Equifax FICO decreased 15 points by 12% credit usage?

[Tufts]

So I had just signed up for myfico.com, before not knowing anything about how credit scores work. With that said I always used my credit card to it's full limit of $1,000.

Now my credit score decreased by 15 points by usage of 0% to 12%? How is that even possible when I used to use my credit limit up to 99% without any effect on my credit?

Also score watch alerts says '2 of your accounts reported balance increases' but these 2 accounts are exactly the same. Same card. Could this credit drop be a mistake?

[kjm79]

It's possible that something else caused the drop but didn't trigger an alert.  A new report would have to be pulled to be certain.  Some credit profiles are very sensitive to utilization increases and large drops can occur from letting a somewhat insignificant util % report.  Thin files have this issues, people with higher scores, just a couple of examples.  The consensus is to allow only one card report a balance between 1-9% of the utilization for optimum scoring potential.  Playing with 1-9% helps you find your credit "sweet spot".

You more than likely received the two alerts because of how you have your settings set under the SW.  I bet one alert was a balance increase in $'s and the other was probably a % increase.  You can change your settings to disable one or the other, or change them to higher thresholds, this is up to.  It's not being double counted or anything like that. 

[LisaPA]

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@Tufts wrote:

So I had just signed up for myfico.com, before not knowing anything about how credit scores work. With that said I always used my credit card to it's full limit of $1,000.

Now my credit score decreased by 15 points by usage of 0% to 12%? How is that even possible when I used to use my credit limit up to 99% without any effect on my credit?

Also score watch alerts says '2 of your accounts reported balance increases' but these 2 accounts are exactly the same. Same card. Could this credit drop be a mistake?

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Tufts, I just want to point out that if you weren't tracking your score before you can't know if using your limit to 99% in the past didn't affect your credit. I'd be surprised if that were true, because high utilization is a big negative on your score. Now, if you mean you ran it up to 99% and paid it off before the statement cut, then it wouldn't affect your score, because only what's on your card when the statement cuts counts in your score.

[Tufts]

Ahh.. Makes plenty of sense now. Thanks a bunch for your help, this forum is so helpful!

[gsxraddict]

It doesn't matter in the long run, because the score will recalculate every month they are re-reported; try to let it report to about 30-35% next month.

That seems to be the ultimate credit to debt ration for positive fico impact.

[MarineVietVet]

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@gsxraddict wrote:

It doesn't matter in the long run, because the score will recalculate every month they are re-reported; try to let it report to about 30-35% next month.

That seems to be the ultimate credit to debt ration for positive fico impact.

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Hi there.

I'm not sure where you got that information but I'm almost certain it wasn't here

Everyone's situation is different and there is no one size fits all approach to this but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

[gsxraddict]

If banks are going to loan you money, they want to see that you will use it, they are in the business to make money; don't think that Fair Issacs and the banks don't work together. Banks don't want to see someone who pays their cards off every month, that's why a utilization score close to 30% is more ideal.

I was told this information from someone who works with a company involved in FICO 8; I don't know him personally but we had the conversation once in an airport in Dubai. 

Upon my previous statement you can take that with a grain of salt, since there is no proof, but it should be considered.

I've been watching my utilization for the past 6 months, and it seems to be accurate.

[kjm79]

There can be proof.  Let one and only one card report 30-35% one month.  Then the following month(all else remaining the same) let 1-9% report and see which nets you the bigger score increase. 

FICO doesn't see the kind of use your card gets throughout the month.  FICO has no idea that I spent $5000 on a $3000 limit card by making multiple payments.   You keep the credit card companies happy by using the card.  You keep FICO happy by keeping LOW utilization and not paying late. 

[Tufts]

Thanks for the advice guys! I did a month at keeping my balance below 9% and my score bounced back to normal. 

So fyi, my usage of 12% decreased my score by 15 points. 

My usage after seeing this was 8-9% and my score increased by almost 15pts. 

[marty56]

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@gsxraddict wrote:

If banks are going to loan you money, they want to see that you will use it, they are in the business to make money; don't think that Fair Issacs and the banks don't work together. Banks don't want to see someone who pays their cards off every month, that's why a utilization score close to 30% is more ideal.

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A person can show 100% util each month and yet PIF and thus pay no interest each month.  So % util doesn't equate to profit and from my experience, and most everyone else here, less then 9% util on a single card is the best.