Credit score decrease

[Anonymous]

I'm trying to understand why my Experian score drop 10 points with $57 CC increase. My CU is at 22%. That's a huge point decrease for a small increase amount and low CU. I have since paid down that $57.

[calyx]

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@Anonymous wrote:
I'm trying to understand why my Experian score drop 10 points with $57 CC increase. My CU is at 22%. That's a huge point decrease for a small increase amount and low CU. I have since paid down that $57.

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8.9% is typically considered ideal - was your CC under 9% before the increase?

[Anonymous]

No it’s been maintained at a utilization of 22%. Now I’m confused because I thought CU was supposed to be good if it’s kept at 30% or under. When I have paid off my CC in the past my fico score decreases. So I’ve kept it at 22%.

[Anonymous]

8.9% is optimal scoring 

if you have no other balances and pay it to $0 then yes, you lose points for not using credit.

30% is just the advice websites recommend because they don't know better.  

[Anonymous]

Thanks so much for the correct info!

[Anonymous]

Clarification:

8.9% is the threshold for aggregate utilization.  For individual cards it is advised to keep balances at 28.9% or lower (not 30%).

OP, how many credit cards do you currently have, and how many are reporting balances?  Also, what are the credit limit(s) for your card(s)?

[SouthJamaica]

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@Anonymous wrote:
I'm trying to understand why my Experian score drop 10 points with $57 CC increase. My CU is at 22%. That's a huge point decrease for a small increase amount and low CU. I have since paid down that $57.

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We would need to know what your limits and balances are to advise  you. I couldn't really understand the facts from your description.

There is almost no scenario under which a $57 increase in utilization, taking you to an aggregate of 22% utilization, would cause a score decrease.

[Anonymous]

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@Anonymous wrote:

Clarification:

8.9% is the threshold for aggregate utilization.  For individual cards it is advised to keep balances at 28.9% or lower (not 30%).

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I prefer to ignore the aggregate option... It's much easier to keep all cards under 8.9% instead of floating higher balances on particular cards and then having to calculate 2 different sets of numbers.  

If I did want to float something for a couple of months just figuring out the amount vs balance   Showing restraint on spending towards the limit gets rewarded with CLI's when you ask for them.  Your scores more likely to be consistent if a lender pulls the rug out from under you for some reason and you don't have a spike in UTIL because you lost a TL.  

When I app'd for Uber I got instapproved and gave them a call a couple of mins later to bump it to 25K and the CA on the phone mentioned my spending patterns and approved it on the spot for 2.5X what the computer approved for.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Clarification:

8.9% is the threshold for aggregate utilization.  For individual cards it is advised to keep balances at 28.9% or lower (not 30%).

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I prefer to ignore the aggregate option... It's much easier to keep all cards under 8.9% instead of floating higher balances on particular cards and then having to calculate 2 different sets of numbers.  

If I did want to float something for a couple of months just figuring out the amount vs balance   Showing restraint on spending towards the limit gets rewarded with CLI's when you ask for them.  Your scores more likely to be consistent if a lender pulls the rug out from under you for some reason and you don't have a spike in UTIL because you lost a TL.  

When I app'd for Uber I got instapproved and gave them a call a couple of mins later to bump it to 25K and the CA on the phone mentioned my spending patterns and approved it on the spot for 2.5X what the computer approved for.

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In an ideal world I'd agree with just keeping each card under 8.9% utilization but that's not always possible unless you have very high limits on all your cards, and the ability to pay in full at all times.  And sometimes it just makes financial/strategic sense to exceed 8.9% on an individual card.  For example, in January I opened a Platinum Visa card with Navy Federal.  Since it is a $0 transfer fee, 0% APR card I consolidated all my other balances to that one card and I've used it as my AZEO card since; all my other cards report $0 balances each month. 

The balance transfers caused the card's utilization to initially spike to 78% but its now paid down to 25%.  While the individual utilization on that card was less than ideal at first, my aggregate utilization never exceeded 4% so my scores are optimized for FICO purposes as I stayed well below the 8.9% aggregate utilization threshold.  That's the only card I carry a balance on, and since it doesn't cost me anything I can pay it down at my own pace until the BT offer expires, while investing the funds that could pay it off elsewhere (A checking account with a local CU that pays 7.5% APR is one such repository).

[Anonymous]

There's always an exception to the rule since life doesn't care about your FICO.

7.5% APY.... up to what amount?  Usually they have a cap of like $1K on those teaser rates.  I have a checking account that pays 2.5% up to 50K though that comes in useful for covering the electric bill every month.