Credit Card Balances and MyFico Score

[Anonymous]

Hello Fellow members,

Hope you can help me understand as I am very frustrated with the way Fico Score works. I went through a nasty divorce 3 years ago which led me to a bankruptcy chapter 7 which was discharged in 2011 (2 years ago).  Since then, I've tried my hardest to re-build my credit as I am now in a financial position to buy a house. However, my score doens't seem to agree.  I applied for a car loan which I have never been late on (right after bankruptcy), and I have student loans which I have never defaulted on (4 year old loan).  I have a credit card with a $700 limit with First Premier (2 years old) and I also have a secure credit card with Bank of America with a $300 balance limit (I obtained in July 2013 in the hopes it would help my score).  I have not been late in any of my loans or cards OR any of my current living expenses.  I've waited 2 years to be able to have a Fico of 640 so I may apply for a decent loan here in Florida (that's min. score for most lenders).

Now back to my question, EVERYTIME I have a bit of balance of any of my cards (I never go beyond 30% credit limit and I pay them off at beginning of month, but they both report the balances sometime before my payment posts agaisnt account, but still I NEVER GO BEYOND THE 30% card limit). my Fico Score goes down!

I.E. this month I have a $100.00 balance posted in my First Premier ($700 credit limit) and my Fico Score went from 606 to 601!!!!!!!!!!!!!!!!! and it shows that it was because my First Premier had a balance.  OH MY GOD!!! So frustrated.  My Fico doesn't go up and if it does, it goes down SO QUICKLY by the bit of balance that I might SOMETIME report on my cards. HELP!!! what am I doing wrong?????  By the way, that balance is now paid off...but next month, WATCH my score won't go up.

[Anonymous]

Hi and welcome to the forums.

30% utilization is still pretty high.  Even though that percentage is all over the place as being good, in reality, it isn't.  I beleive FICO sees anything over 10% as a negative.

For optimal scoring purposes, let only one card report a balance and the others at 0.  Letting all report balances is not good and having none with a balance is, likewise, not good.

You will need to know when your CCC report to the CRAs, which is normally on the day the statement cuts or within a few days.  Pay one to 0 before the statement cuts to make sure it will be reported as 0.  Have the other one, on or before the statement date, paid down to 9% or under.  Once it reports to the CRAs, pay it off before the due date to avoid interest charges.

Doing it this way should help  you.  Also keep in mind your entire credit profile is considered in your score.

Utilization is the one thing you have complete control over.  It has no memory.  Your score is based entirely on what is on your CR the day a score is received.

[Anonymous]

Thank you very much for your response, very informative.  I was unaware of the 10% max. balance, I was told 30% before,  but now that makes sense and  is a great deal of help to know now!

[Anonymous]

Scoring is frustrating.

Just follow the rule of letting one report a small balance and the other none.  Your score should stop the up and down. 

You can use either card and switch between which one reports the balance. 

Do you have any negatives on your reports?

ETA:  Never mind.   I see the BK.  Is everything showing IIB that was included in the BK and showing a 0 balance?