How does utilization work on credit report

[Anonymous]

I notice that when your utilization % reported it is the overall % and not individual utilization.


So in an extra example have 2 cards, one has (250/300) and one is (50/10,000), thus my utilization will  be low overall, but will the 250/300 strongly impact my score because that card is way over 30% utilization?


Atm I have

(10/1,000)

(750/4,000)

and (1,800/3,200)

my utilization is something like 33% and I was wondering dropping the 1800  (to less than 30) considerably would be a huge impact or not really because the overall wont change much.


Thanks in advance.

[myjourney]

---

@Anonymous wrote:

I notice that when your utilization % reported it is the overall % and not individual utilization.


So in an extra example have 2 cards, one has (250/300) and one is (50/10,000), thus my utilization will  be low overall, but will the 250/300 strongly impact my score because that card is way over 30% utilization?


Atm I have

(10/1,000)

(750/4,000)

and (1,800/3,200)

my utilization is something like 33% and I was wondering dropping the 1800  (to less than 30) considerably would be a huge impact or not really because the overall wont change much.


Thanks in advance.

---

Welcome to the forum

In your example 

It won't effect your credit report what it will do is be reflected in your scores....And remember UTL has no memory so if paid the following month scores would go up again

Another point about UTL is any card that shows a balance of IIRC 75% scores are dinged as it is considered maxed out 

So you would be dinged twice due to that card 

Once for over 30% mark (UTL) and once for the card being considered maxed out

[Anonymous]

Thank you for the welcome and for your response. Much appreciated.



So youre saying that it will help my credit score not only in lowering my overall util but also because I wont have any lines over 30% util?

[myjourney]

---

@Anonymous wrote:

Thank you for the welcome and for your response. Much appreciated.



So youre saying that it will help my credit score not only in lowering my overall util but also because I wont have any lines over 30% util?

---

In most cases yes 

Any time UTL is under 30% is always good for scores

However if you're not applying for any new credit you can run up balances and not worry about it (UTL) until paid down or wait till statement cuts and PIF

To many times this is lost in thought 

"worry about UTL and how many cards report a balance when you're planning to apply for more credit other than that don't sweat the small stuff unless INTEREST will cost you money$$$$$$$$$$$$$$$

[Thomas_Thumb]

---

@Anonymous wrote:

I notice that when your utilization % reported it is the overall % and not individual utilization.


So in an extra example have 2 cards, one has (250/300) and one is (50/10,000), thus my utilization will  be low overall, but will the 250/300 strongly impact my score because that card is way over 30% utilization?


Atm I have

(10/1,000)

(750/4,000)

and (1,800/3,200)

my utilization is something like 33% and I was wondering dropping the 1800  (to less than 30) considerably would be a huge impact or not really because the overall wont change much.


Thanks in advance.

---

Your overall utilization is 2560/8200 = 31%. Dropping balance on the one card (currently at 56%) to get it under 30% ($960) would take your aggregate utilization down to 21%.  That is a nice change in overall utilization. However, paying off a little more to get overall UT under 20% and reducing the # cards reporting a balance will increase the impact substantially. 

As a first step pay off the card with a $10 balance. Then pay down the $1800 balance to (say $850) so it is below 30% and overall UT is below 20% - (1600/8200 = 19.5%).

Note: Fico does drop score if you have 3 or more cards and allow 100% of them to report a non zero balance. So paying off the $10 balance on the one card will help score although impact on utilization is almost nothing.

[Anonymous]

Hey guys.  The folks who are chiming in to the OP seem to be saying several things:

(1)  Overall CC utilization is a scoring factor

(2)  Individual utilization (of each CC) is a scoring factor

(3)  You have more latitude with individual than you do with overall, unless the individual U gets very high.

That strikes me as definitely sound.  Additionally though, if I am hearing the guys right, they also seem to be agreed that there is a definite penalty associated with any individual tradeline going over 30%. 

For example, suppose Bob and Geroge have identical profiles in all respects, including exactly four credit cards with credit limits of $1000 each.  Bob has balances of $260, $260, $0 and $0.  George has balances of $360, $160, $0, and $0.  Both have the same overall U ($13%) but one guy went above 30% on a card and the other guy didn't. 

If I am hearing the folks chiming in, they believe that George will take a definite score hit that Bob will not.

I am curious, is there a particular reason they have for believing that?  There's no question that there does begin to become a penalty when the indivudal tradeline gets high enough.  I would not be confident, however, saying that it is as low as 30% for all profiles.

[Thomas_Thumb]

The 30% UT threshold on an individual card basis is not a hard rule - But some people/profiles attest to experiencing a point change when they cross a 30% threshold. It may (or may not) be a threshold in this case but I would not anticipate a significant impact for this factor alone.

I can say with certainty that 50% and even 80% UT on an individual card basis had no impact on my Fico 8 score (zero point change). My aggregate UT% was maintained between 2% and 4% each time the card reported high UT%

In the OPs case only the last card reporting a $1600 balance may yield a better score than splitting the balance $750, $850. Can't say for sure. Either way getting overall UT under 20% will have a positive impact.

[Anonymous]

Hi TT.  I think it is significant that you had zero point change with high individual U. (Though I am surprised to hear that you had no impact with 80%.)  That's why I am skeptical of the claims of the other folks that 30% is in itself a breakpoint for individual lines.  If it were, then you'd be experiencing some kind of impact with a U of > 50%.

My guess is that most scorecards don't experience any impact until an individual TL gets to at least 50% -- assuming that overall U is fixed, as in the thought experiment I gave with Bob and George.

Certainly there eventually becomes a place where individual U matters, and matters a lot, but the actual breakpoint may be fairly high.

PS. Your 80% line must been with a VERY low CL compared to your others!  It's hard otherwise to have a 2% overall U with an 80% on one TL. 

[Thomas_Thumb]

A couple of notes on individual card UT %:

1) A nominal 2% aggregate UT was associated with the time when my BB store card posted a balance of slightly over 50% ( just over $2100 as I recall).

2) Balance on the same BB card was $3202, card CL of $4000 (80.1% utilization). Aggregate UT @ 3.5% at the time.

Note: Fico 4 score did take a significant hit although Fico 8 did not. I increased CL on the Best Buy store card to $7500 to avoid "max out" after seeing the Fico 4 drop due to the 80% card utilization. (took a year long hit on EQ Fico 4 due to the lone inquiry from the CL increase request - again no impact on Fico 8)

[Revelate]

---

@Thomas_Thumb wrote:

The 30% UT threshold on an individual card basis is not a hard rule - But some people/profiles attest to experiencing a point change when they cross a 30% threshold. It may (or may not) be a threshold in this case but I would not anticipate a significant impact for this factor alone.

I can say with certainty that 50% and even 80% UT on an individual card basis had no impact on my Fico 8 score (zero point change). My aggregate UT% was maintained between 2% and 4% each time the card reported high UT%

In the OPs case only the last card reporting a $1600 balance may yield a better score than splitting the balance $750, $850. Can't say for sure. Either way getting overall UT under 20% will have a positive impact.

---

TT: were you at your 850 when you tested the 80%?

I got such a minor drop at 87.5% (4-7 points depending on bureau FICO 8) that I wonder if your buffer was such that the 80% was irrelevant.  Testing at 850 might be a little suspect as I think it's a presentation cap and you can have minor blemishes based on some of android01's reports without losing that lofty metric.