@smallfry wrote:
I know for a fact that FICO rounds up to 1%. I had $122 report a few months ago on $130K available credit and it was rounded up.
There are two separate issues here. I know for a fact that in some cases utilization of less than 1% can generate FICO scores higher than having exactly 1% utilization. FICO does not round up the utilization percentage when generating the score.
Just because the FICO summary may have said that your $122 was 1% of $130K does not mean that the score was generated based upon a 1% utility. Your score was generated based upon .09% (point 09%).
If you don't believe me play with the FICO score simulator. The score changes at utilization points that are not necessarily whole percentage numbers.
When an explanation (reason) is generated pertaining to the score or other scoring factors, fractions of a percent are not used. The percentage is rounded up for explanation purposes.
The balance that generates my maximum FICO score is below one percent. If I carried a balance of exactly 1% of my total credit limit my FICO score is lower. The actual scoring algorithm definitely does not round up a fractional percentage (utility) to the next highest percent and then use the rounded utility percentage to complete the scoring computation.
Generally when doing mathematical calculations you use numbers accurate to a certain number of decimal places. The final number can then be rounded up or down. One doesn't usually round all numbers to one decimal place and then begin the calculation.
If the final number is greater than 0 but less than 1, rounding up to one is more accurate than claiming that there is no numeric value at all. One could hardly say that utility was zero when a small balance in fact existed.
That is what happened in your case. Your actual utility was 9/100 of 1 %. It was not zero. When explaining your utility percentage the FICO guys simply prefer to use whole numbers when making their explanations.
When Equifax quotes a consumer's average age it uses years and months. The other bureaus seem to round down to the year. That does not necessarily mean that Equifax generates a score based on average age to the nearest month, while the others base the score on average age rounded down to the year. It is simply the way the different bureaus choose to summarize the consumer's stats.
In this forum we try to determine cause and effect of FICO scores. We are basically trying to "reverse engineer" a secret algorithm even though we will never have all of the essential data to work with.
We must be careful not to introduce inaccurate assumptions about the data that we can observe and test. Just because MyFico rounds up when telling a consumer what his utilization is, it does not mean that the scoring algorithm rounds up in a similar manner.
I have been trying to shed some light on the utilization sweet spot issue for some time now. There seems to be few who have acknowledged that they understand or at least are open to the possibility that the phenomenon does exist.
colbaltnv is one of a few who seems to understand the reality of a slight bump in score in some cases at below the 1% utilization mark.
I really shouldn't try so hard to keep setting the record straight. The issue no longer matters to me for my scoring purposes. If it matters to others I have already explained how they can find their own "sweet spots" i am sure some have. It is not that hard.
If a person needs a few extra points he can find them in some cases below 1% utility. The FICO simulator was pretty accurate in predicting where I should start when I performed my own month to month trial and error tests a few years ago.
smallfry,
I am not trying to disagree with your statement. You are correct when stating that FICO rounds up. FICO however only rounds up when giving summaries or explanations. FICO does not round up basic raw data before performing the actual score calculations.
