How does CR's read utilization?

[Anonymous]

I know that under 50% utilization is good and will be positive on your score.  But how does the credit reports read the utilization, by total utilization of all CC's or each individual basis?

I have 4 Credit cards

$500 - $0 Balance - 0% Utilization
$500 - $190 Balance - 38% Utilization
$320 - $190 Balance - 60% Utilization
$1000 - $300 balance - 30% Utilization

Total Utilization =  30% 

it looked like it was total based on my TU report but i wanted to make sure.  I was at 51% 2 weeks ago, now im at 30%, in two weeks i hope to be at 20%....

[MarineVietVet]

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@Anonymous wrote:

I know that under 50% utilization is good and will be positive on your score.  But how does the credit reports read the utilization, by total utilization of all CC's or each individual basis?

I have 4 Credit cards

$500 - $0 Balance - 0% Utilization
$500 - $190 Balance - 38% Utilization
$320 - $190 Balance - 60% Utilization
$1000 - $300 balance - 30% Utilization

Total Utilization =  30% 

it looked like it was total based on my TU report but i wanted to make sure.  I was at 51% 2 weeks ago, now im at 30%, in two weeks i hope to be at 20%....

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The utilization that is reported is overall utilization but FICO also looks at individual account utilization and also the number of accounts reporting a balance at any one time so keep all that in mind.

If you're looking to really tweak your scores 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.

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Anonymous]

Hi kyomagi,

FICO looks at both overall utilization as well as individual utilization.

For highest FICO scores, the general mantra is to have all your CC's but one report a zero balance; with the one remaining card reporting a less than 9% balance.

FICO also looks at how many accounts are reporting a balance.  One is a good number, YMMV and you can experiment and see if you're fine with an additional card or two reporting a balance - most generally folks recommend less than half of your accounts (at the most) report a balance.  I generally stick with reporting a balance on only one card and keeping that one below 9% - it works swell.

And Congrats on your exceptional paydown!  Nice work!

---I would definitely consider knocking the 60% utilization card down to zero as a high priority, then the 38% utilization down to zero; then the $300/$1000 card down to below 9%.  Other folks will chime in with their thoughts.  (Not that you asked, I'm just putting off going to bed, so I thought I'd just keep driveling on.... )

ETA:  Out-typed by MVV.  Dude!  Do you ever sleep???? 

[Anonymous]

Ok so what i did this morning was i paid off the highest utilization card down to 45% (320 Limit and 154 balance) and now all my CC's are under 50% and my total is 28%.  Only thing is i have to have that $320 one reopened because its my oldest account (4 years) and i have a $15 mo payment.  I may pay if off before i apply for my home lone and i dont want my score to drop.  I closed it because of a $70 yearly fee.  But i am considering reopening it now.

[GregB]

As far as I know no CCC will reopen an account. That whole idea disappeared a while ago. I believe Amex will open a new account and backdate it to the opening date of your previous account.

A balance showing on a CC that is closed will look bad. If not to FICO, then on review for a new account.

[vanillabean]

A thing to consider in these days of signature and world cards is whether an account's credit limit or high credit is reported. If not, the account is not used for util. This includes accounts that report a high credit but whose account type is not credit (except for TU 98).

You can pay down $20,000 on such a card, and it will do nothing for your util. You can pay down $200 on a util card with a small credit limit, and it might lower the account's util from 50% to 5%, boosting your score considerably.

That's not to say that a high balance on a non-util card will not affect your score. It will; it's just not util-related, so the impact is a good deal less. Applying this, you can put non-util cards to use in a sweet way.

[veracious]

I hope this isn't a thread jack.  I aplologize. I just wanted someone's input. I think I know the answer.

My question is about month- to -month utilization.

Before I got a second CC, my utilization would change by the balance I chose to report.

I always kept it at 1.6% or less and most of the time 0% was reported. Then one month I let 1.6% report

and the next month I let 2.2% report..  I lost points because of this.   I don't understand ??

The comment given by EQ FICO was that my balance increased, but I had PIF the previous month.

My balance did not increase from the previos month, I only let a 1.6% larger balance report.

Is this the norm?   I was trying to find the best utilization rate for only one  CC.  Now that I have another card, and my first

experiment didn't work, I'll probably have an even harder time finding the right balance to report.

The one thing I haven't tried is to carry a small balance for one month and a 0% balance the next, with two cards.

Why does FICO judge you by your last balance against your current balance when your utilization is miniscule?

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eta:  Thanks for any replies

[GregB]

It doesn't.

FICO only cares about the info on the report at that instant. The only way the previous balance on anything is factored is if it changed High Balance on a card that reports that instead of Limit.

FICO only knows the amount reported, which is virtually always the statement balance. It doesn't know, or care, if you PIF. The info on the actual payment amounts IS included by some lenders and is in your complete reports. I assume that might help or hurt in a manual review, such as done on a mortgage.

If that small a balance is changing your FICO, I can only assume you passed one of the steps. I do get the feeling that there are only around 5 steps total on utilization percentage that make a change to your score. One of them is $0, one of them is over 80%, one of them SEEMS to be around 50%.

[Anonymous]

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@GregB wrote:

It doesn't.

FICO only cares about the info on the report at that instant. The only way the previous balance on anything is factored is if it changed High Balance on a card that reports that instead of Limit.

FICO only knows the amount reported, which is virtually always the statement balance. It doesn't know, or care, if you PIF. The info on the actual payment amounts IS included by some lenders and is in your complete reports. I assume that might help or hurt in a manual review, such as done on a mortgage.

If that small a balance is changing your FICO, I can only assume you passed one of the steps. I do get the feeling that there are only around 5 steps total on utilization percentage that make a change to your score. One of them is $0, one of them is over 80%, one of them SEEMS to be around 50%.

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And based on experience here at the forums, it varies from individual to individual and for each individual it varies over time.  There's just a ton of variables in your report and there appears to be no iron hard cutoffs for utilization. 

I can vouch that DH and I have had somewhat different results - but we both do well with only one card reporting less than 9%; and the others reporting zero.  Sometimes when I anticipate a big score hit, I'm pleasantly surprised.  And vice versa.  It appears to be a very fluid cutoff line. 

It's kind of like if you eat a donut and run 5 miles, exactly what will your weight change be?  You know the general outcome, but the precise result varies depending on so many interacting factors.

[vanillabean]

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@Anonymous wrote:

I can vouch that DH and I have had somewhat different results - but we both do well with only one card reporting less than 9%; and the others reporting zero.

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DW and I too do well at less than 9%. But just as well at less than 10%.

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It's kind of like if you eat a donut and run 5 miles, exactly what will your weight change be?  You know the general outcome, but the precise result varies depending on so many interacting factors.

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Interesting. Just yesterday on the television, Dr. Oz noted that "How many minutes of dancing do you think it takes to burn off the 350 calories found in a glazed doughnut?  You need to dance for 55 minutes." He didn't say 50 for some and 60 for others.