Decreasing your utilization yields NO increase in scores?

[Anonymous]

These posts are truly excellent. I have a similar situation where I dropped my UTI but still unknowingly carried too many small balances, I expect.

So I have 13 accounts, and my scores dropped at the middle of Jan and haven't yet recovered. I'm now guessing It is probably due to the small balances on too many accounts. I had a 38% UTI on Overstock as I bought something for $363 and didn't pay until after the statement cut. But that and another high balance ($1,600 on a $3k card) brought my overall UTI to 24% at the time. Now both balances are 0 and I've added a few accounts to bring down overall UTI, but I still have several small balances as well -- ranging from $8 on Amazon (1%) to $108 on Bloomingdales (13%) and about 5 others, bringing small balances across 6-7 accounts. I thought I should report small balances, but in contrast it looks like the best profile for 13 accounts is to carry balances across only 2 or 3 accounts but each balance should be under 10%? So if my total revolving account limit is $32k, and I should carry a 6-9% balance across 2-3 cards, but no card should also report higher than 9%, I would need to just carry the balance on my higher limit card and the next two highest? For example, if I carry $800 on a $9k card and $290 on a $3.3 limit card and $270 on a $3k card, this formula should bring my scores back up towards their highs? My second question is how to avoid interest charges with this formula?

Appreciate any insight here as my EQ and EX scores are now 40 points off of their highs and I'm desperate to get them back where they were -- onward and upward. Thank you.

[Anonymous]

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@Anonymous wrote:

These posts are truly excellent. I have a similar situation where I dropped my UTI but still unknowingly carried too many small balances, I expect.

So I have 13 accounts, and my scores dropped at the middle of Jan and haven't yet recovered. I'm now guessing It is probably due to the small balances on too many accounts. I had a 38% UTI on Overstock as I bought something for $363 and didn't pay until after the statement cut. But that and another high balance ($1,600 on a $3k card) brought my overall UTI to 24% at the time. Now both balances are 0 and I've added a few accounts to bring down overall UTI, but I still have several small balances as well -- ranging from $8 on Amazon (1%) to $108 on Bloomingdales (13%) and about 5 others, bringing small balances across 6-7 accounts. I thought I should report small balances, but in contrast it looks like the best profile for 13 accounts is to carry balances across only 2 or 3 accounts but each balance should be under 10%? So if my total revolving account limit is $32k, and I should carry a 6-9% balance across 2-3 cards, but no card should also report higher than 9%, I would need to just carry the balance on my higher limit card and the next two highest? For example, if I carry $800 on a $9k card and $290 on a $3.3 limit card and $270 on a $3k card, this formula should bring my scores back up towards their highs? My second question is how to avoid interest charges with this formula?

Appreciate any insight here as my EQ and EX scores are now 40 points off of their highs and I'm desperate to get them back where they were -- onward and upward. Thank you.

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This is EXACTLY what I do.

2-3 accounts CREDIT CARD ACCOUNTS with small balances, each INDIVIDUAL account is under 7% UTILIZATION.  Total UTI is about 3%.

STORE CARDS are PIFd EVERY MONTH before Statement Date.

[StartingOver10]

How to avoid interest? 

Pay off the account every month.  This does not mean that you report zero balance each month. It means that you control your balances reporting. You have the right idea to show a balance on only 2 or 3 cards and zero on the rest.  The amount that you let report is what will determine your utilization.  Once your card reports then pay the balance to zero so no interest is ever paid.  Make sense?

[Anonymous]

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@StartingOver10 wrote:

How to avoid interest? 

Pay off the account every month.  This does not mean that you report zero balance each month. It means that you control your balances reporting. You have the right idea to show a balance on only 2 or 3 cards and zero on the rest.  The amount that you let report is what will determine your utilization.  Once your card reports then pay the balance to zero so no interest is ever paid.  Make sense?

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Now it does! Many thanks!

[bdhu2001]

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@Anonymous wrote:

These posts are truly excellent. I have a similar situation where I dropped my UTI but still unknowingly carried too many small balances, I expect.

So I have 13 accounts, and my scores dropped at the middle of Jan and haven't yet recovered. I'm now guessing It is probably due to the small balances on too many accounts. I had a 38% UTI on Overstock as I bought something for $363 and didn't pay until after the statement cut. But that and another high balance ($1,600 on a $3k card) brought my overall UTI to 24% at the time. Now both balances are 0 and I've added a few accounts to bring down overall UTI, but I still have several small balances as well -- ranging from $8 on Amazon (1%) to $108 on Bloomingdales (13%) and about 5 others, bringing small balances across 6-7 accounts. I thought I should report small balances, but in contrast it looks like the best profile for 13 accounts is to carry balances across only 2 or 3 accounts but each balance should be under 10%? So if my total revolving account limit is $32k, and I should carry a 6-9% balance across 2-3 cards, but no card should also report higher than 9%, I would need to just carry the balance on my higher limit card and the next two highest? For example, if I carry $800 on a $9k card and $290 on a $3.3 limit card and $270 on a $3k card, this formula should bring my scores back up towards their highs? My second question is how to avoid interest charges with this formula?

Appreciate any insight here as my EQ and EX scores are now 40 points off of their highs and I'm desperate to get them back where they were -- onward and upward. Thank you.

---

1. Yes.  The sweet spot is 1-3 cards reporting a balance and each cards with a balance being 9% or less.  You can test it to see which gives you the most points.
2. The formula you listed would have your score recover from the plumet.  Utilization has no memory, but unsure of exactly how much of your score you'll recover as you'd need to be in previous situation.  You've added accounts & have new TL.
3. Interest, on most cards, is based on carrying a balance.  If you PIF the previous months statement balance, and your prevous month's balance did not have a carryover from the month prior to that, you'll pay $0 interest. However, those cards will still report a balance. Thus, make sure the balance you're leaving is less than 9%.

Check your cards to see what your grace period is and be sure to pay in that time frame. 

[Anonymous]

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@bdhu2001 wrote:

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@Anonymous wrote:

These posts are truly excellent. I have a similar situation where I dropped my UTI but still unknowingly carried too many small balances, I expect.

So I have 13 accounts, and my scores dropped at the middle of Jan and haven't yet recovered. I'm now guessing It is probably due to the small balances on too many accounts. I had a 38% UTI on Overstock as I bought something for $363 and didn't pay until after the statement cut. But that and another high balance ($1,600 on a $3k card) brought my overall UTI to 24% at the time. Now both balances are 0 and I've added a few accounts to bring down overall UTI, but I still have several small balances as well -- ranging from $8 on Amazon (1%) to $108 on Bloomingdales (13%) and about 5 others, bringing small balances across 6-7 accounts. I thought I should report small balances, but in contrast it looks like the best profile for 13 accounts is to carry balances across only 2 or 3 accounts but each balance should be under 10%? So if my total revolving account limit is $32k, and I should carry a 6-9% balance across 2-3 cards, but no card should also report higher than 9%, I would need to just carry the balance on my higher limit card and the next two highest? For example, if I carry $800 on a $9k card and $290 on a $3.3 limit card and $270 on a $3k card, this formula should bring my scores back up towards their highs? My second question is how to avoid interest charges with this formula?

Appreciate any insight here as my EQ and EX scores are now 40 points off of their highs and I'm desperate to get them back where they were -- onward and upward. Thank you.

---

1. Yes.  The sweet spot is 1-3 cards reporting a balance and each cards with a balance being 9% or less.  You can test it to see which gives you the most points.
2. The formula you listed would have your score recover from the plumet.  Utilization has no memory, but unsure of exactly how much of your score you'll recover as you'd need to be in previous situation.  You've added accounts & have new TL.
3. Interest, on most cards, is based on carrying a balance.  If you PIF the previous months statement balance, and your prevous month's balance did not have a carryover from the month prior to that, you'll pay $0 interest. However, those cards will still report a balance. Thus, make sure the balance you're leaving is less than 9%.

Check your cards to see what your grace period is and be sure to pay in that time frame. 

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This is very clear, thank you for taking the time to answer each question. I'm going with the plan of 3 bank cards cards carrying a balance, each under 9%. I will then go down to 2 cards, each at 9% the following month. No plans to add any additional cards or INQs until summer when I try for another higher limit prime card if my scores qualify at that time.

One follow-up:  is it imperative that each retail trade line report 0 UTI? I'm happy to PIF with 0 UTI if that is best practice for these type of cards. I noticed that TU reports balance alerts across "All Retail Cards" and other alerts across "All Bank Cards", meaning cumulative balances, where the slightest increase in retail usually drops the score a little, but any reasonable increase in bank card raises the score.

[bdhu2001]

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@Anonymous wrote:

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@bdhu2001 wrote:

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@Anonymous wrote:

These posts are truly excellent. I have a similar situation where I dropped my UTI but still unknowingly carried too many small balances, I expect.

So I have 13 accounts, and my scores dropped at the middle of Jan and haven't yet recovered. I'm now guessing It is probably due to the small balances on too many accounts. I had a 38% UTI on Overstock as I bought something for $363 and didn't pay until after the statement cut. But that and another high balance ($1,600 on a $3k card) brought my overall UTI to 24% at the time. Now both balances are 0 and I've added a few accounts to bring down overall UTI, but I still have several small balances as well -- ranging from $8 on Amazon (1%) to $108 on Bloomingdales (13%) and about 5 others, bringing small balances across 6-7 accounts. I thought I should report small balances, but in contrast it looks like the best profile for 13 accounts is to carry balances across only 2 or 3 accounts but each balance should be under 10%? So if my total revolving account limit is $32k, and I should carry a 6-9% balance across 2-3 cards, but no card should also report higher than 9%, I would need to just carry the balance on my higher limit card and the next two highest? For example, if I carry $800 on a $9k card and $290 on a $3.3 limit card and $270 on a $3k card, this formula should bring my scores back up towards their highs? My second question is how to avoid interest charges with this formula?

Appreciate any insight here as my EQ and EX scores are now 40 points off of their highs and I'm desperate to get them back where they were -- onward and upward. Thank you.

---

1. Yes.  The sweet spot is 1-3 cards reporting a balance and each cards with a balance being 9% or less.  You can test it to see which gives you the most points.
2. The formula you listed would have your score recover from the plumet.  Utilization has no memory, but unsure of exactly how much of your score you'll recover as you'd need to be in previous situation.  You've added accounts & have new TL.
3. Interest, on most cards, is based on carrying a balance.  If you PIF the previous months statement balance, and your prevous month's balance did not have a carryover from the month prior to that, you'll pay $0 interest. However, those cards will still report a balance. Thus, make sure the balance you're leaving is less than 9%.

Check your cards to see what your grace period is and be sure to pay in that time frame. 

---

This is very clear, thank you for taking the time to answer each question. I'm going with the plan of 3 bank cards cards carrying a balance, each under 9%. I will then go down to 2 cards, each at 9% the following month. No plans to add any additional cards or INQs until summer when I try for another higher limit prime card if my scores qualify at that time.

One follow-up:  is it imperative that each retail trade line report 0 UTI? I'm happy to PIF with 0 UTI if that is best practice for these type of cards. I noticed that TU reports balance alerts across "All Retail Cards" and other alerts across "All Bank Cards", meaning cumulative balances, where the slightest increase in retail usually drops the score a little, but any reasonable increase in bank card raises the score.

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It's important that only 1-3 cards report a balance on statement close date.  I use my other cards, PIF (entire balance not just previous month) by due date and don't use card again until after the statement cuts.

For card or cards that I want to report a balance, I simply pay previous month and ensure the balance is below 9%.  I'm usually at 3%, that way even if I use the card before the statement cuts, I'm still below 9%.

However, no one needs to be as weird as me.  I have all my accounts on Mint and log in each morning to be sure nothing has escaped my notice.  Then I pull up my Excel spread sheet to be sure the balances match and that my budget is on target.  When a bill hits my account that's more than my regular payment, I call the utility company and have them go over the charges with me line by line.

I know the company will have an excuse like increased taxes or something, but I just want them to be aware that I'll notice every charge.  My alarm company had the nerve to complain that it was just $2.50.