I don't think utilization actually affects 30% of the credit score. Am I missing something?

[RobertEG]

I dont think you are missing anything, but rather simply realizing how complex FICO scoring really is.

I agree with your primary observation, hobojon. 

The 30% of FICO is utilization of current credit, and not just %util of revolving credit.

It includes util of installment, non-CC revolving, and CC revolving debt, all scored with different weightings, with revolving/CC util counting much higher than installment util.

 

Taking revolving %util by itself, for example, it has three primary components of its own: overall %util, %util of each account, and percent of accounts carrying balances.  Fair Isaac has said that in scoring revolving %util, overall %util and the sum of the affect of %util of all individual cards count approx.  the same.   Additionally, percent of all cards carrying balances factors in at some unspecified weighting.

 

So, yes, overall %util of revolving credit counts for less than 30% of FICO scoring.

Just how much is a proprietary trade secret of Fair Isaac, and no one can tell you how much, other than through anecdotal experiences.

[Anonymous]

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@RobertEG wrote:

I dont think you are missing anything, but rather simply realizing how complex FICO scoring really is.

I agree with your primary observation, hobojon. 

The 30% of FICO is utilization of current credit, and not just %util of revolving credit.

It includes util of installment, non-CC revolving, and CC revolving debt, all scored with different weightings, with revolving/CC util counting much higher than installment util.

 

Taking revolving %util by itself, for example, it has three primary components of its own: overall %util, %util of each account, and percent of accounts carrying balances.  Fair Isaac has said that in scoring revolving %util, overall %util and the sum of the affect of %util of all individual cards count approx.  the same.   Additionally, percent of all cards carrying balances factors in at some unspecified weighting.

 

So, yes, overall %util of revolving credit counts for less than 30% of FICO scoring.

Just how much is a proprietary trade secret of Fair Isaac, and no one can tell you how much, other than through anecdotal experiences.

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I guess that is my point. The faq is stating how much a single factor counts, and it is wrong.

[RobertEG]

If  any FAQ states that overall %util of revolving credit alone is 30% of FICO score, that is clearly incorrect.

[Anonymous]

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@RobertEG wrote:
If  any FAQ states that overall %util of revolving credit alone is 30% of FICO score, that is clearly incorrect.

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The "credit scoring 101" faq on this site states this:

-30% affects Utilization. It is best to have several accounts with low balances distributed then it is to have fewer accounts maxed out. To figure utilization: Balance (divided) by Credit Limit = percentage. Lower than 10% recommended per account, this is one of the fastest means for increasing the over all credit score.

This certainly sounds like it is describing revolving accounts. What other type of account has a credit limit? I don't think that the faq is suggesting you reduce a mortgage account or auto loan to less than 10% of its original balance to quickly increase your overall credit score.

Message Edited by hobojon on 08-02-2009 11:08 PM

[RobertEG]

FAQ answers are not generated with full explanations, but neither are the FICO methodologies

Maybe the FICO FAQ post is a bit misleading to those with a higher understanding of credit scoring, but it is still good advice on the basic level.  FICO has never preteneded to offer a full disclosure of its scoring methodology, and never will, for very good reasons.

[Anonymous]

The 30% is correctly attributable to "Amounts Owed":

http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx

Once again hung up on semantics.

[haulingthescoreup]

It seems to vary by reports, too.

For instance, with TU, it shows my correct very low util, but on the sims, it includes my $50K HELOC balance as debt to be repaid. (As of course, it is.) This makes me wonder if TU codes high-limit CC's and LOC's in a way that they don't show on revolving util, but they do show on debt.

[Anonymous]

By FICO model I think and not only that but by bucket within model. It really isn't that simple at all.

[Anonymous]

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@Anonymous wrote:

The 30% is correctly attributable to "Amounts Owed":

http://www.myfico.com/CreditEducation/WhatsInYourScore.aspx

Once again hung up on semantics.

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• Lack of a specific type of balance, in some cases
• Number of accounts with balances

I agree with the OP. These are not utilization factors and the way the faq reads it is wrong. 

You should stick to what you know and post in the Bankruptcy forum.

[Anonymous]

I think that it has been made perfectly clear that Friendly, Supportive & Respectful posts are the ONLY contributions that are welcome here. There are no exceptions to this rule.

If you can't contribute in a manner that's consistent with both the TOS and FS&R requirements, then DON'T post at all. It will not be tolerated, and it's that simple.

Thread is locked.

Message Edited by LilMirth on 08-04-2009 05:41 AM

Message Edited by LilMirth on 08-06-2009 05:36 AM