Credit Utilization Question

[Anonymous]

Hello everyone!

I am looking for opinions on credit utilization. I am super new here, and I am new at this, so please bear with me. 

Here is the scenerio:

My current overall utilization is 45% but that is mostrly because I am an AU on a Chase Slate account that is currently at 95%.

The thing is, this account is 9 years old with perfect payment history. The balance is only going to creep down, so the utilization on that card will stay high for quite some time.

I also have:

My own Credit One account that is 3 years old with $1000 limit, less than 10% utilization, and perfect payment history.

My own Capital One Platinum that is only 2 months old with a $750 limit, 0% utilization, and perfect payment history.

Authorized User on a Synchrony Master Card that is 4 years old, with $6000 limit, 0% utilization, perfect payment history.

My question is:

Would it be more beneficial to stay as an AU on the Chase Slate card due to the age of account and payment history, or would it be better to be removed as an AU and lose the payment history, age of account, the tradeline in general?

All insight is much appreciated, and please feel free to fire away with any other questions you may have.

Thanks! 

[RobertEG]

I would advice removing the AU.

An AU is, by definition, an account that is reporting the credit history of another to your credit file/report.

Thus, regardless of whether it helps or hurts your score, the generated score is no longer an evaluation of only your own credit history/risk analysis.  When applying for new credit, if the creditor does a manual review and notices an AU account, they immediately know that the score they have received is not based only on your history. They cannot back out the effect of the AU and generate a score that represents only your own risk analysis.

AUs are valuable primarily in rebuilding, where the amount of credit being sought is usually low, and the creditor does not do a manual review in their evaluation process.  In such cases, they do not know that your score is not representative of only your own credit history.

However, as you pass the building/rebuilding stage, chances of a manual review increase, and the likelihood of their being aware that your score is not a "real" score increases.

You have multiple credit cards, and a credit history of approx 3-4 years, with a good payment history.

It is time, in my opinion, to ditch the AU regardless of whether it is helping of hurting scoring, as it is also making your score unrepresentative of your own risk analysis.

[Anonymous]

I completely understand what you are getting at, and I feel the same, but the 2 accounts I am AU on are my wife's cards, so I am not trying to pull a fast one or anything.

That actually leads me to another question. It has been said many times that in order to maximize your Fico score(s) you need to have 3 or more revolving credit accounts. Do the accounts that you are an AU on count towards the 3?

I have every intention of grabbing one more revolving card (or more) in the near future, but I am tryign to get my score up to the point where I will get a decent one with a decent limit and then garden for a while. 

[austingal]

Okay here is what I think I'd do. I would remove myself from the AU card now for the time being until the balance is paid well down. You can always have her add you back to the card later. This card is killing your utilization right now which is likely harming your scores.

Yes the three cards should be your own cards and not AU cards. The conventional wisdom in the past was to have a minimum of 3 of your own cards but nowadays I am hearing that it is more helpful to have at least 5 of your own cards. I would say 3 is the bare minimum.

If I were you I'd try to get a card from a credit union. Try NFCU if you qualify for membership -- you or your spouse or other family member would need to have current or past military ties for you to qualify. They are one credit union that is great to people who are building / rebuilding. If you don't qualify for membership there are many other great credit unions out there that could help you.

[CH-7-Mission-Accomplished]

AU counts the same for FICO scoring purposes, so three AU accounts score the same as three individual accounts.   Have the primary card holder "terminate" you as an AU.   The account will remain on your reports for (up to) 10 years and you will get the benefit of the account age but the accont will update to a zero balance so you will have no penalty.  It's a win-win, no-brainer.

[Anonymous]

@CH-7 Rebuilding.... Great great idea, thanks for the insight!

@austingal.... Nice call on the NFCU. I am eligible for membership, but never joined up.... until tonight! I opened a checking and savings and funded them witha small amount to get started! 

Thanks everyone!

[austingal]

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@Anonymous wrote:

@austingal.... Nice call on the NFCU. I am eligible for membership, but never joined up.... until tonight! I opened a checking and savings and funded them witha small amount to get started! 

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Glad to hear that you are eligible for membership. I love NFCU. At a time when I had poor credit and had not had any credit cards at all in 5 years, they approved me for their $500 secured card. At the time, Discover wouldn't even approve me for a secured card.

That $500 secured card became unsecured after one year (although I hear they may be unsecuring sooner nowadays) and they gave me my $500 deposit back into my checking account. Since the card unsecured they have given me CLIs without my asking to where my credit limit is now $3000.

Also the card has a good interest rate for a rebuilder card and it is a rewards card.

When I signed up I joined online and over the phone because the nearest NFCU location to me was nearly and hour and a half away. Last year they opened a branch that is 20 - 25 minutes away from me.

[Anonymous]

OK, I follwed everyone's advice with a mix of conventional wisdom, a pinch of math, and some blind hope, and I pulled the trigger to be removed as an authorized user on my wife's 97% utilization Chase Slate. It hate to lose the 8 years of account age and perfect payment, but that utilization is just oppressive at the moment.

So once all the reporting all catches up, my active revolving account situation will look like this:

My own Credit One Platinum that is 3 years old with $1000 limit, less than 10% utilization, and perfect payment history.

My own Capital One Platinum that is 2 months old with a $750 limit, 0% utilization, and perfect payment history.

Authorized User on a Synchrony Master Card that is 4 years old, with $6000 limit, 0% utilization, perfect payment history.

So I will be reporting less than 5% total utilization and I will no longer have any card over 10% utilization.

If this helps once that all shakes out, I will try for a NFCU card and set up camp in the garden!

Let's see how it goes! Thanks again!

[RobertEG]

There was no intent to imply that having an AU on your report was in any way an attempt to pull a fast one.

Adding of AU accounts is a totally legit and acceptable practice.

The intent was to raise the issue that creditors realize that AU accounts do not reflect your personal history, and they can choose to ignore them in their credit determinations.  Yes, you still get a score, but they realize that the score is not a reflection only of your own history/risk analysis if it is based in part on accounts that are not your own.

Just as FICO likes to see at multiple revolving accounts, a creditor may also wish, as part of their manual review, to see multiple revolving account histories, and can choose to deny new credit, regardless of score, if their determination mandates multiple revolving accounts for their evaluation and your only revolving is an AU.

[Anonymous]

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@RobertEG wrote:

There was no intent to imply that having an AU on your report was in any way an attempt to pull a fast one.

Adding of AU accounts is a totally legit and acceptable practice.

The intent was to raise the issue that creditors realize that AU accounts do not reflect your personal history, and they can choose to ignore them in their credit determinations.  Yes, you still get a score, but they realize that the score is not a reflection only of your own history/risk analysis if it is based in part on accounts that are not your own.

Just as FICO likes to see at multiple revolving accounts, a creditor may also wish, as part of their manual review, to see multiple revolving account histories, and can choose to deny new credit, regardless of score, if their determination mandates multiple revolving accounts for their evaluation and your only revolving is an AU.

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No worries, I completely understand.

In essence, that is exactly what I am trying to do, get more of my own smaller tradelines in order to build more positive history for when I may need larger loans and such.

That is why I was wondering if removing a very very high utilization would be beneficial even though the account is seasoned and has a perfect payment history.