practical value of a huge credit limit?

[Anonymous]

Thanks JLK!  Yeah, I thought about that too.  That will work if FICO drops not only the big card's CL from one's total CL (i.e. the "denominator" of the util %) but also drops the reported balance as well (the numerator).  That's an assumption, but if that is true this would certainly be the way to detect whether a card has been dropped.

Curiously, if that assumption is true, it means that one could have exactly two credit cards, a 55k CL card and a 5k card, with 54k reporting on the big card and $100 on the small card -- and FICO would score you very positively as though you had a 2% total utilization, when in fact you had a total U of 91% and half of your cards almost completely maxed out.

The reason I was asking people repeatedly how they think they know whether a card is being included is because I doubt they are carefully testing.  My guess is that they are relying on the summary software that comes with their credit monitoring service (whether myFICO or Credit Check Total or Credit Karma or whatever).  Since that the summary page says that their 50k CL card is being included in their total CL, then they assume that the actual algorithm is doing that, an assumption that is unwarranted.

[JLK93]

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@Anonymous wrote:

it means that one could have exactly two credit cards, a 55k CL card and a 5k card, with 54k reporting on the big card and $100 on the small card -- and FICO would score you very positively as though you had a 2% total utilization, when in fact you had a total U of 91% and half of your cards almost completely maxed out.

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That is exactly how it works.

To the best of my knowledge, both the CL and the balance are completely excluded from utilization calculation. Most people who test these things have large CLs. I doubt if anyone with 2 credit cards has ever performed this test.

Other lenders would of course still see the balance. Barclays would not be a happy camper.

There are rare exceptions. I seem to recall that cashnocredit's experiments demonstrated that Amex charge card balances were included in total utilization on EQ FICO 8 but excluded from per card utilization. This only applied to EQ 08 and only if the high balance iwas under 50K. Of course, that type of testing requires very high spending. I've never had much interest in charge card's effect on FICO, so I'm now completely sure. However, from my memory of his posts and my conversations with cashnocredit, I think I've got that correct.

[Thomas_Thumb]

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@JLK93 wrote:

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@Anonymous wrote:

it means that one could have exactly two credit cards, a 55k CL card and a 5k card, with 54k reporting on the big card and $100 on the small card -- and FICO would score you very positively as though you had a 2% total utilization, when in fact you had a total U of 91% and half of your cards almost completely maxed out.

---

That is exactly how it works.

To the best of my knowledge, both the CL and the balance are completely excluded from utilization calculation. Most people who test these things have large CLs. I doubt if anyone with 2 credit cards has ever performed this test.

Other lenders would of course still see the balance. Barclays would not be a happy camper.

There are rare exceptions. I seem to recall that cashnocredit's experiments demonstrated that Amex charge card balances were included in total utilization on EQ FICO 8 but excluded from per card utilization. This only applied to EQ 08 and only if the high balance iwas under 50K. Of course, that type of testing requires very high spending. I've never had much interest in charge card's effect on FICO, so I'm now completely sure. However, from my memory of his posts and my conversations with cashnocredit, I think I've got that correct.

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My observation with my AMEX NPSL charge card (with a tiny $1997 HB) is a bit different as follows:

1) HB is included in the denominator of total CL

2) Actual balance (B) is excluded in the numerator of the aggregate balance. The exclusion was true for EQ as well as TU and EX even though HB was small. ("hidden" CL exceeds $35k)

Note: I took pains to ensure the card has NO provision for a pay over time fail safe - Full statement balance must be paid by due date. (I had to opt out of the pay over time feature and then had to speak with CSRs on three subsequent occassions to have a cease and desist notice put in my file regarding solicitations to add the pay over time option back in).

I always see the HB included in the total CL. I experienced 0% Ag UT across all three CBs with AMEX reporting a balance of $1997 (which was also the high balance). 

Only Fico 98 reacted negatively scorewise to the individual 100% B/HB

- I did two 3B pulls (7/23 and 8/6) with AMEX at 100% B/HB, the 1st one with Ag UT at 1% and the 2nd one at 0% Ag UT which allowed me to isolate impact of 100% B/HB..

[JLK93]

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@Thomas_Thumb wrote:

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@JLK93 wrote:

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@Anonymous wrote:

it means that one could have exactly two credit cards, a 55k CL card and a 5k card, with 54k reporting on the big card and $100 on the small card -- and FICO would score you very positively as though you had a 2% total utilization, when in fact you had a total U of 91% and half of your cards almost completely maxed out.

---

That is exactly how it works.

To the best of my knowledge, both the CL and the balance are completely excluded from utilization calculation. Most people who test these things have large CLs. I doubt if anyone with 2 credit cards has ever performed this test.

Other lenders would of course still see the balance. Barclays would not be a happy camper.

There are rare exceptions. I seem to recall that cashnocredit's experiments demonstrated that Amex charge card balances were included in total utilization on EQ FICO 8 but excluded from per card utilization. This only applied to EQ 08 and only if the high balance iwas under 50K. Of course, that type of testing requires very high spending. I've never had much interest in charge card's effect on FICO, so I'm now completely sure. However, from my memory of his posts and my conversations with cashnocredit, I think I've got that correct.

---

My observation with my AMEX NPSL charge card (with a tiny $1997 HB) is a bit different as follows:

1) HB is included in the denominator of total CL

2) Actual balance (B) is excluded in the numerator of the aggregate balance. The exclusion was true for EQ as well as TU and EX even though HB was small. ("hidden" CL exceeds $35k)

Note: I took pains to ensure the card has NO provision for a pay over time fail safe - pure play pay full balance by due date (I had to opt out of the pay over time and speak with a CSR on three subsequent occassions to have a cease and desist notice put in my file regarding solicitations to add the pay over time option).

I always see the HB included in the total CL. I experienced 0% Ag UT across all three CBs with AMEX reporting a balance of $1997 (which was also the high balance). 

Only Fico 98 reacts negatively scorewise to the individual 100% B/HB - I did two 3B pulls (7/23 and 8/6) with AMEX at 100% B/HB, the 1st one with Ag UT at 1% and the 2nd one at 0% Ag UT.

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TT,

Have you reviewed cashnocredit's posts? He did more experimentation on this subject than anyone.

Here is one. I believe there were others.

http://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/Amex-Charge-Card-Balances-Now-Impact-FICO-EQ-08-SCORES-Update-TU/td-p/3173386

Was your charge card balance large enough, relative to total CLs, to cause a drop in for in your FICO scores? $1997 doesn't seem large enought to have had an effect on FICO scoring of overall utilization.

I'm confused about the numbers you are reporting. How do you know? Why are we talking about numerators and denominators instead of FICO scores?

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@Thomas_Thumb wrote:

2) Actual balance (B) is excluded in the numerator of the aggregate balance.

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How do you know? Do you have access to the FICO scoring algorithms? You seem to be mentioning a lot of numbers but not FICO scores. The only thing that counts is how charge card balances affect FICO scores.

[driftless]

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@Thomas_Thumb wrote:

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@JLK93 wrote:

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@Anonymous wrote:

it means that one could have exactly two credit cards, a 55k CL card and a 5k card, with 54k reporting on the big card and $100 on the small card -- and FICO would score you very positively as though you had a 2% total utilization, when in fact you had a total U of 91% and half of your cards almost completely maxed out.

---

That is exactly how it works.

To the best of my knowledge, both the CL and the balance are completely excluded from utilization calculation. Most people who test these things have large CLs. I doubt if anyone with 2 credit cards has ever performed this test.

Other lenders would of course still see the balance. Barclays would not be a happy camper.

There are rare exceptions. I seem to recall that cashnocredit's experiments demonstrated that Amex charge card balances were included in total utilization on EQ FICO 8 but excluded from per card utilization. This only applied to EQ 08 and only if the high balance iwas under 50K. Of course, that type of testing requires very high spending. I've never had much interest in charge card's effect on FICO, so I'm now completely sure. However, from my memory of his posts and my conversations with cashnocredit, I think I've got that correct.

---

My observation with my AMEX NPSL charge card (with a tiny $1997 HB) is a bit different as follows:

1) HB is included in the denominator of total CL

2) Actual balance (B) is excluded in the numerator of the aggregate balance. The exclusion was true for EQ as well as TU and EX even though HB was small. ("hidden" CL exceeds $35k)

Note: I took pains to ensure the card has NO provision for a pay over time fail safe - Full statement balance must be paid by due date. (I had to opt out of the pay over time feature and then had to speak with CSRs on three subsequent occassions to have a cease and desist notice put in my file regarding solicitations to add the pay over time option back in).

I always see the HB included in the total CL. I experienced 0% Ag UT across all three CBs with AMEX reporting a balance of $1997 (which was also the high balance). 

Only Fico 98 reacted negatively scorewise to the individual 100% B/HB

- I did two 3B pulls (7/23 and 8/6) with AMEX at 100% B/HB, the 1st one with Ag UT at 1% and the 2nd one at 0% Ag UT which allowed me to isolate impact of 100% B/HB..

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Hi Thomas,

So what happens if I don't pay my PRG off the day before the statement cuts and I have, say $6 - 10,000.00 in charges, some of which can be paid over time.  I have up until the due date to make a selection to select charges to pay over over time, how do those charges impact my utilization as they will be reported on the statement cut date?  I always pay off a day or two before the reporting date.  

Thanks, 

Driftless

[Thomas_Thumb]

The AMEX card had a balance of $1997, the only other card with a balance was an AU card with a $576 balance.

Here is what I saw on my 8-6-2016 report. I interpret reason statements under the SCORE FACTORS heading on Fico 3B reports as relating to Fico scoring.

So, the 0% UT "presentation summary" coupled with the reason statement: "There are no recent balances on your revolving credit accounts" leads me to the conclusion that the $1997 AMEX and $576 AU card balances (also listed on the same report) are not included in the aggregate utilization calculation. The "Heavy use of available revolving credit" is specific to AMEX NPSL charge card B/HB at 100% ... That balance is not factored into "ratio of your revolving balances" - otherwise the value would be 1%, not 0%. The $1997 total balance on revolving accounts (AMEX charge) is confusing and certainly conflicts with the 0%. It is an account balance - just not revolving. [Note the careful wording on sum of balances "open ended accounts (such as a Charge Card) and/or Revolving Accounts (such as a credit card)". Then, for ratio of sum of balances note the wording: "sum of balances on revolving accounts divided by sum of credit limits on revolving accounts reported". The charge card is not a revolving account.

Also see the following on the 3B Fico 08 enhanced - score drop across the board from 7/23 to 8/6 although # cards reporting and UT is lower on 8/6.

Pasted below is the AU card with a balance on both reports, my discover credit card that had a balance on 7/23 but not 8/6 and my AMEX which reported on both 3B reports..

 AU CARD BALANCE of $576 on BOTH 7-23 and 8-6 reports

 DISCOVER CARD BALANCE on 7-23-2016 ($33)

 

DISCOVER CARD BALANCE on 8-6-2016 ($0)

AMEX CHARGE CARD BALANCE of $1997 on BOTH 7-23 and 8-6 reports

[JLK93]

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@Thomas_Thumb wrote:

The AMEX card had a balance of $1997, the only other card with a balance was an AU card with a $576 balance.

Here is what I saw on my 8-6-2016 report. I interpret reason statements under the SCORE FACTORS heading on Fico 3B reports as relating to Fico scoring.

So, the 0% UT "presentation summary" coupled with the reason statement: "There are no recent balances on your revolving credit accounts" leads me to the conclusion that the $1997 AMEX and $576 AU card balances (also listed on the same report) are not included in the aggregate utilization calculation. 

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I'm just not following.

The last time I paid attention to myFICO SCORE FACTORS or Reason Codes was 2013.

The last time I shaved with a single blade razor was 1978.

I just don't understand the reasoning behind the substitution of reason codes etc., for actual FICO scoring data.

Let  a charge card report a balance large enough to affect FICO scores or review cashnocredit's posts.

I find your posts, and your analysis, to be invaluable. I just don't follow this logic. I never will.

[Thomas_Thumb]

Ok - we will disagree. I don't see the charge card showing in Fico 08 Ag UT.

A balance of $1997 is over 1% of my aggregate CL (excluding "hidden" NPSL) - so if AG UT shows 0%, the charge card is NOT included in the numerator. For me, a balance of $1997 on the charge card is without a doubt large enough for a non zero Ag UT%.

Not in a position to report $10k or $20k on a charge card.

*** Difference between the 7-23 and 8-6 reports is payment of the $33 Discover balance to $0 ***

 - The reason for the 1% Ag UT% on the July 23 report and higher Fico 08 enhanced scores is due the $33 balance that was reporting on the Discover credit card.

 - The payment of the $33 balance prior to the August 6 report resulted in the Ag UT dropping to 0% and the lower Fico 08 scores.

If a $33 payment on a credit card causes AG UT% to drop from 1% to 0% with two other cards still showing order of magnitude higher balances, then those other two balances (AU and AMEX) are not part of the calculation. Also, a drop in Fico 08 enhanced scores across the board with fewer cards showing balances points to 0% Ag UT as a cause for the drop in Fico 08 scores. Otherwise the accounts as reflected in the two reports look to be the same.

[Anonymous]

JLK93, what part of TT's posts above are you not following or disagreeing with? 

CGID, TT's post above sort of sheds a little light on a question you were asking earlier in this thread the other day.  You basically posed the question of how someone would be able to tell if their monster credit line was included into aggregate utilization when more often than not based on aggregate utilization percentage there wouldn't be a significant difference regardless.  Basically, a $1000 balance on $50k in total credit lines is 2% aggregate utilization and a $1000 balance on $100k in total credit lines (assuming another $50k credit line isn't counted into the equation) is 1% AU.  From what we know, there wouldn't be a scoring difference here at all.  However, in looking at the myFICO data provided, this example would show us a difference of 1% verses 2% aggregate utilization if the single $50k line of credit wasn't included. 

[driftless]

Thanks Thomas_Thumb,

That is an interesting observatiion.  I may change how I pay Amex.

- Driftless