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High Utilization Accts, FICO 2 vs FICO 8

SouthJamaica
Mega Contributor

High Utilization Accts, FICO 2 vs FICO 8

There is an opinion expressed by some members of this forum that where one has high utilization revolving accounts, FICO penalizes you for the highest one, and having a second one doesn't necessarily lose you more points.  I have on occasion seen indications that the number of such accounts does make a difference.  I.e., having one account at greater than, let's say 80%, is a lesser evil than having 2 accounts at greater than 80%.

 

I'm wondering if this month I tripped across a distinction between the way EX FICO 2 and EX FICO 8 treat this.

 

Last month I had 2 accounts that reported at > 80% utilization.

 

Today, when one of those 2 went back to a normal level :

 

FICO 8 showed no change.

 

FICO 2 increased by 7 points.

 

This might suggest that the mortgage scores do take into account the number of misbehaved accounts, while FICO 8 focuses simply on the worst of them.

 

The other account is also no longer in a high utilization category, but hasn't reported yet, so it will be interesting to see what happens when that is reflected in the computations.


Total revolving limits 699000 (597000 reporting) FICO 8: EQ 732 TU 721 EX 698

15 REPLIES 15
Sunrise900
New Visitor

Re: High Utilization Accts, FICO 2 vs FICO 8

Maybe Fico 2 is more sensitive to the dollars of debt than Fico 8 is, all other things being equal.

Message 2 of 16
aj2121
Frequent Contributor

Re: High Utilization Accts, FICO 2 vs FICO 8

I am thinking there is a lot of merit to this theory, and should hopefully have some DPs to contribute over the next couple of months. I have let 2 cards report over 80% utilization but have kept my overall utilization in the same range (28-29% utilization). With the first card reporting over 80% utilization I lost no points on EX2, on EX8 I lost 20 points. When the second card reported (89% utilization) I received a 6 point EX2 drop, and a 10 point EX8 drop. I am not sure if the 89% utilization was high enough to make the card considered max and that is what caused the point drop, or if it was the addition of another high utilization card that caused a point drop. Once my balance on that card updates this month, it should report at 88% utilization, I will let you know if I regain those points on EX2 and/or EX8. If I regain points that would indicate the loss was from the card being "maxed", if the points don't recover then that should provide further support to your theory.

FICO8 as of 4/9/21:
Message 3 of 16
SouthJamaica
Mega Contributor

Re: High Utilization Accts, FICO 2 vs FICO 8


@aj2121 wrote:

I am thinking there is a lot of merit to this theory, and should hopefully have some DPs to contribute over the next couple of months. I have let 2 cards report over 80% utilization but have kept my overall utilization in the same range (28-29% utilization). With the first card reporting over 80% utilization I lost no points on EX2, on EX8 I lost 20 points. When the second card reported (89% utilization) I received a 6 point EX2 drop, and a 10 point EX8 drop. I am not sure if the 89% utilization was high enough to make the card considered max and that is what caused the point drop, or if it was the addition of another high utilization card that caused a point drop. Once my balance on that card updates this month, it should report at 88% utilization, I will let you know if I regain those points on EX2 and/or EX8. If I regain points that would indicate the loss was from the card being "maxed", if the points don't recover then that should provide further support to your theory.


The thing I'm focusing on right now isn't 90% vs 80% vs 70%, it's the number of high utilization accounts (which I define as anything that is reporting at 30% or higher). I.e. my inquiry would be the same if the accounts were at 35%, as opposed to 85%. I'm trying to track down if FICO 8 just looks at your highest utilization account, while FICO 2 also looks at how many of those higher utilization accounts you've got.


Total revolving limits 699000 (597000 reporting) FICO 8: EQ 732 TU 721 EX 698

Message 4 of 16
SouthJamaica
Mega Contributor

Re: High Utilization Accts, FICO 2 vs FICO 8

Update.  Account #2, which had been at 85% last month just reported this month at 25%.

 

EX FICO 8 ascended 6 points.

 

EX FICO 2 showed no additional change.

 

So now I have no idea what it means.

 

FICO 2 was happy when I got rid of one sore thumb, but didn't show any additional excitement over me getting rid of the remaining sore thumb.

 

FICO 8, on the other hand, patiently waited to see if I could get rid of both of them before giving me any sign of approval Smiley Happy

 

So there goes my hypothesis, and I am left to continue wondering.

 

But I guess it could mean that FICO 2 does factor in the number of offending accounts, while FICO 8 just looks at the worst of them.


Total revolving limits 699000 (597000 reporting) FICO 8: EQ 732 TU 721 EX 698

Message 5 of 16
SouthJamaica
Mega Contributor

Re: High Utilization Accts, FICO 2 vs FICO 8

So, after my previous round of lowering my two 80% accounts, the end result of which appeared to suggest that possibly the mortgage score EX2 is concerned with the number of high utilization accounts, while EX8 just looks at the worst of the offending accounts, I was left with a revolving profile that had five sore thumb accounts (in this case 50%+ accounts).

 

As I start lowering the 50% + accounts, the same pattern seems to be emerging:

 

Removed 1 of 5:  EX2 + 9     EX8 no change

                  2 of 5:  EX2 + 7     EX8 no change

 

(I may have to rethink the advice I have been giving people on how to tackle high utilization profiles when trying to improve mortgage scores and not having the funds to pay off all the revolvers. 

 

Until now I have been emphasizing putting one's money into "snowballing" the revolving profile: i.e. getting as many accounts as possible to zero . But now it appears that there may be a second, competing strategy, which may produce even more points: getting as many very high utilization accounts (defined as >50%) as possible to 48% or lower.

 

If I'm ever lucky enough to get down to no > 50% accounts, and am left with just >30% accounts as my bad boys, it will be fascinating to see if the same pattern continues with them.

 

At this point, getting two >80% accounts out of that region, and two > 50% accounts out of that region, I've realized a modest gain of 6 points in FICO 8 but a signficant 23 points in FICO 2.  Of course one can only guess as to how much of the effect is due to the reduction in overall utilization which has accompanied these changes).


Total revolving limits 699000 (597000 reporting) FICO 8: EQ 732 TU 721 EX 698

Message 6 of 16
aj2121
Frequent Contributor

Re: High Utilization Accts, FICO 2 vs FICO 8


@SouthJamaica wrote:

So, after my previous round of lowering my two 80% accounts, the end result of which appeared to suggest that possibly the mortgage score EX2 is concerned with the number of high utilization accounts, while EX8 just looks at the worst of the offending accounts, I was left with a revolving profile that had five sore thumb accounts (in this case 50%+ accounts).

 

As I start lowering the 50% + accounts, the same pattern seems to be emerging:

 

Removed 1 of 5:  EX2 + 9     EX8 no change

                  2 of 5:  EX2 + 7     EX8 no change

 

(I may have to rethink the advice I have been giving people on how to tackle high utilization profiles when trying to improve mortgage scores and not having the funds to pay off all the revolvers. 

 

Until now I have been emphasizing putting one's money into "snowballing" the revolving profile: i.e. getting as many accounts as possible to zero . But now it appears that there may be a second, competing strategy, which may produce even more points: getting as many very high high utilization accounts as possible to 48% or lower.

 

If I'm ever lucky enough to get down to no > 50% accounts, and am left with just >30% accounts as my bad boys, it will be fascinating to see if the same pattern continues with them.

 

At this point, getting two >80% accounts out of that region, and two > 50% accounts out of that region, I've realized a modest gain of 6 points in FICO 8 but a signficant 23% in FICO 2.  Of course one can only guess as to how much of the effect is due to the reduction in overall utilization which has accompanied these changes).


These are some excellent data points! It certainly creates new points to consider when giving advice.

 

Edit: I wonder if it would be more beneficial for a profile to have one 80%+ utilization card versus multiple 50%+ utilization cards? If so this could make a balance transfer a very useful tool in trying to boost mortgage scores, one could potentially keep overall utilization the same but get a score boost. Just a point of consideration.

FICO8 as of 4/9/21:
Message 7 of 16
SouthJamaica
Mega Contributor

Re: High Utilization Accts, FICO 2 vs FICO 8


@aj2121 wrote:

@SouthJamaica wrote:

So, after my previous round of lowering my two 80% accounts, the end result of which appeared to suggest that possibly the mortgage score EX2 is concerned with the number of high utilization accounts, while EX8 just looks at the worst of the offending accounts, I was left with a revolving profile that had five sore thumb accounts (in this case 50%+ accounts).

 

As I start lowering the 50% + accounts, the same pattern seems to be emerging:

 

Removed 1 of 5:  EX2 + 9     EX8 no change

                  2 of 5:  EX2 + 7     EX8 no change

 

(I may have to rethink the advice I have been giving people on how to tackle high utilization profiles when trying to improve mortgage scores and not having the funds to pay off all the revolvers. 

 

Until now I have been emphasizing putting one's money into "snowballing" the revolving profile: i.e. getting as many accounts as possible to zero . But now it appears that there may be a second, competing strategy, which may produce even more points: getting as many very high high utilization accounts as possible to 48% or lower.

 

If I'm ever lucky enough to get down to no > 50% accounts, and am left with just >30% accounts as my bad boys, it will be fascinating to see if the same pattern continues with them.

 

At this point, getting two >80% accounts out of that region, and two > 50% accounts out of that region, I've realized a modest gain of 6 points in FICO 8 but a signficant 23% in FICO 2.  Of course one can only guess as to how much of the effect is due to the reduction in overall utilization which has accompanied these changes).


These are some excellent data points! It certainly creates new points to consider when giving advice.

 

Edit: I wonder if it would be more beneficial for a profile to have one 80%+ utilization card versus multiple 50%+ utilization cards? If so this could make a balance transfer a very useful tool in trying to boost mortgage scores, one could potentially keep overall utilization the same but get a score boost. Just a point of consideration.


Yeah well I hope I never find out about >80% accounts again, and I'm hoping to get to the point that I never find out about >50% accounts either.  I'll be happy when and if I get down to the 28% and under world I occupied before Covid hit.

 

 


Total revolving limits 699000 (597000 reporting) FICO 8: EQ 732 TU 721 EX 698

Message 8 of 16
aj2121
Frequent Contributor

Re: High Utilization Accts, FICO 2 vs FICO 8


@aj2121 wrote:

I am thinking there is a lot of merit to this theory, and should hopefully have some DPs to contribute over the next couple of months. I have let 2 cards report over 80% utilization but have kept my overall utilization in the same range (28-29% utilization). With the first card reporting over 80% utilization I lost no points on EX2, on EX8 I lost 20 points. When the second card reported (89% utilization) I received a 6 point EX2 drop, and a 10 point EX8 drop. I am not sure if the 89% utilization was high enough to make the card considered max and that is what caused the point drop, or if it was the addition of another high utilization card that caused a point drop. Once my balance on that card updates this month, it should report at 88% utilization, I will let you know if I regain those points on EX2 and/or EX8. If I regain points that would indicate the loss was from the card being "maxed", if the points don't recover then that should provide further support to your theory.


An update to this, the card is now reporting at 87% utilization and I did not recover the lost points. So it looks like the penalty was from having 2 cards report at over 80% utilization. I am hoping I will be able to reduce one of these cards to under 80% utilization next month and will report back on whether I see those points return or not.

FICO8 as of 4/9/21:
Message 9 of 16
SouthJamaica
Mega Contributor

Re: High Utilization Accts, FICO 2 vs FICO 8


@SouthJamaica wrote:

So, after my previous round of lowering my two 80% accounts, the end result of which appeared to suggest that possibly the mortgage score EX2 is concerned with the number of high utilization accounts, while EX8 just looks at the worst of the offending accounts, I was left with a revolving profile that had five sore thumb accounts (in this case 50%+ accounts).

 

As I start lowering the 50% + accounts, the same pattern seems to be emerging:

 

Removed 1 of 5:  EX2 + 9     EX8 no change

                  2 of 5:  EX2 + 7     EX8 no change

 

(I may have to rethink the advice I have been giving people on how to tackle high utilization profiles when trying to improve mortgage scores and not having the funds to pay off all the revolvers. 

 

Until now I have been emphasizing putting one's money into "snowballing" the revolving profile: i.e. getting as many accounts as possible to zero . But now it appears that there may be a second, competing strategy, which may produce even more points: getting as many very high utilization accounts (defined as >50%) as possible to 48% or lower.

 

If I'm ever lucky enough to get down to no > 50% accounts, and am left with just >30% accounts as my bad boys, it will be fascinating to see if the same pattern continues with them.

 

At this point, getting two >80% accounts out of that region, and two > 50% accounts out of that region, I've realized a modest gain of 6 points in FICO 8 but a signficant 23 points in FICO 2.  Of course one can only guess as to how much of the effect is due to the reduction in overall utilization which has accompanied these changes).


I have dropped two of the three remaining > 50% accounts to below 50%. They will be reporting within a week. It will be interesting to see if the pattern continues: their removal having no effect on EX FICO 8, and significant effect on EX FICO 2.


Total revolving limits 699000 (597000 reporting) FICO 8: EQ 732 TU 721 EX 698

Message 10 of 16
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