You want to be under 8.9% reported aggregate utilization.
0% utilization, you'll receive penalty points.
Greater than 8.9%, you'll receive penalty points.
50% or more of your cards reporting a balance, you'll receive penalty points.
0% utilization, you'll receive penalty points.
Greater than 8.9%, you'll receive penalty points.
50% or more of your cards reporting a balance, you'll receive penalty points.
To optimize FICO scores, it's recommended to have three revolving credit cards and a installment loan (auto, student, mortgage, SSL).
Hi John, welcome to the forums!
I'm assuming you are tracking one your FICO Mortgage scores and not a Vantage score from a site like Credit Karma.
FICO Mortgage scores are sensitive to the number of cards with a balance. Ideally, one would have no more than 1/3 of their total number of cards report a balance each month. In your case, you only have the one card so 100% of your cards are showing a balance. It seems you are being penalized a few points for that.
Unfortunately, there's not much you can do about that right now since you need to show usage for the lender to evaluate, and you really should not open a new, second credit card account while in the process of seeking a mortgage.
Can you confirm this is a FICO score you are tracking?
I'm assuming you are tracking one your FICO Mortgage scores and not a Vantage score from a site like Credit Karma.
FICO Mortgage scores are sensitive to the number of cards with a balance. Ideally, one would have no more than 1/3 of their total number of cards report a balance each month. In your case, you only have the one card so 100% of your cards are showing a balance. It seems you are being penalized a few points for that.
Unfortunately, there's not much you can do about that right now since you need to show usage for the lender to evaluate, and you really should not open a new, second credit card account while in the process of seeking a mortgage.
Can you confirm this is a FICO score you are tracking?
In addition, for the classic scores, mortgage FICO; it doesn't like 1/3 or more of the cards reporting a balance.
It's also recommended not to open or apply for any credit for 12 months leading up to a mortgage application.
It's also recommended not to open or apply for any credit for 12 months leading up to a mortgage application.
Lenders use EX2, TU4, EQ5.
@Anonymous wrote:Hi,
I opened a secured credit card 18 months ago. This is my first and only card.
I have a credit limit of $200. Never missed a payment.
I understood you needed to be below a 30% utilization rate. And actually, I had a 0% utilization rate for 12 months. My score back then was 697.
But bankers (for mortgage) told me my score was not "usable" because there was no credit history (since I did not use the card).
So, I decided to use the card a little bit.
As soon as I started to use the credit card for $12 (6% utilization ratio on $200), my score dropped 4 pts even though I paid the $12 in time.
I tried again. My credit went from $12 to $22, but my score went down 2 points.
Can someone explain why my score dropped in this case even though I did things the right way?
What should I do to get an excellent score while building credit history?
Thank you
I do not believe your FICO scores would have dropped due to a balance increase from 0 to $12 or a balance increase from $12 to $22.
What 'score' are you talking about?
@Anonymous wrote:Thanks for the answer Thomback.
I actually follow my score on creditkarma.
Does this make a difference?
John
Yes that's a Vantage score, and completely meaningless.