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How does CR's read utilization?

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Anonymous
Not applicable

Re: How does CR's read utilization?

Smiley Very Happy

 

And undoubtedly someone will ask the good Dr., "If I take off half the sprinkles, can I get away with only dancing 53.5 minutes?

 

Message 11 of 25
veracious
Established Contributor

Re: How does CR's read utilization?

 


@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%.




Thanks for your reply  GregB.

 

My confusion lies with the fact that FICO stated as  the reason my score changed was because my balance had changed from the previous month.

 

If  FICO only knows what the amount reported at that instant you pull your report, why then, does it comment about your previous balance?

Wasn't this anew report being pulled on the second month? FICO should only know that my utilization remained below some threshold.

Why compare it to the previous month?

 

I understand that FICO could care less if you pay in full but, why is it keeping track of your previous balance reported.

 

If FICO cares only about utilization, why was I penalized for showing a higher utilization ? I thought  that if your utilization was

less than 9% you would be OK.   The CC I am referring to is a regular vanilla Master Card.

 

Fico stated that my balance had increased from the previous month.  Grossly Unfair if I have to keep using a lower utilization % every month.

 

Maybe FICO algorithms are looking at my personal report  and judging my credit useage inaccurately.

 

I am I right on this point?

 

Thanks


eta:  clarification.

_________________________________________________
"You may never know what results come of your actions,
but if you do nothing, there will be no result" ~ Mahatma Gandhi
Message 12 of 25
GregB
Valued Contributor

Re: How does CR's read utilization?

I assume you are looking at a product that is tracking your FICO score like Scorewatch. I assume when you said "FICO" you meant Scorewatch from myFICO. There isn't anything like that on your Credit Reports, which also have your FICO score included,  so I assume it is the tracking product that states the reason.

 

If you get a FICO score decrease because your utilization increased, lowering it to the previous amount will return your score to the previous score if nothing else changed.

 

I think it is very safe to assume that there is never any error in calculating your score from the information in your reports. If there is incorrect info in your reports, that is different.

Message 13 of 25
veracious
Established Contributor

Re: How does CR's read utilization?

 


@GregB wrote:

I assume you are looking at a product that is tracking your FICO score like Scorewatch. I assume when you said "FICO" you meant Scorewatch from myFICO. There isn't anything like that on your Credit Reports, which also have your FICO score included,  so I assume it is the tracking product that states the reason.

 

If you get a FICO score decrease because your utilization increased, lowering it to the previous amount will return your score to the previous score if nothing else changed.

 

I think it is very safe to assume that there is never any error in calculating your score from the information in your reports. If there is incorrect info in your reports, that is different.


Thanks for your reply  GregB

 

I guess I was wrong in assuming the FICO score I  purchased here was going to see a credit balance and utilization increase

no matter how slight---1.6% -2.2% and not make a  score penalty, even though it was miniscule when compared to the credit line.

 

I mean, raising your utilization   from 1.6% to 2.2% seems  insignificant  to me, but apparently FICO doesn't like for your credit usage to

rise at all. Hence you get a penalty even though you are using credit responsibly.  On top of that, FICO penalizes you if you report a 0% usage.

 

So with all the talk on these boards about letting a small balance report and paying in full, which I do, how come no one mentioned that you

should report a lesser utilization rate each time or you will (may) see a point drop.

 

That's how it  happens on my CR , but maybe my view is less than the complete picture.

_________________________________________________
"You may never know what results come of your actions,
but if you do nothing, there will be no result" ~ Mahatma Gandhi
Message 14 of 25
Anonymous
Not applicable

Re: How does CR's read utilization?


@veracious wrote:

I guess I was wrong in assuming the FICO score I  purchased here was going to see a credit balance and utilization increase

no matter how slight---1.6% -2.2% and not make a  score penalty, even though it was miniscule when compared to the credit line.  There are so many factors involved in your FICO credit score that it's impossible (really) to earmark one factor and determine that it alone caused any FICO score change.  FICO is an extremely complex algorithm.  Having a balance change and a FICO score change on the same day does not equate to the balance change creating the FICO score change. 

 

I mean, raising your utilization   from 1.6% to 2.2% seems  insignificant  to me, but apparently FICO doesn't like for your credit usage to

rise at all. It's not a matter of FICO liking or not liking credit usage to change.  FICO doesn't track the change in your utilization.  It's a snapshot of your current utilization that FICO is looking at - and that snapshot includes a myriad of other factors.  Hence you get a penalty even though you are using credit responsibly.  On top of that, FICO penalizes you if you report a 0% usage.  FICO is not a grading system with penalties for bad behavior.  It's simply a risk assessment.  Anytime a FICO score is generated it is assessing your risk based on boatloads of statistical data. 

 

So with all the talk on these boards about letting a small balance report and paying in full, which I do, how come no one mentioned that you

should report a lesser utilization rate each time or you will (may) see a point drop.  Because that's not true.   On a regular basis, DH and I report miniscule-ishly larger utilizations and do not see a score change.  FICO is looking at lots of info, but they are not tracking your change in utilization.  ScoreWatch or other such programs can report a change in balance (dollars and/or utilization - which is why some may receive two alerts for one account having a balance change) and it will also tell you your FICO score at that point; but it does not mean the change in utilization creates the change in the FICO score. 

 

That's how it  happens on my CR , but maybe my view is less than the complete picture.


I think lots of folks have been confused by getting a scorewatch triggered by one of the factors that you can individually choose; and then feeling that the factor that triggered the ScoreWatch is the factor that triggered the FICO score change.  You choose what triggers a ScoreWatch; and that ScoreWatch is a separate issue than the factors that trigger a FICO score change. 

 

And remember that things are constantly changing on your accounts, time since new account reported, age of accounts, age of inquiries, and tons of other stuff.  And sometimes an account reports something in a different way than it did before.  There's lots of constantly moving targets on anyone's CR's.

Message 15 of 25
vanillabean
Valued Contributor

Re: How does CR's read utilization?

For people using credit, I have never come across a case in which a higher utilization resulted in a higher FICO score. It would indeed appear that FICO wants us to use credit, but as little of it as possible. It doesn't quite make sense that if you have a credit card account with a purchase limit of $10,000, it's more responsible use of that card to spend $20 monthly than $200. Then again, $200 can be viewed as riskier than $20, and it's not entirely unreasonable to assume that FICO goes by risk rather than by responsibility.

Message 16 of 25
veracious
Established Contributor

Re: How does CR's read utilization?

Thanks beamMEup. 

 

I get it now, and I think that's what GregB  meant in his post.

 

OK, I'll never again use the word penalize, from now on I'll just say "drops your score"

 

I'd just like the FICO score to settle down and quit changing all the time on my reports.

 

I've got an expensive vacation coming up, so I know the FICO engines will be humming, and I'll probably geta ton of alerts.Smiley Very Happy

_________________________________________________
"You may never know what results come of your actions,
but if you do nothing, there will be no result" ~ Mahatma Gandhi
Message 17 of 25
veracious
Established Contributor

Re: How does CR's read utilization?

Thanks my-own-fico.

 

You are absolutely right.

I just forget from time to time that FICO scoring is nothing more than a risk assessment.

 

Like most people here on these forums, I use credit responsibly, and since FICO does not know me or anyone else,

they judge by risk behavior only.

 

 

 

_________________________________________________
"You may never know what results come of your actions,
but if you do nothing, there will be no result" ~ Mahatma Gandhi
Message 18 of 25
GregB
Valued Contributor

Re: How does CR's read utilization?

An increase in utilization tends to decrease your FICO score but it does it in steps. Here is an example of a big increase not changing FICO. I have also had a 3 point drop from charging $18 on a card with a zero balance reported.

alert.jpg

Message 19 of 25
MarineVietVet
Moderator Emeritus

Re: How does CR's read utilization?


@veracious wrote:

Thanks beamMEup. 

 

I get it now, and I think that's what GregB  meant in his post.

 

OK, I'll never again use the word penalize, from now on I'll just say "drops your score"

 

I'd just like the FICO score to settle down and quit changing all the time on my reports.

 

I've got an expensive vacation coming up, so I know the FICO engines will be humming, and I'll probably geta ton of alerts.Smiley Very Happy


IME only this won't happen. Credit files are very dynamic and small changes in our scores (both up and down) are normal and part of the process.

 

 

 

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".

Message 20 of 25
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