Am I being double penalized for utilization?

[KatieKatie]

Hi, on my last report my utilization was pretty high at 39%. Ironically, Equifax and Experian classified this as Good in the amount of debt factor in the score analysis and Transunion classified it as Very Good. All 3 bureaus note, “You’ve made heavy use of your available revolving credit”; however Equifax also noted, “The amount owed on your revolving and/or open-ended accounts is too high.”

Does this mean I’m being penalized for both the utilization and the actual balance irrespective of utilization with Equifax?

My Equifax score is my lowest with a delta of 31 points to Transunion and 34 points to Experian. Given Equifax is the only one reporting this balance related reason code and my reports are identical I’m curious if the score difference is because of this factor. When I simulate score changes it shows that Equifax will actually be the highest of all 3, with obviously the largest gains, when I pay down the majority of my credit card debt. I know this is only directionally relevant and not guaranteed but I still found it interesting.

Incidentally I did just that on Friday, paying down almost all of my revolving debt to less than 9% as I gear up for my mortgage so I should know soon enough if this holds true.

[Revelate]

All the green things are fluff when it comes to FICO 8.

So to answer the question: no, but you are being dinged somewhat.

[Anonymous]

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@KatieKatie wrote:

Incidentally I did just that on Friday, paying down almost all of my revolving debt to less than 9% as I gear up for my mortgage so I should know soon enough if this holds true.

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Mortgage = different models

The thing to keep in mind for a mortgage is to get all of your balances / monthly payments down to $0 if possible to get the best approval ceiling possible.  They will calculate your DTI based on the minimum payments for each account and thus lower your borrowing ability in the end.

I wouldn't worry about what the CMS / simulators show since what matters are your actual results prior to pulling the trigger on the application.  It's not uncommon to see a 30 point spread between CRA's anyway.  That's why when you do a mortgage they use the middle score to account for discrepancies.

[Anonymous]

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@KatieKatie wrote:
Hi, on my last report my utilization was pretty high at 39%. Ironically, Equifax and Experian classified this as Good in the amount of debt factor in the score analysis and Transunion classified it as Very Good. All 3 bureaus note, “You’ve made heavy use of your available revolving credit”; however Equifax also noted, “The amount owed on your revolving and/or open-ended accounts is too high.”

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There's no such thing is "good" and "very good" or any other so called rating.  Those are just fluff words and an attempt to dumb things down.  What matters are not rating words, but actual numbers.  Any utilization above 8.9% reported is going to result in a score ding and can cause the negative reason codes that you're seeing to appear.  The next threshold point is at 28.9% after that followed by 48.9%.  You've crossed 2 thresholds, meaning you've got 2 opportunities there to cross each and pick up points.  Whatever words you want to assign to them is fine and no less meaningful than the fluff words your CMS is saying.  I'm critical and always like best-case scenarios, so for me utilization below 8.9% is good and above 8.9% is bad if I were to assign words to them... but that's me being critical of my own utilization.

[KatieKatie]

Thank you all for your feedback.

To clarify DTI is the least of my worries, in fact it’s not a concern at all.

I mentioned that the scoring analysis showed good and very good for utilization and prefaced my comment with “ironically” because I know it’s not good at all and certainly not very good. I will be AZEO with about 5% reporting after all is updated.

My inquiry was primarily to determine if I’m getting a double hit on Equifax because of the two negative reason codes the first related to utilization and the second related to the actual balance. My hope was that I was and that accounted for the disparity in my Equifax score because it would be remedied when my new balances update. Essentially I was wondering if this was an additional point in time penalty specific to Equifax and perhaps my Equifax 8 score would fall in line with my other score when my utilization/balances updated.

One other unrelated point in case it’s helpful to anyone, NFCU and AmEx we’re both willing to push an update to the CBs mid-cycle. I asked not expecting a yes, so it was a pleasant surprise. I managed to let my NORDSTROM’s stmt cut with a $200 balance because I ordered shoes without realizing the point in the cycle I was in, they agreed to do the same. Of course Chase updated the day after I paid in full. All my others typically report by the 12th at the latest so I was ok with that.

Thanks again!

[Anonymous]

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@KatieKatie wrote:

My inquiry was primarily to determine if I’m getting a double hit on Equifax because of the two negative reason codes the first related to utilization and the second related to the actual balance.

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The presence of a negative reason statement means that it's impacting your FICO scores by at least 1 point.  I think it's good to keep this in mind, because just because a reason code is there doesn't mean it's causing a big score loss.  Do you know your 4 negative reason statements and if so, what are they in order?

There are multiple negative reason statements that can be generated for a single adverse factor.  For example, someone may have a single 90 day late payment on just 1 account on their CR with everything else clean.  They may get the negative reason statement "major delinquency present..." and also another that states "too few accounts paid as agreed" when both of those statements pertain to the same (single) item.

[Anonymous]

Just out of curiosity, you were talking about FICO eight right OP? Or were you talking about mortgage scores?

[KatieKatie]

@BBS I only see 3 and for Equifax the last two were the ones I shared the first one however for all 3 is, “You have one or more accounts showing missed payments or derogatory indicators.” Nothing will fix this one except time and distance, although I continue to try to work with DCU to remove it as a courtesy.

[KatieKatie]

@Birdman 7 - Yes, I was referring to FICO 8

[Anonymous]

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@KatieKatie wrote:
@BBS I only see 3 and for Equifax the last two were the ones I shared the first one however for all 3 is, “You have one or more accounts showing missed payments or derogatory indicators.” Nothing will fix this one except time and distance, although I continue to try to work with DCU to remove it as a courtesy.

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Gotcha.  That makes sense, you're first negative reason statement, as they go in order of score impact severity and anything payment history-related like negative information is going to land you that statement first.