Ok... so I know Utilization makes up a big chunk of your fico score. How is that calculated?
Is it percent utilization across all tradelines?
- i.e. you have 10000 in CL, you owe 3000 across all cards so your Utilization is 30 percent)
Or is it utilization for each trade line?
- you have one card with a 500 CL that is at 100 percent utilization and a 5000 CL tradeline that is at 0 then then utilization 50 percent -- i.e. (100 percent + 0 percent)/2 )
Thanks in advance!
Fico scores util for both aggregate and individual -- though aggregate tends to have a greater effect.
Aggregate:
(Total Balance Across All Cards / Total Credit Limit Across All Cards) * 100
Individual:
(Individual Card Balance / Individual Card Limit) * 100
Utilization Thresholds for scoring (red is too high) - both aggregate and individual:
88.9%, 68.9%, 48.9%, 28.9%, 8.9%
Best practice for scoring purposes is to keep aggregate below 8.9% and individual below 28.9%.
Number of cards reporting a balance is also a thing that affects scoring --- 1/3 or less of all cards with a balance is ideal.
Excellent explanation! Thank you!
Do closed cards with balances reporting (and payments being made -- not charged off) count just the same as open cards?
Again, thank you for such an easy to understand answer!
@designated_knitter wrote:Excellent explanation! Thank you!
Do closed cards with balances reporting (and payments being made -- not charged off) count just the same as open cards?
Again, thank you for such an easy to understand answer!
You're welcome!
Yes. Closed cards with a balance count also (and I believe their credit limits count, so util will would be calculated the same as an open card).
As for charge-offs with a balance (just as an FYI) - they count as over 100% util because their credit limit is $0.
Once again, thank you! If you aren't already and are looking for a career change, might I suggest becoming a math teacher!
Cheers!
@designated_knitter wrote:Once again, thank you! If you aren't already and are looking for a career change, might I suggest becoming a math teacher!
Cheers!
LMAO
-- thanks but no. Math is one of the most difficult things to teach (I tutored my nephew and he's lucky I love him) -- I think i'd lose my mind before the end of my first school semester!