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Distribution of Utilization

Regular Contributor

Distribution of Utilization

So it's fairly common knowledge on credit repair forums that letting 1-9% utilization of your total overall credit limits report on one card results in optimal scoring. But  is anyone aware of a point where that utilization affects you negatively due to the limit on that card that reports it?


Let's say I have two cards, one with a $10K CL and one with a $1K CL. Let's use 2% overall utilization as optimal scoring for this example:


Total limits = $10,000 + $1000 = $11,000 * .02 = $220 overall reporting for optimal scoring, and it is on the $1K card. So that individual card has 22% utilization with 2% overall. Would/should this be scored any differently than if the $220 was reporting on the $10k card instead (2.2% card/2% overall)?


Now let's use a card with a $10k CL along with a card with a $300 CL:


Total limits = $10,000 + 300 = $10,200 * .02 = $206 overall reporting for optimal scoring, and it is all on the $300 card. So that card has 69% utilization with 2% overall. Now this to me would seem a bit worse because of high utilization of an individual line, would that be correct?


To me there has to be a crossover point where approaching high utilization on an individual card starts to negatively affect your scores as well, despite sticking to the 1-9% overall rule. The obvious answer is to carry your overall utilization balance on the card with the highest limit to avoid this whole mental exercise in the first place I suppose. Smiley Very Happy Thoughts?

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Epic Contributor

Re: Distribution of Utilization

There are two types of utilization used in your FICO score.  Individual and aggregate (overall),  Each card is scored then the overall is scored.


If you have high utilization on one card you will be dinged for that.  If your overall is fine you will not receive an additional ding.


So, yes, it could matter where you use your higher balance.



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