OPTIMUM UTILIZATION % - WHAT SHOULD IT BE - EXPERTS PLEASE - THANK YOU

[haulingthescoreup]

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@Anonymous wrote:

I just got a shock.

I got an e-mail today that my credit score went down 18pts, from 730 to 712...the reason given was vague.

I have 11 personal credit cards (one card has a credit limits up to 55.5k) and utilization on all cards from 0 to 30%, that i keep a close eye on.

Then i needed to make a business charge, so i used one of my personal cards w/ 0 balance so i could know the $$$$ used separate from my personal charge.

But, stupid me, i picked a card w/ a 3.5k limit for a 1.7k charge....i.e. over 50% utilization. Last Tuesday (Mar11) was the statement date, so I and the world found out about it Mar12, my credit dropped 18 pts on Mar14.

What i should have done is pay it off or to 1-9% utilization before Mar11.

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Ouch! I know it stinks now, but you'll have it turned around next month.

This is the sort of thing that I'm really going to have to stay on top of, since I'm determined to keep everything PIF'd but the BT card. With this many cards, it should be interesting! I've already called everyone and found out the statement dates.

[haulingthescoreup]

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@fused wrote:

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@MidnightVoice wrote:

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@fused wrote:
It's been rumored that folks with thick files are more likely to get away with a single CC nearly maxed-out.

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Well, EX thinks my Heloc is a CC and hates it being at 75% util! (50 points of hate)

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Are you sure EX has it wrong and your not lender miscoding it? I have a new BoA unsecured LOC for 26.5K (not tied to a house) and it's reported as a home equity loan on EX.

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So, in other words, EX is miscoding it?

Pretty sweet, having a HELOC when you rent!

[RobertEG]

To address your original question of "1-9% being optimal," many offer anecdotal opinions on this, and it appears to have become the general consensus on this site.  I dont question this conclusion per se, just the validity of the basis for such a conclusion..FICO is a proprietary, trade secret scoring algorithm, and no one can speak definatively on this assumption except for FairIsaac, and that is just not going to happen.  I, for one, have not seen any substantive difference beween 12% and 9%, and do not see a valid basis for this mantra.

Since we will never get any definative answer from FairIsaac on this, the only way to truly evaluate it is to collect a significant amount of data from consumers, and use that to statistically evaluate the assumption.  Siingle anecdotes are not statistically valid to support the hypothesis. 

If readers are interested in a more definative answer to tthe affect of this, and other assumptions, upon FICO score, it can only come from we users setting up a consumer database that can collect enough data for an intelligent analysis.  CuckG has volunteered to do this, but to date, support has not followed.

So if you choose to rely upon anecdotes, just realize their inherent statistical limitations.

[Anonymous]

My Anecdotal Evidence.

Top Negative Factor number 4 on my credit report:

Negative Factor: You've made heavy use of your available revolving credit.

The proportion of balances to credit limits (high credit) on your revolving accounts is 13%.For FICO High Achievers, this ratio is 7%, on average.

When my utilization went up from 7% (to the present 13%), I got a 18 point score drop to 597 and now have no positive factors on my score according to Equifax.

[RobertEG]

WOW!  Messages attached to credit analysis do not even arise to the level of an anecdote. they are BS,  If I saw a BS message like that on my "what is hurting you" canned message in the analysis portion of my credit report that said  13% util was a neg factor, I would laugh heartedly, and put it in the nearest trashcan.  That is clearly well below average util, and cannot "hurt."

Those "what is hurting" and "what is helping" score messages are total BS, and usually totally contradictory.  Ignore them!  They are computer-generated, usually pegged to only one account, and at the least, misleadng, and at the most, harmful.  Trash Can 101!

Message Edited by RobertEG on 03-22-2008 11:00 PM

[RobertEG]

I do not believe, from my years of monitoring, that a few percent above or below 10% overall util (your report wandering from 7% to 13%) could alone to have led to this kind of drop that your report.  There has to be something else that changed in the underlying credit report. Did %util of one card jump significantly?  Do more cards now show balances?  New credit inquires?  Dropping of a prior account?  Late, a challenged account?  Something else is clearly at work here...

[haulingthescoreup]

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@RobertEG wrote:

WOW! Messages attached to credit analysis do not even arise to the level of an anecdote. they are BS, If I saw a BS message like that on my "what is hurting you" canned message in the analysis portion of my credit report that said 13% util was a neg factor, I would laugh heartedly, and put it in the nearest trashcan. That is clearly well below average util, and cannot "hurt."

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I don't know that I agree. This poster had very high scores, and that means there is a good chance s/he is in a high score bucket. I got nailed on my scores with my new apping, and one message was about high util, as in 17%, I think. This was because of a 0% balance transfer. Util before had been under 1%.

In my experience, those with long, long histories are expected to have very little util. My kids don't get this at all. In fact, my son once got a positive with 23% util, but his history was only 5 years at the time.

[Anonymous]

In Response to Robert... "Did %util of one card jump significantly? Do more cards now show balances?" Yes, I have 6 revolving accts and 4 with a total balance of $3,321, available credit is $22,279, credit limits $25,600 (13% util). BUT one of the cards IS over 50% utilization for the first time ever so maybe that is the problem. I have paid everything down to $0 balance this month so we'll see next update if I get my 18 points back... BTW - nothing else changed - no new inqs, no new accts...

[Anonymous]

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kbns625 wrote:
BUT one of the cards IS over 50% utilization for the first time ever so maybe that is the problem.

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That will absolutely do it!  Individual utilization and overall utilization are counted about equally.  One card over 50% is definitely worth at least a few points.