Impact of high utilization on a store card vs majo... - myFICO® Forums

DeeBee78 · ‎02-10-2017

So I've noticed that MyFICO reporting and alerting breaks accounts into two buckets: Retail Trades (store cards) and Bankcard (Visa, MC, etc.).

Let's say I have a $5K Visa and a $5K Amazon card. Is the impact to my scores the same if I max one of them out? I'm getting the impression that maxing out a retail card is not viewed as a high risk behavior by some lenders. Or a less risky behavior than maxing out a bankcard.

If the impact is the same, why the breakdown into two buckets?

Anonymous · ‎02-10-2017

I think myFICO is just breaking them down into categories to help the user (you) see how many of each type of card you have easier. It's basically just "fluff" software that has no bearing on score.

A revolver is a revolver. Maxing any one out will have the same impact as maxing out any other one. Whether it is a store card or a bank card doesn't matter with respect to the FICO scoring algorithm. Also, dollar amount matters far less than percentages.

One example, Steve and Joe both have 2 credit cards each (doesn't matter if they are store cards or not). The both have a card with a $1000 limit and a $5000 limit that have zero balances. Steve makes a $1000 purchase on the $1000 limit card where Joe makes a $1000 purchase on his $5000 card. Both let their balances report. While both have 17% aggregate utilization, Steve's got a maxed out credit line where Joe's highest utilized credit line sits at 20%. While both have the same amount of debt in dollars, Joe's credit scores will be higher, all other things being equal since he doesn't have a maxed out trade line where Steve does.

Revelate · ‎02-11-2017

It's just Transunion.

The monitoring solutions were built for the banks and then adapted for consumer use as near as I can tell; Transunion breaks tradelines down into categories but at least for FICO 8 there's no apparent difference. My theory was the TU service was originally developed in 1999-2003 ballpark when FICO NextGen was a thing (or at least lenders were possibly asking for it vis a vis FICO's decision to go down that rabbit hole with NG), which might explain the rationale for breaking everything out.

Modern algorithms doesn't appear to have any use, so it's simply an old artifact.

SouthJamaica · ‎02-11-2017

@DeeBee78 wrote:
So I've noticed that MyFICO reporting and alerting breaks accounts into two buckets: Retail Trades (store cards) and Bankcard (Visa, MC, etc.).

Let's say I have a $5K Visa and a $5K Amazon card. Is the impact to my scores the same if I max one of them out? I'm getting the impression that maxing out a retail card is not viewed as a high risk behavior by some lenders. Or a less risky behavior than maxing out a bankcard.

If the impact is the same, why the breakdown into two buckets?

Maxing out a store card would be just as negative as maxing out a bank card.