balance on a single card

Anonymous · ‎03-25-2015

What point of a single account having a high utilization does it affect your score? Like let's say that you have 5 accounts and between them you have 20k in limits, but one of your accounts has a 2.5k limit and you have it at 2000. Will that hurt your credit score more than having that 2000 on two accounts? I am trying to figure out how I want to make a big purchase that I will pay off over 3 months. I want to just put it on one card, but I can put it on two if it is better for my credit that way.

myjourney · ‎03-25-2015

I'll break it down for a clearer understanding

Fico looks at UTL in (2) ways

1) overall UTL

Meaning ratio of used credit vs total limts

2) any one card with IIRC 75% of total limit being used on that card (maxed out)

So if one card has say 75% of limit (UTL) being used this would cause a Fico ding (loss of points)

If total UTL across all cards is high this would also cause a scoring ding as well

So sometimes even tho UTL is lower in comparison to total UTL Fico will pickup on a maxed out card

Before you app think...
Have you done your research of the CC?
Does it fit your spending?
Do you have a plan for the bonus w/o going into debt?
Can you afford the AF?
Do you know the cards benefits? Is it worth the HP?

Anonymous · ‎03-25-2015

That's exactly what I needed to know. I'm going to spread around that big charge do none of the lines go over 50%. Not a problem, just have to go the purchase differently.

takeshi74 · ‎03-26-2015

Your score is affected at various utilization levels. By how much is difficult to say but lower is generally better. That's why the "optimal" recommendation is "1 balance at 10% or less". Keep in mind that 30% is the generally recommended max. Short term high utilization is generally no big deal. It's prolonged high utilization that may lead to trouble. Do you intend to carry the balance and if so, for how long?

Anonymous · ‎03-26-2015

I'm only planning on carrying it for two months. It's not a long term carry type of thing. I just don't have extra cash to pay this at the moment.

guydiver · ‎03-26-2015

@Anonymous wrote:
I'm only planning on carrying it for two months. It's not a long term carry type of thing. I just don't have extra cash to pay this at the moment.

So as long as you're going to pay it off quickly, and you don't mind the temporary score ding(like planning any new credit apps), your scores will return to baseline. Fico scoring has no memory.

'diver

Anonymous · ‎03-26-2015

I'm not apping for anything unless I get a csp pre approval. My total utilization won't go above 15 percent anyways. I'm moving my monthly stuff to a charge card. This will basically be my only balances

Anonymous · ‎03-27-2015

If it were me, I would put it all on one card that has a cash back/rewards benefit. People get too hung up on scores in some situations. Even if your score takes a short term 10 point loss, it will bounce right back when you pay it. Utilization has no memory. Example, I bought my DH golf clubs for Christmas. I used my rewards card. I usually PIF weekly but we were travelling for the holidays. I didn't get the pay off in one time. I missed it by 1 day. I carried a balance of 90% on one card. for one statement. I lost 14 points. I gained it back the next month after the payment reported. .

As mentioned above, unless you are applying for credit in the next month, ignore your score short term. Do what you need to do and look at your scores after you pay it off I also think this situation can help you if you want/need a cli in the future. They can pull your account, see that you had a lalrge charge and paid it off quckly. Not only are you showing your credit limit isn't too high, you are justifying that you can responsibly handle a larger limit.

Anonymous · ‎03-28-2015

@myjourney wrote:
I'll break it down for a clearer understanding
Fico looks at UTL in (2) ways

1) overall UTL
Meaning ratio of used credit vs total limts
2) any one card with IIRC 75% of total limit being used on that card (maxed out)

So if one card has say 75% of limit (UTL) being used this would cause a Fico ding (loss of points)
If total UTL across all cards is high this would also cause a scoring ding as well

So sometimes even tho UTL is lower in comparison to total UTL Fico will pickup on a maxed out card

Assuming this is true (which I believe is), then that's a really stupid scoring algorithm. In a perfect world, simply shuffling money around between accounts shouldn't have any impact, negative or positive, on your scores/risk evaluation. That's annoying.