all revolvers. I think when this went into effect limits weren't as large as they were now: I have absolutely no idea why I need the 120K limits I have currently but it's what I wound up with and I'm not even one of the pretty credit people, but that's with a max line of 22K, which is a long walk from 50K so I suspect that number was safely rare to exclude.
Also historically if you needed big expense you threw it on an Amex and paid it, rather than floating it on a traditional credit card... then collectively the other lenders decided they wanted that business and went after it, and limits likely got bigger for that reason among others... talking out my you know what on that one haha.
