Hello all,
I have 6 credit cards and I'm wondering what the impact to my FICO will be for carrying a balance on several or all of them. Previously, I've stuck to the AZEO model. Thanks.
@Anonymous wrote:I'm in the process of testing this out right now currently with my profile, going from AZEO (1 of 8 cards with a balance) to 100% of cards with a a balance reported. I'm currently at 6 of 8 and will be at 7 of 8 tomorrow and 8 of 8 on Tuesday or Wednesday. From there I'll be backing everything back down to AZEO while double checking my data points along the decline.
On my profile, shooting from the hip I'm guessing it's around a 10 point loss in going from AZEO to 100% of cards with balances reported.
Cool! Are you planning on posting your results?
@Anonymous wrote:Two points of clarification.
(1) You talk about carrying a balance when I am pretty sure you just mean reporting a balance. Carrying is when you don't pay the amount on the statement in full and (usually) pay interest on the remainder.
(2) You ask about the impact on FICO. You probably are thinking of the FICO 8 Classic model.
Can you confirm?
Allowing several cards to report a balance will likely give you some penalty in FICO 8. Maybe 15-20 points? (Assuming the utilization stays low.) Why don't you try it and see? All the points you lose will come back when you re-implement AZEO. That's why many people (me included) don't worry about AZEO except in the 40 days prior to an important application for credit (car loan, home loan, etc.).
Yes, FICO 8 and I would be carrying the balance and not PIF as they are all 0% APR until at least December. What I plan to do is to keep one card with a balance of 29% UTIL while the others will all be below 9%.
@pipeguy wrote:As far as scoring, it depends on what you consider "a balance". In general, if you keep your overall utility under 9% there will be little impact on overall scoring and you can modify that by trying to keep any single card under 30% balanced out by other cards(s) at 0%.
I had a situation several years ago where I needed to run a card up to 90%+ and carry that for 3-6 months and I called DCU and explained to them why (I was carrying expenses of settling an estate which would be reimbursed by the estate, but not for a while) DCU sad the credit line is there to use, all of it. I said I was concerned about adverse action maxing out an account, they said don't be. Can't say this would apply for all lenders, I certainly didn't call and ask Barclays. DCU got zero'd out when I was paid by the estate, including any interest charged.
Also, keep in mind that you'll pay interest on carried balances and when/if they creep up they'll be more difficult to zero-out (and) that credit scores are just a snapshot of today - any loss of points for going to 8.9% or 29.9% utility will recover once you correct or change that factor and you only need maximum scores when you are going to apply for additional credit. The daily scoring chart can be interesting or fun but means nothing until you actually need that score for a new card/car/mortgage.
Thanks, that's great info. I completed a bt to my new Amex. Since Amex doesn't report for 2 bill cycles, I believe the bt will drop off of my credit. It was the only balance over 29% Util but with the transfer, I'll have a couple of months to pay down the debt.
@Anonymous wrote:
@polaris2011What I plan to do is to keep one card with a balance of 29% UTIL while the others will all be below 9%.That's a good plan, but keep in mind that all decimals round UP for FICO scoring purposes. 29.anything% rounds up to 30%, which could cause you to incur a penalty. As a best practice you'll want to be at 28.9% or under and if you have any interest kicking in a more comfortable/safe number would probably be 27% or so.
Thanks for the heads up. Great info!