@SouthJamaica wrote:
@Thomas_Thumb wrote:
@SouthJamaica wrote:
@Anonymous wrote:
@SouthJamaicaWell I definitely appreciate the DPs, that’s something I’ve been wondering about for awhile. What other “common wisdom” about utilization have you found to be incorrect?Too many examples, I could be here all day trying to locate them, but here are some of the more respected ones:
[B] "9-29% utlization: subtract 10 points
29%-49% aggregate utilization: subtract 10 points
49%-69% aggregate utilization: subtract 10 point
69%-89% aggregate utilization: subtract 20 points
89%-99.9% aggregate utilization: subtract 20 points
100% or higher aggregate utilization: subtract 20 points"
[C]
- Individual card with 29-49% utilization: subtract 5 points (multiply by number of cards with utilization/total number of cards)
- Individual card with 49%-69% utilization: subtract 5 points (multiply by number of cards with utilization/total number of cards)
- Individual card with 69%-89% utilization: subtract 5 points (multiply by number of cards with utilization/total number of cards)
- Individual card with 89%-99.9% utilization: subtract 10 points (multiply by number of cards with utilization/total number of cards)
- Individual card with 100%+ overlimit utilization: subtract 10 points (multiply by number of cards with utilization/total number of cards)
[D]
i. The major recognized Aggregate revolving utilization thresholds occur at 9%, 29%, 49%, 69%, 89%, 100% (Some scorecards may also have lower thresholds.)
ii. The major recognized Individual revolving utilization thresholds occur at 29%, 49%, 69%, 89%, 100% (Some scorecards may also have lower thresholds.)
[E]
1) Total utilization breakpoints: 9%, 29%, 49%, 69%, 89%
2) Individual utilization breakpoints: 29%, 49%, 69%, 89%
Also, I question the utility of this chart. I think it could be quite misleading:
In my experience there are just a few "well defined" breakpoints in revolving utilization -- 29% and 49% in individual account utilization.
The rest of the "collective wisdom" (or madness of crowds) is conjecture.
I actually dispelled that, to my own satisfaction, months ago
This year, unfortunately, has been my opportunity to learn about high utilization
Which is why I'm not happy with much of the wrong 'common wisdom' that's been bandied about suggesting 'acceptable' utilization levels which are in fact hurting people's scores
@SouthJamaica, As always .. Great DP's .. Thank You
The revolving utilization "formulas" (B&C) which state crossing certain thresholds yield specific point gains or losses are misguided and highly inaccurate. Not all thresholds have equal impact and individual profiles certainly experience widely diverging results. Very bad info there which is a disservice IMO.
Fico reason statements are pretty clear in stating absolute dollar amount of revolving debt is a scoring factor. Therefore, unless the cards are rather low limit, elevated card utilizations on multiple cards are likely to trigger scoring penalties associated with an absolute dollar amount.
My experience is revolving debt in absolute dollar terms can impact score. I had a relatively low limit BBY store card and could report rather high utilization levels with no change in score. Later, after credit limit was increased on this and other cards, I realized a score drop even though card utilization was lower and aggregare utilization was essentially the same. See example below.
A) I reported a balance of $3202 on BBY when the card CL was $4500 (71% utilization) - no drop in any Fico 8 scores. Aggregate balance around $5200. All remained at 850.
b) Later I reported a balance of $7811 on the BBY card when CL was $12,500 (62% utilization). TU Fico 8 dropped 5 points, no change in other Fico 8 scores. Aggregate balance around $9400.
Great data point. Thank you. Certainly does support theory that absolute dollar amount, on an individual account, is an additional scoring factor in FICO 8.
The above (TU Fico 8 dropping to 845 or sometimes 848 while EX and EQ scores holds 850) has happened on multiple occasions. Sometimes highest individual card utilization never goes above 20%. Aggregate utilization always under 9%. My conclusion was I must be crossing over some absolute revolving debt threshold in the $5k to $6k rangewhere the TU Fico 8 penalty exceeded my available buffer.
Personnally, I think the utilization table is a VERY good tool and support its use wholeheartedly along the threshold guidelines as defined. I have used those levels along with #cards reporting balances to provide stepwise improvement plans to forum members with low scores due to high utilization. Subsequently reported score improvements were realized with drops in utilization and cards reporting as anticipated.
Have you ever personally experienced > 9% aggregate utilization without losing points? I haven't.
Here is a link to one such example (mortgage Ficos):
https://ficoforums.myfico.com/t5/Understanding-FICO-Scoring/mortgage-score-Bump/td-p/5940138/page/2#
That's a good example of how lower aggregate utilization and more zero balances will increase one's mortgage scores. But I don't see how the example establishes any particular breakpoints.
Although I have not personnally experienced a score drop associated with an elevated individual card utilization,
Which brings us back to the subject of this thread. I had in the past detected a FICO 8 score drop with individual utilization at 30% or higher, and again with a second card hitting 30%. The other day I experienced similar additional score drops when those same two cards hit 50+.
many others have - particularly at or around the 49% level. Likewise, many have experienced score shifts when aggregate utilization at/around the 9% level.
I have never experienced, or seen evidence, of a 9% threshold in aggregate utilization, although I know it is "common knowledge" in this forum that such a breakpoint exists. I am as guilty as anyone of passing this meme along, advising folks to keep aggregate utilization at 9% or less... until I finally woke up and realized that if such a threshold had existed, why wouldn't I have experienced it? The reality of my profile for the past 5 1/2 years has been that the higher my utilization, the lower the FICO 8 scores, except perhaps in the 1 to 3 % range.
For the average Joe with under $100k in total CL and "limited" cards (say under 10), the defined thresholds in the utilization table has proven to be very helpful as a guide.
Are you referring to the utilization table which was posted a few months ago? If so, I'm sure there's no evidence that it has proven to be very helpful to the "average Joe"
The best test for individual card utilization as an attribute is to step up utilization on a low limit card on a profile having a high aggregate CL. Then step up the balance reporting on this card only with all others at zero. This approach eliminates influence of changes in # cards reporting balances, potential impact of crossing absolute $ thresholds and increases in aggregate utilization. Some testing along these lines has been done. Here is another link to an old discussion:
As always, it's a breath of fresh air to get the benefit of your careful, well reasoned thoughts.
Awesome information!
I'd be interested to see how my score changes once I get all of my cards indivually below 50%. I currently have 5 cards over 50% and I was just able to get my overall down to 27%. I did see a slight increase once the overall went under 30%, but not nearly as much as I was expecting/hoping for.
Starting Score: 667
@bfranklin825 wrote:I'd be interested to see how my score changes once I get all of my cards indivually below 50%. I currently have 5 cards over 50% and I was just able to get my overall down to 27%. I did see a slight increase once the overall went under 30%, but not nearly as much as I was expecting/hoping for.
I predict you'll see a solid increase in your FICO 8's and 9's once you have all individual accounts at 48% or less. Even one by one you will probably see some gains along the way.
And then more increases as you start lowering them to 28% of less.
