General Utilization Question

[Anonymous]

I have a general utlilization question. My current rate is about 20%. Does the scoring model just look at the overall rate or 

does it look at individual accounts. For example, if I have 10 open accounts with an overall rate of 20% with 8 accounts at a 

zero balance, one at 5% and one at 40%. Would that be scored the same the same as 5 accounts with a zero balance and 5 with 10-20% utilization? Both the same overall utilization rate just different routes. I do not know if it is better to have more accounts with smaller

amounts of one account that contributes the bulk of the utilization?

[sarge12]

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@Anonymous wrote:

I have a general utlilization question. My current rate is about 20%. Does the scoring model just look at the overall rate or 

does it look at individual accounts. For example, if I have 10 open accounts with an overall rate of 20% with 8 accounts at a 

zero balance, one at 5% and one at 40%. Would that be scored the same the same as 5 accounts with a zero balance and 5 with 10-20% utilization? Both the same overall utilization rate just different routes. I do not know if it is better to have more accounts with smaller

amounts of one account that contributes the bulk of the utilization?

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It considers both individual and aggregate utilization, with the generally accepted ideal being under 29% on any individual account, and under 9% on aggregate. Also under 50% of cards should report any balance to maximize the utilization. How much exceeding these ideals is likely to impact scores is overall profile dependant however. Many here describe AZEO, but that actually comes from needing 3 cards with only one reporting a balance, but if you have 5 cards, 2 can do so without reaching the 50% reporting threshold. I have one card that my sister uses and pays the payments and interest on and it is currently about 45% utilization. In spite of that less than ideal individual card utilization, my TU fico 08 is 845, so it can't be dragging my score down much. It is not possible to acheive AZEO with less than 3 cards, and if you have a lot of cards like me (about 20), you really do not need to micro-manage utilization if you always PIF.

[tcbofade]

As mentioned above, Fico scoring counts both individual and aggregate utilization.

In your ten card scenario, you might see a slight improvement with seven cards reporting at zero, one card at five percent, and the other two each reporting under 28.9%...

...you might not...

If you see a score bump, it wouldn't be much.

Good luck!

[sarge12]

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@tcbofade wrote:

As mentioned above, Fico scoring counts both individual and aggregate utilization.

In your ten card scenario, you might see a slight improvement with seven cards reporting at zero, one card at five percent, and the other two each reporting under 28.9%...

...you might not...

If you see a score bump, it wouldn't be much.

Good luck!

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Yes, I think the actual thresholds are under 28.9% and 8.9% respectively due to rounding up to the next higher tenth of a percentage point. It is all very speculative in any case, as the brain trust giving advice officially says to only apply for credit as needed. Based on how much easier managing utilization is with a greater number of cards, that advice is clearly lacking. It is very easy to maintain ideal utilization with more cards and higher limits if you PIF. I never even take note of when a statement cuts, and have not in years. If 4 or 5 cards report, and you have 20 cards, there is no noticable score change because the thresholds are never even close to being approached. I also tend to believe that exceeding the 28.9% individual card threshold is somewhat watered down by having more cards. Clearly, based on my being only 5 points shy of the TU fico 08 max leads me to that conclusion.

[SouthJamaica]

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@Anonymous wrote:

I have a general utlilization question. My current rate is about 20%. Does the scoring model just look at the overall rate or 

does it look at individual accounts. For example, if I have 10 open accounts with an overall rate of 20% with 8 accounts at a 

zero balance, one at 5% and one at 40%. Would that be scored the same the same as 5 accounts with a zero balance and 5 with 10-20% utilization? Both the same overall utilization rate just different routes. I do not know if it is better to have more accounts with smaller

amounts of one account that contributes the bulk of the utilization?

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1.  There are around 28 FICO scoring models, not just one.

2.  All of them do take into account not only aggregate revolving utilization, but also individual revolving account utilization.

3.  In the 2 examples you posited, I am guessing that most models would give you a better score in the second version, because having any individual account at 30% or more gets you penalized.

4.  Some of the scoring models, especially the older ones, most notably the mortgage scores, place a premium on having a lot of zero balances, so that if you had all but one of the accounts at zero, you would fare best in those models, so long as the one account is below 30%.  In my experience the FICO 8's and 9's don't penalize you much for having a lot of small balances.

[sarge12]

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@SouthJamaica wrote:

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@Anonymous wrote:

I have a general utlilization question. My current rate is about 20%. Does the scoring model just look at the overall rate or 

does it look at individual accounts. For example, if I have 10 open accounts with an overall rate of 20% with 8 accounts at a 

zero balance, one at 5% and one at 40%. Would that be scored the same the same as 5 accounts with a zero balance and 5 with 10-20% utilization? Both the same overall utilization rate just different routes. I do not know if it is better to have more accounts with smaller

amounts of one account that contributes the bulk of the utilization?

---

1.  There are around 28 FICO scoring models, not just one.

2.  All of them do take into account not only aggregate revolving utilization, but also individual revolving account utilization.

3.  In the 2 examples you posited, I am guessing that most models would give you a better score in the second version, because having any individual account at 30% or more gets you penalized.

4.  Some of the scoring models, especially the older ones, most notably the mortgage scores, place a premium on having a lot of zero balances, so that if you had all but one of the accounts at zero, you would fare best in those models, so long as the one account is below 30%.  In my experience the FICO 8's and 9's don't penalize you much for having a lot of small balances.

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I am pretty sure there are a lot more than the 28 we recieve with a 3B pull. I think I read that many fico scores specialized for various industies are just not as commonly used as those 28, so are not supplied. I know one of my statements show a fico NG1 score.