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Best way to pay on a credit card

Super Contributor

Re: Best way to pay on a credit card


@NRB525 wrote:
The king of impact to FICO score is paying on time. Everything else is a choice how to use credit.

That's not what we're talking about here.  We're talking about a specific scoring factor, revolving utilization and how going from a best to worst case scanario with it can constitute a 70-90 point change in scores.  Going from best to worst here only involves a reported balance change of around $165 which is of course quite insignificant when someone is using their card naturally.  Your suggestion that the OPs score may be only impacted around 10 points based on this is way off base.

 

When you're talking about a profile that's in bad place with respect to the largest sector of the FICO pie, the last thing you want is the [close] second slice of the FICO pie to be in a bad place as well.  I'm quite certain that the OP or anyone for that matter would much rather seeing their scores 70-90 points higher, especially if their scores are already in a less than favorable spot.

Message 31 of 33
Super Contributor

Re: Best way to pay on a credit card

OP is in a good space to play with the scores, and check the Discover statement to see how things go.

I am of the opinion that not only multiple instances of a particular effect on scores sees diminished impact, but when lates and similar payment issues are on, the effect of other parts of score impact are less. Utilization being less impactful. 10 points is probably too light. 70 seems excessive in this case.
High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812

Delta Reserve and CSP Jan 2018, no more 5/24 worries... unless new Chase Marriott/SPG replacement is enticing...meh, turns out not. [unless a 100k points SPG Luxury Upgrade appears... well lookie here...]
Message 32 of 33
Super Contributor

Re: Best way to pay on a credit card

I guess we can agree to disagree on that.

I've had the pleasure of possessing both a filthy report and a squeaky clean report in the last year and a half or so and can't say I noticed much of a difference if any regarding utilization changes regardless of which score card I was assigned. Granted I never went from ideal to maxed out or anything, but proportionally the changes were similar. I also possessed dirty and clean scorecards at the same time and aside from my dirty scorecard not caring about number of accounts with a balance there wasn't really a difference.

When you look at the FICO scores of someone that's got just payment history issues (but not utilization) OR just utilization issues (but not payment history) you'll often find scores in the (say) 600-700 range. When you find someone in the 500-600 range, 9 times out of 10 they have both issues (2/3 of the FICO pie) going on. To me, that is suggestive that the second issue is "worth" nearly just as many points as the first. I haven't seen examples of dramatically diminishing returns across different FICO pie sectors.

If there's someone out there that had a FICO score of (say) 650 when their utilization was ideal but payment history was bad and they then tanked their utilization to maxed out proportions (individual AND aggregate) and only saw a score drop to 620-630 or so, I'd love to hear from them. My guess is such a person would find themselves around 570-580, give or take.
Message 33 of 33