Is there some truth in the simulators about pay/use ratio to increase score

[Anonymous]

Hi Everybody

I know people say the simulators can't really simulate anything because they can not factor different changes, but I was wondering if there is any truth on some of it, that you guys knew better.

I am specifically talking about when, in my case, score 669. (49% of my available credit (17k))

 pay off $2000     -->     simulated credit score  693

pay off $ 3000      -->                                              670

pay off $ 3000 + use $500 credit to buy -->       715

(paying those 3000 would still not get me below the almost ideal below 30% )

question 1

So... is there a rule ratio that you guys are aware of pay/use ratio so help better your score

how much you should pay + how much you should use

I understand, the best way to improve my score is keeping it below 30%, even better 10%, and have some utilization to be payed every month, and maybe that is what the simulator refers to.

question 2

By every month, does this mean, after the statement has been issued? That would create interests, right? But I guess they need the expenses to go trough the statement cycle so it counts for the credit score.

thanks!

[Trudy]

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@Anonymous wrote:

Hi Everybody

I know people say the simulators can't really simulate anything because they can not factor different changes, but I was wondering if there is any truth on some of it, that you guys knew better.

I am specifically talking about when, in my case, score 669. (49% of my available credit (17k))

 pay off $2000     -->     simulated credit score  693

pay off $ 3000      -->                                              670

pay off $ 3000 + use $500 credit to buy -->       715

(paying those 3000 would still not get me below the almost ideal below 30% )

question 1

So... is there a rule ratio that you guys are aware of pay/use ratio so help better your score

how much you should pay + how much you should use

I understand, the best way to improve my score is keeping it below 30%, even better 10%,  and have some utilization to be payed every month, and maybe that is what the simulator refers to. 

Sounds like you're referring to Credit Karma advice which does not absolutely correlate with FICO scoring.

question 2

By every month, does this mean, after the statement has been issued? That would create interests, right? But I guess they need the expenses to go trough the statement cycle so it counts for the credit score.  

No.  Interest is only charged if you do not pay your statement balance.  You will have until the statement due date to avoid interest.

thanks!

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UTL is what is reported to the CB which is your statement balance with the exception of a few lenders who report on the last day of the month regardless of statement date (USBank is one).  So you can spend as much as you want, pay it down through the month and let a small amount report on the statement.  Many do this to benefit from rewards.  Run up the balance in a month, pay it down throughout the month to a small amount before the next statement close date.

The credit bureaus don't know what you spend, only what is reported by the creditor which is the statement balance.  To maximize your score from a UTL perspective, you want only one CC/revolver reporting a balance.  Since the CB's don't know what you spend, only the amount reported, this is the only way they know you use your credit and pay or don't pay responsibly.  If you report $0 on all revolvers than you will incur a "no UTL" penalty.

There's individual UTL and separately aggregate UTL.

The known thresholds (or ratio rules) are 8.9%, 28.9%, 48.9% in increments of 20 up to 100% maxed out. I believe above 88.9% is considered maxed for scoring purposes. Each time you go below a threshold you could gain points granted all other things remain constant (on time payments, no new accts, no new inquiries, etc). It is said that certain profiles can be up to 28.9% on an individual card without a penalty.  Above this you will incur a score penalty when crossing these threshold's.  Some see a difference with greater than 25%, and even 9%. All profiles are different.  I see a loss when greater than 25%.

Aggregate UTL (all revolvers) have the same thresholds as above with the exception that the 8.9% is ideal. This is a separate scoring factor from individual cards.  Crossing this at each upper threshold could cause a point loss.  Some profiles see a gain at certain percentages below the 8.9% threshold.  Again, all profiles are different.  I see a gain below 6% on EX.

If trying to gain points the 1st thing I'd suggest is paying off all balances with the exception of 1.  If you can, bring that one down as far as you can.  This will impact the # of accounts reporting (impacts score also) and you may cross the above thresholds which would likely give you points for each threshold crossed.  If you have to take it slow than bring accounts down below the next threshold and you should see a gain.  Clearly the more thresholds crossed the better score impact.

I can't quantify what you may gain buy others do this very well.  They will generally request balance and CL for each card, including interest rates to help you with the best game plan and what you might expect in point gain.

[Trudy]

There are plenty of threads regarding this but just ran across this one that might be helpful.

https://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/How-to-increase-credit-score/td-p/5825226

[Anonymous]

The expenses going through the statement cycle simply causes them to report which causes you to have an additional account with a balance and higher utilization, which HARMS your score, if it causes you to cross a threshold. (Except for the exception when you have all zero balances, where you will of course wear a penalty.)

There is no pay/use ratio. The way you show use to the algorithm is by having a non-zero balance on at least one revolver. That’s why it penalizes you when they’re all zero. Back when these algorithms were created, I guess they thought that was the best way to determine use.

Now, vantagescore 4.0, if you want a high score there, then you’re going to need to report a balance and then show it being paid off, I’d imagine because it uses trended data. But the only lender I’m aware of that uses VS4 now is synchrony.

As long as you PIF by the due date, there’s no interest from most CCs. Check your T&Cs for specific cards. Some do immediately begin interest, I believe, like low-interest Barclay Ring.

[Anonymous]

@Trudy, you found a 25% individual threshold? Was it isolated? Are you sure there’s nothing else that could’ve affected it?

That’s the first time I’ve ever heard of a 25% individual utilization threshold. I’ve heard of 4% on young thin scorecards and then of course, the 8.9% and every 20% increasing up to 88.9%, but 25% is new to me.

[Trudy]

Yep, it was isolated.  BBS also said he saw this on his profile.  I'll try to find the post.

[Anonymous]

Very interesting. I would definitely like to know more. what was your aggregate change and your individual change when you saw this and was there a change in the number of accounts with a balance?

[Trudy]

It may be easier for you to inquire with BBS as I'm unable to find the post since I believe it's been over 3 -6 months + and we post a lot. If I find it I will send it to you.  But my UTL was above 25%, less than 29% when he responded to my post regarding a change he saw below 25% and I realized it after dropping my UTL to that point.

[Anonymous]

Right and I'll have to ask BBS about his,but I'd also like to know about yours. The more DPs, the better, right?

Can you tell me the exact individual percentage changes, like 28.6% to 24.4% and if the number of accounts with a balance changed. If so from how many to how many. And were there any other changes? Not on the 1st of the month? Ect..

Thanks!

Whatever info you are willing to share will be appreciated.

[Trudy]

Birdman7

Wanted to find the post to get an idea of when this occurred.  Couldn't find the post but it was 6/29 through 7/31.

6/29/19 Score 799

AGG UTL = 14.26%

AoYA     10m

AAoA     11y10m

AoOA     23y3m

4accts reporting 2R 2L

1R @ 21%, 1R @ 27%

Auto 25.3% UTL, Mtg 92.1% UTL

76.7% AGG installment UTL

--------------------------------------------------------

7/31/19 - Score change to 803

AGG UTL = 11.64%

AoYA     11m

AAoA     11y11m

AoOA     23y4m

4accts reporting 2R 2L

1R @ 15% 1R @ 25%

Auto 23.1% UTL, Mtg 91.2% UTL

75.5% agg UTL