1% Credit Usage Provides Best Credit Score?

[Anonymous]

It seems the credit score increased each time I decreased debt from 9% usage to 1%, where 1% provides the best score.

[Anonymous]

Yup, this is a common discussion point and observation that many have made.

[disdreamin]

Personally it doesn't seem to matter how much or how little I let report on my credit cards. I've had a single card at ~20% util with 75% of cards reporting balances without a noticeable change in my scores. Perhaps aggregate being low helps, but that's also been >1% without an issue. I think it probably depends a lot on the entire file, not just that one factor.

[Thomas_Thumb]

I generally advise under 9% utilization in aggregate - I have allowed this to float between 1% and 5% with no effect on score. Inverse did report a few points increase when dropping aggregate from  7% to 9% to under 6% - it was less than 5 points.

Utilization on an individual card basis is less critical and I have let 51% and 75% report on a card with zero point change in Fico 08. Realizing that my profile/scorecard likely behaves differently than others based on poster data, I think it is prudent to stay under 30% on an individual card basis ... and 6% on an aggregated basis.

For example, If you have 5 to 8 cards and only allow one to report a balance, I believe it highly unlikely that your score will suffer if you allow the card to report 25% utilization as long as aggregate utilization is under 6% (potentially even up to 9%).

[Anonymous]

I always use myself as an example when discussing how overall utilization can perhaps NOT impact score much.  I dropped my overall utilization from 44% to 5% (or was it 6%?) a few months back.  Prior to the drop (a $3500 revolver payment) I posted a question on here and most replied estimating that I'd see a 10 point increase or so... some said 5 points, some said 20, but the overall average I'd say was about 10.  AT MOST I saw 2-3 points gained across the bureaus from a drop from the 3rd best utilization bucket to the 1st.  I know others have had very different results with this, but I post this as a data point that significant utilization drops are not always huge score boosters.

[SharonLea]

Yes, I've also noticed that 1% is the sweet spot for credit utilization. Usually, I pay off all my balances before my statement closing dates, my credit utilization is reported as zero, and my FICO score is 817. But occasionally, I need to make a small purchase between the time I pay my balance and the time my statement cuts, and the small charge appears on my statement as an unpaid balance. At first I was afraid that with an unpaid balance reported, my FICO score would go down. But actually, when my credit utilization goes from zero to 1% or a few tenths of 1%, my FICO score increases from 817 to 842. I've noticed this pattern consistently for the past two years.

[JLK93]

1 card reporting a balance of less than 1% will optimize all scoring models.

It all depends on your profile, the scoring model and your current scoring bucket.

For some models, such as FICO 8, uitilization of less than 1% will have diminishing returns.

On some scorecards, FICO 04 is very sensitive to the number of cards reporting and utilization. If you are not interested in FICO 04, and don't care about the few points gained from optimizing scoring models, utilization of 1% will result in diminishing returns.

[masscredit]

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@SharonLea wrote:

Yes, I've also noticed that 1% is the sweet spot for credit utilization. Usually, I pay off all my balances before my statement closing dates, my credit utilization is reported as zero, and my FICO score is 817. But occasionally, I need to make a small purchase between the time I pay my balance and the time my statement cuts, and the small charge appears on my statement as an unpaid balance. At first I was afraid that with an unpaid balance reported, my FICO score would go down. But actually, when my credit utilization goes from zero to 1% or a few tenths of 1%, my FICO score increases from 817 to 842. I've noticed this pattern consistently for the past two years.

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I believe I lost 14 points when I accidently paid off the one card that was supposed to report a balance (the card that I usually use). I got them all back when I went back to one card reporting. Other than that, I always make sure that I at least have one card reporting.

[RonM21]

I haven't been at 1% any time recently. But I know the scores have risen as I've come.down to 6%. I've read and seen like others that 1% is a good number for most people.

[Anonymous]

Yes. Everytime I bring my utilization down to 1% from about 8 or 9% my score gets a boost.