FICO due to no mortgage and credit card only debt

[Thomas_Thumb]

---

@FICOdawg wrote:

Yeah divorce bit me there too.  Bought a new (used) car so we had clean ownership of cars so getting dinged on credit for that new loan as well.   Credit scoring is truly stupid.      Just started using the Experian app.  Should my score keep improving every month with the lower balance or only when I hit certain percentages?   I also had a PayPal credit card amount that I paid off and score bounced up but I basically took a $4k balance to zero in one go.     

---

Fico looks at highest individual card utilization and aggregate utilization for scoring independently. It also looks at aggregate balance in $. The $ amount thresholds are unknown. A few utilization % thresholds are:

Highest individual card utilization under 49% and highest card utilization under 29%. For aggregate revolving utilization, under 9% is important. Aggregate UT could use a sliding scale between 9% and 29% or have a constant impact on score. There are different points of view with data to support either opinion depending on source selection.

Regardless, 9% , 29% and 49% are important milestones. There are some higher UT thresholds but, just get both cards below 49% before paying off your lower balance card.

Don't expect every paydown to increase score. Some paydowns may not cross a UT threshold.

BTW - what are your current individual card utilizations and your aggregate utilization?

[FICOdawg]

That's good to know about the individual cards.   When I get alerts from Experian it always shows the total % ulitized across the two cards and Pay Pal Credit account no mention that each one matters.       The only red category I have is the % utlized and it's obvious their formula is hammering me for it.     All the other categories have green/excellent showing.         With no mortgage and a single car loan is 800 never going to happen?     I'll keep the cards open and revolve some balances on them.     Anything else I should do?       Next year I plan to get a boat and will likely have a loan so that will ding me yet again.

[FICOdawg]

I have 40,9xx in balance.     Pay Paypal Credit is $6k with now $0 balance as of mid December.      One car loan that paid off old car and now new loan as my own vehicle.     $23,3xx.00 on one card, $176xx.00     Experian shows 84% utilization across the three credit lines.    Never had a late payment, ever.     Mortgage I had for over 4 years (refi during covid like everyone else) and a solar loan from 2019 got paid in full in September.   Really frustrating that for a case line mine, I'm rocking a horrible 695 while people with piles of debt are 750+.      

Imagine only having 40k in debt with my income and getting a worse loan rate than someone with piles of debt.  Make it make sense.    The smart thing to do would be cash out some of my Roth and pay off the cards but I just don't have the will power to touch any of my retirement stuff.   More incentive to hammer these balances.

[Thomas_Thumb]

---

@FICOdawg wrote:

I have 40,9xx in balance.     Pay Paypal Credit is $6k with now $0 balance as of mid December.      One car loan that paid off old car and now new loan as my own vehicle.     $23,3xx.00 on one card, $176xx.00     Experian shows 84% utilization across the three credit lines.    Never had a late payment, ever.   

---

That's a brutal aggregate utilization level. If one card is 89% or higher, that card is considered maxed out and triggers even greater penalties. Overall, your revolving utilization penalties are likely costing you 80-90 points. Getting under 49% on all cards and 29% in aggregate should provide a nice initial score boost.

Capacity to service debt does not correlate with desire to manage it. Credit payment history and degree of leverage of available credit - particularly unsecured credit do.

[GZG]

---

@FICOdawg wrote:

I have 40,9xx in balance.     Pay Paypal Credit is $6k with now $0 balance as of mid December.      One car loan that paid off old car and now new loan as my own vehicle.     $23,3xx.00 on one card, $176xx.00     Experian shows 84% utilization across the three credit lines.    Never had a late payment, ever.     Mortgage I had for over 4 years (refi during covid like everyone else) and a solar loan from 2019 got paid in full in September.   Really frustrating that for a case line mine, I'm rocking a horrible 695 while people with piles of debt are 750+.      

Imagine only having 40k in debt with my income and getting a worse loan rate than someone with piles of debt.  Make it make sense.    The smart thing to do would be cash out some of my Roth and pay off the cards but I just don't have the will power to touch any of my retirement stuff.   More incentive to hammer these balances.

---

yeah, kinda dumb

if you had 5 other credit cards with $0 balances and 200k in limits (which wouldn't be abnormal at your income) 

your scores would be mostly fine

[FICOdawg]

ANY scoring system than penalizes you for paying off debt or having a 0 balance is flawed.   That's FICO.    

Does the amount paid off per month or as a percentage matter?     

As to the ability to manage debt, this is where FICO lacks depth in their data to predict credit risk and debt management.   I'm north of $1M in 401k/Roth/Stocks.     Mortgage free.  Kinda have to be able to manage money to save and accomplish those two milestones.    Yet, I have a relatively low credit score because my debt is in the revolving category not installment loan.    All the while my debt to income is very low.    No amount of logic will justify my score being 695.      I'd even say mine is a case study for FICO to fix their scoring.   A large portion of Americans would trade their higher FICO score for my total debt of $40k LOL

In my case the divorce is why the balance shot up as usually just revolved balances on my United & Marriott cards as a part work travel and monthly expenses to get points.    Divorce I had to put stuff on card to carry me through as the cash burn was crazy.     If I didn't have the ability to pay the CC off relatively quickly I'd pull from the Roth to wipe it out.    

[FICOdawg]

I never paid attention to this much as never an issue but the HOA pulls credit and background and saw the 695 and was like **bleep**.      Did a search to understand why, only to find out paying off long term loans like a mortgage actually hurts your FICO score.

Had I known,  I would have opened another CC account pre divorce to play the credit score game.     Hopefully this sorts itself out as I think will take 9-10 months to pay them off.        

[Rogue46]

To answer your question about having over 800 credit score without a mortgage yes you can, I've never had a mortgage and only have a car loan and credit cards (under 1% UT) and all scores over 800

[FICOdawg]

How much money do you revolve on CC balances?    I plan get a third CC once my score goes up.    Car loan.   And likely boat loan.   Any tips appreciated.

[Rogue46]

I don't carry balances on the cards. As mentioned above adding another card right now would likely be counter productive as you will take a score hit with the new inquiry. Likewise adding another loan wouldn't help as you already have a car loan which satisfies that criteria score wise.