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0% utilization worse than 40-50% utilization.

Valued Contributor

Re: 0% utilization worse than 40-50% utilization.

Utilization must be the most discussed topic on these boards. The reason no cards hurts is because it is a point in time metric. If they all show 0 balance, it is scored utilization wise just as someone who does not ever use credit cards, and will cause a fairly large drop in score. If you show a balance of  <9% of cl on 1/5 or less of your cards you should get the maximum utilization points. It is their rules, we just play the game!





TU fico08=814 11/10/18
EX fico08=796 10/31/18
EQ fico08=813 10/04/18
EX fico09=803 10/03/18
EQ fico bankcard08=831 10/23/18
Garden since 07/02/18
Message 11 of 23
Super Contributor

Re: 0% utilization worse than 40-50% utilization.


sarge12 wrote:

It is their rules, we just play the game


Yes and when you are in the position to control your reported util, you win.

 

Also don't forget that some looking at your CR might prefer 0% util being reported, like a potential employer or mortgage company.

10/15/2018: FICO 838 EQ 827 TU 826 EX
Message 12 of 23
Super Contributor

Re: 0% utilization worse than 40-50% utilization.


pipeguy wrote:

If I misread your intent, my bad....


It's all good.  I took your reply as if I were one of the people on here posting another "I don't get why my scores dropped when I paid off all my CC's" when I was simply making a comparison between paying off CC's and raising utilization... both of which are known factors to adversely impact scoring.

 

If I didn't have relatively high credit lines, I'd love to test what raising utilization from 1% to 90%+ would do.  If going from 1% to almost 50% means 3 lost points for me, maybe 1% to 90% only means 10 or so, who knows... but if that's the case, I find it quite amusing (and ridiculous to some extent) that taking utilization from "ideal" to "maxed out horrible" would result in less of a score drop than going from "ideal" to no balances at the same point in time.

Message 13 of 23
Frequent Contributor

Re: 0% utilization worse than 40-50% utilization.

I don't know.  If I had an auto repair shop and I used algorithms to score potential customers, the guy with the old clunker would be scored VERY high because I know he's money in the bank for me.  The guy with the shiny new Accord gets me what, $45 bucks every 4 months for an oil change?  No one would doubt that a shiny new Accord beats an old clunker (or whatever shiny new car fits the taste), however for the guy who makes money fixing them, Accords are the worst thing on the planet. 

 

I think 27 years in business has me a little jaded Smiley Very Happy

FICO 8:  EQ:687  TU:728  EX:735
Message 14 of 23
Established Contributor

Re: 0% utilization worse than 40-50% utilization.


BrutalBodyShots wrote:

I can understand that from the perspective of the creditor, but we're talking FICO scores here which aren't designed by the creditor.  Were FICO algorithms designed with creditor profit in mind? 


Well... yeah.

 

Risk-based scoring is all about maximizing profits.

 

Beyond the basic lend/don't lend decision, the whole reason for a score range vs interest rate scale is to maximize profits at ALL risk levels.

 

Ensuring creditor profit is literally the reason credit score models exist, FICO and otherwise.

EQ8:843 TU8:840 EX8:850 EQ9:850 TU9:850 EX9:850 EQ5:774 TU4:791 EX2:809 - 2018-11-07
Message 15 of 23
Super Contributor

Re: 0% utilization worse than 40-50% utilization.

Right, but I was writing that in reference to an above post which suggests that "less" risk factored data may be scored as "more" risky in order to be more profitable for creditors.

 

To me, that just seems counter productive.

Message 16 of 23
Established Contributor

Re: 0% utilization worse than 40-50% utilization.

I don't think profit is really tied to fico scoring, at least not directly. After all the most profitable customers are the ones carrying large bals with high interest only paying the min. It's up to banks to decide how much they are willing to risk on those types of customers. Fico simply gives the probability of loss based on comparative data.
Message 17 of 23
Community Leader
Super Contributor

Re: 0% utilization worse than 40-50% utilization.

OpenG and BBS are on the mark, as far I know.  Although it's quite possible that FICO may make specialized products for lenders that attempt to assess how profitable a person might be (e.g. how  likely is the person to carry a large balance on a CC and pay a lot of interest) the basic score we are all familiar with does not do that.

 

It's a measure of one thing: the probability that a person will be become "severely delinquent" on one or more accounts in the next X months.  I think SD is defined as 90 days or more overdue and the projected timeframe is 18 months.  Here's an article on it, which I found by googling What does your credit score measure?:

 

https://www.savvyoncredit.com/credit-score-measure/

 

ThomThumb or others may be able to reference a white paper that gives the actual specifics for what FICO 8 is attempting to predict.  But I think it is something like that.  Basically, how likely is the person to get into serious trouble in the fairly near future.  Not how likely is the person to make us money.  

Message 18 of 23
Valued Contributor

Re: 0% utilization worse than 40-50% utilization.

Here is what Fico said regarding Fico 8 score models:

http://www.fico.com/landing/Webinar_PDFs/Get_the_Benefits_Now.pdf

http://www.fico.com/en/wp-content/secure_upload/FICO_8_Validation_Results_Mortgage_2632FS.pdf

 

Here's an article on Fico 8 mortgage that Fico has been trying to push as a replacement for Classic Fico 8.

http://cashmoneylife.com/fico-8-mortgage-score-could-make-it-harder-to-get-approved/

 

... And if you are interested in a deep dive beyond Fico, check out the following

https://www.teamupturn.com/static/files/Knowing_the_Score_Oct_2014_v1_1.pdf

 

Delinquency "risk rate" has been a primary focus for Fico scoring (below is from EQ Scorepower) but that appears to have broadened with Fico 08.

 

 EQ Fico 04 Mortgage .jpg

 

 

Fico 8: .......EQ 850 TU 850 EX 850
Fico 9: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
VS 3.0:...... EQ 835 TU 835 EX 835
Fico 8 BC:. EQ 892 TU 900 EX 900
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 19 of 23
Valued Contributor

Re: 0% utilization worse than 40-50% utilization.


Thomas_Thumb wrote:

Here is what Fico said regarding Fico 8 score models:

http://www.fico.com/landing/Webinar_PDFs/Get_the_Benefits_Now.pdf

http://www.fico.com/en/wp-content/secure_upload/FICO_8_Validation_Results_Mortgage_2632FS.pdf

 

Here's an article on Fico 8 mortgage that Fico has been trying to push as a replacement for Classic Fico 8.

http://cashmoneylife.com/fico-8-mortgage-score-could-make-it-harder-to-get-approved/

 

... And if you are interested in a deep dive beyond Fico, check out the following

https://www.teamupturn.com/static/files/Knowing_the_Score_Oct_2014_v1_1.pdf

 

Delinquency "risk rate" has been a primary focus for Fico scoring (below is from EQ Scorepower) but that appears to have broadened with Fico 08.

 

EQ Fico 04 Mortgage .jpg

 


The main difference between my profile and yours is you have went 5 years since last new account....coming to join you with 850's across the board...just need to stay in the garden.





TU fico08=814 11/10/18
EX fico08=796 10/31/18
EQ fico08=813 10/04/18
EX fico09=803 10/03/18
EQ fico bankcard08=831 10/23/18
Garden since 07/02/18
Message 20 of 23