Individual Account Utilization and number of accounts Thresholds

[jackg]

With regards to your "EQ FICO" question I'm pretty sure the answer is in the total number of accounts you have reporting versus the number of them showing a balance due. For example, if you took a picture of the average americans credit report today you would likely find:

One auto loan (installment credit) Balance due:$5,000

One mortgage (Mortgage credit) Balance due: $200,000

Three credit cards (Revolving credit) One of them reporting a $500 bal. due, two report zero balance due.

In this example there are a total of 5 accounts reporting and 3 of them report a balance due and is losing points for reporting balances due in excess of 50% of the total number of accounts. In order to optimize the score in this area the number of accounts reporting a balance due can not exceed 2.

A line of credit account can and will report under a "Revolving acct." or an "Installment acct.". 

In this example I'm referring to open accounts only.

I hope this info helps you.

Message Edited by jackg on 08-15-2009 01:16 PM

[Macroman]

Thanks for the attempt to help.

Obviously from my post where I list my balances I don't have the financial resources to bring my Utilization down to 9% immediately. Believe me, I am working on it.

My immediate question is does it make a scoring differences whether 12 or 13 out of 16 open CL report balances.

The predominant answer from posters here seems to be to take whatever path is most effective at getting overall utilization below 10% and then concern oneself with the finer points of credit scoring.

Would you agree, jackg?

Message Edited by Macroman on 08-15-2009 01:49 PM

[Anonymous]

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@smallfry wrote:
I was a believer in the 40% of open accounts reporting a balance threshold until I pulled my FICO's last week. Due to the time of month the scores were pulled and the fact that a closed BofA card reported a small balance I had 4 accounts out of 7 (6 actually open) reporting with a balance. No score change. I won't make it a habit though.

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It's really not 40% of open accounts. It is:

1) Less that half of revolving TL's reporting a balance, AND

2) Half or less of all TL's reporting a balance.

Closed TL's count if they are reporting a balance.

And I do believe this. I let one more account report a balance and my UTIL go from 9% to 12% and I took a 20+ point wack on EQ.

As far as your situation is concerned OP I would not pay off those closed accounts so fast. Once they are paid to zero their CL's will drop out of your UTIL calculation and that would not be good. Pay them down - far down - but not off.

The problem with DIscover BT offers is that they are expensive (4%+) and may not be forthcoming when they see the rest of your credit picture. Look to Citi or try to get another organization (like a CU) to give you an installement loan to consolidate these balances. Clearing a bunch of these balances that way will work wonders for you FICO scores. Your ability to obtain such a loan is going to be income dependent. If you do consolidate you must not turn around and run the balances right back up again!

[jackg]

Macroman,

I really appreciate the difficulty of paying off CC's. And as you said all you can do is keep your head down and move forward, don't lat it get to you!!

It does make a difference to your score when you hit a threshhold for % utilization. The reason is you are paying off debt.

I do agree that overall utilization of 10% is better than 15%. Besides paying off debt thare are other ways to improve utilization. I'm unaware of your overall credit picture but if you could get one of your creditors to raise the credit limit on your account. Also perhaps you could apply for a new CC.

I know your'e trying really hard but let me tell you that in this credit game your biggest assest is time and patience.

And, hang around here whenever possible because you never know when you might hear something that could be crucial to your situation.

Good Luck

[smallfry]

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@Anonymous wrote:

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@smallfry wrote:
I was a believer in the 40% of open accounts reporting a balance threshold until I pulled my FICO's last week. Due to the time of month the scores were pulled and the fact that a closed BofA card reported a small balance I had 4 accounts out of 7 (6 actually open) reporting with a balance. No score change. I won't make it a habit though.

---

It's really not 40% of open accounts. It is:

1) Less that half of revolving TL's reporting a balance, AND

2) Half or less of all TL's reporting a balance.

Closed TL's count if they are reporting a balance.

And I do believe this. I let one more account report a balance and my UTIL go from 9% to 12% and I took a 20+ point wack on EQ.

As far as your situation is concerned OP I would not pay off those closed accounts so fast. Once they are paid to zero their CL's will drop out of your UTIL calculation and that would not be good. Pay them down - far down - but not off.

The problem with DIscover BT offers is that they are expensive (4%+) and may not be forthcoming when they see the rest of your credit picture. Look to Citi or try to get another organization (like a CU) to give you an installement loan to consolidate these balances. Clearing a bunch of these balances that way will work wonders for you FICO scores. Your ability to obtain such a loan is going to be income dependent. If you do consolidate you must not turn around and run the balances right back up again!

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Credit I have a total of 5 revolving accounts 6 if you want to count the closed BofA credit card. The other open TL is my car loan. 3 revolving accounts reported balances so that is within your parameter of 50%. As for my utilization and the closed BofA card? Well put it this way the limit was only 5K and the balance reported was only 30 bucks. Thankfully I could lose all but 1 of my credit cards and my utilization would be just fine.

[Anonymous]

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@smallfry wrote:

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@Anonymous wrote:

It's really not 40% of open accounts. It is:

1) Less that half of revolving TL's reporting a balance, AND

2) Half or less of all TL's reporting a balance.

Closed TL's count if they are reporting a balance.

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Credit I have a total of 5 revolving accounts 6 if you want to count the closed BofA credit card. The other open TL is my car loan. 3 revolving accounts reported balances so that is within your parameter of 50%. As for my utilization and the closed BofA card? Well put it this way the limit was only 5K and the balance reported was only 30 bucks. Thankfully I could lose all but 1 of my credit cards and my utilization would be just fine.

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As described:

Number of revolving TL's = 6

Number of revolving TL's with balances = 3

Number of installment TL's = 1

Total TL's with balances = 3 revolving + 1 installment = 4

1) Less that half of revolving TL's reporting a balance, AND

(Total revolving TL's = 6, half = 3, (3=3) so NO)

2) Half or less of all TL's reporting a balance.

(Total TL's = 7, half = 3.5, (4>3.5) so NO) 

 You fail both tests.

Assuming the closed account did not have a balance:

Number of revolving TL's = 5

Number of revolving TL's with balances = 2

Number of installment TL's = 1

Total TL's with balances = 2 revolving + 1 installment = 3

1) Less that half of revolving TL's reporting a balance, AND

(Total revolving TL's = 5, half = 2.5, (2<2.5) so YES)

2) Half or less of all TL's reporting a balance.

(Total TL's = 6, half = 3, (3=3) so YES)

This works better. You pass both tests.

Of course when you pay off that $30 balance you will lose $5K out of the UTIL calc, To be optimal you still have to be < 9% UTIL without the $5K.

Now you know the true value of unused store cards and in not closing TL's without a very good reason! The more installment loans you have the more zero balance revolving accounts you need to offset them.

[smallfry]

I had to close the BofA card due to problems with my AU's. The card was used in error the day before the last statement cut so I could not pay it w/o a balance reporting. Since I have 80K available and use just a shade over 1K a month I doubt I will miss the 5K limit.

[Anonymous]

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@smallfry wrote:
I had to close the BofA card due to problems with my AU's. The card was used in error the day before the last statement cut so I could not pay it w/o a balance reporting. Since I have 80K available and use just a shade over 1K a month I doubt I will miss the 5K limit.

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My comment was more directed at the next person who comes along and looks at that calculation and says, "Huh?" than it was at you. You will definitely be better off with that card out of the picture.

[Macroman]

Updates:

Wal-Mart rate jacked me to 22.9%

DIscover- I expect to PIF by the October billing cycle.

Citi-Lowered my APR on CITI card to 22.5 and ATT card to 21.9

I plan to PIF Wal-mart by November cycle. 

[jackg]

Macroman,

I do agree