Overall Utilization - FICO 9

[sto0pyd]

Since FICO 9 is gaining popularity with my main credit unions, does anyone know how the new model works in terms of utilization? I tried searching through the forum and couldn't find anything. Does the < 30% utilization apply to your aggregate limit, or to just one card? When do you start losing points?

Basically, I have ~280k in revolving with 0% utilization. I received an offer to use one of my cards @ 0% for 12 months with no transaction fee. I'm about to spend ~$7k to help a family member out (already regretting the decision, but I'll be OK). Instead of using my savings for the family loan, I figured why not use the 0% offer and use the money I get back every month to pay the balance down. The card I want to get the advance from has a limit of $22k, so the balance would be close to the 30% threshold but would still be ~2% of the overall available credit. This would also be the only card carrying a balance. 

[Anonymous]

$7000/$22000 = 31.8%

Why not do the balance transfer as desired but before the first statement cuts, pay it down to $6350?  That's $650 payment will bring you below 29%.  If they're paying you over 12 months, they'll be paying about that anyway so it might cost you out of pocket for a few weeks at most.

[sto0pyd]

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@Anonymous wrote:

$7000/$22000 = 31.8%

Why not do the balance transfer as desired but before the first statement cuts, pay it down to $6350?  That's $650 payment will bring you below 29%.  If they're paying you over 12 months, they'll be paying about that anyway so it might cost you out of pocket for a few weeks at most.

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I plan on carrying a balance of ~6300 so that it would be less than the 30% benchmark. But to my question, if you know it, is the 30% benchmark towards the single limit of a card? - or your overall limit?

[Anonymous]

FICO9 theories currently discuss that the huge differences are in paid collections and in thin/thick profile differences.  I haven't seen a single data point mentioning that utilization is different over FICO8.

Generally for FICO8 the rule is <9% aggregation utilization is important, and <29% individual utilization is as well.

Since you're SO CLOSE to <29% (meaning, 28.9% or lower), if you're actually actively seeking credit elsewhere, just pay it down there and call it a day.

If you are NOT seeking credit in the next 60 days, maybe let it report 32% and if you pull your FICO9s monthly, post your own data point on what happens!

[Anonymous]

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@sto0pyd wrote:

Since FICO 9 is gaining popularity with my main credit unions, does anyone know how the new model works in terms of utilization? I tried searching through the forum and couldn't find anything. Does the < 30% utilization apply to your aggregate limit, or to just one card? When do you start losing points?

Basically, I have ~280k in revolving with 0% utilization. @I received an offer to use one of my cards @ 0% for 12 months with no transaction fee. I'm about to spend ~$7k to help a family member out (already regretting the decision, but I'll be OK). Instead of using my savings for the family loan, I figured why not use the 0% offer and use the money I get back every month to pay the balance down. The card I want to get the advance from has a limit of $22k, so the balance would be close to the 30% threshold but would still be ~2% of the overall available credit. This would also be the only card carrying a balance. 

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Responding to blue above:

Total or aggregate utilization counts all your credit limits together.  For total utilization you begin losing FICO points when you cross 8.99% into 9.0%.

Individual utilization looks only at each card and its limit by itself.  Some people have been unable to see a scoring loss even when their individual U is as high as 48.9% (as long as their total U is low).  The general consensus is that < 29% is safe for a zero point penalty.

Responding to green above:

When you say that you have 0% utilization, do you means that all of your cards are reporting $0?  If so, you are being penalized by FICO.  Probably about 20 points.  This penalty goes away if you allow one card to report a balance of at least a few dollars.

As far as the FICO 8 vs. 9 distinction, in both models all of the above is true.  Also in both models, the scoring penalties are termporary -- they vanish once your CC balances change (i.e. to the recommended low but positive util).  Because they are temporary, it probably isn't worth worrying about them, given your general tendency to have low util most months.

PS.  Nice responses by ABCD.

[NRB525]

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@sto0pyd wrote:

Since FICO 9 is gaining popularity with my main credit unions, does anyone know how the new model works in terms of utilization? I tried searching through the forum and couldn't find anything. Does the < 30% utilization apply to your aggregate limit, or to just one card? When do you start losing points?

@Basically, I have ~280k in revolving with 0% utilization. I received an offer to use one of my cards @ 0% for 12 months with no transaction fee. I'm about to spend ~$7k to help a family member out (already regretting the decision, but I'll be OK). Instead of using my savings for the family loan, I figured why not use the 0% offer and use the money I get back every month to pay the balance down. The card I want to get the advance from has a limit of $22k, so the balance would be close to the 30% threshold but would still be ~2% of the overall available credit. This would also be the only card carrying a balance. 

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What are your FICO 9 scores now?

[Anonymous]

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@Credit_Manager wrote:

US Credit Czar David Howe published a number of educational articles including a recent video correcting the LA Times, Bloomberg, and NBC concerning FICO utilization.  Perform a Google with the following to expand your knowlege: FICO Score Benefit from Carrying Balances while Ending Misinformation Published by Bloomberg, NBC, and LA Times .

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Hey Credit Manager!  Thanks for the suggested article and welcome to the forums.

It sounds like the author (David Howe) is confused about the difference between carrying a balance and reporting a balance.  The person he's critiquing (Liz Weston) is indeed correct.  Liz writes that many people mistakenly think that there is a scoring advanatge to carrying a balance -- she's right that there is no advantage to carrying a balance.  There is however an advantage to having at least one card that reports a small balance each month.

Howe doesn't appear to understand the difference, so he may be diving down an unnecessary rabbit hole.  The folks here on the forum certainly know that there is an advantage to having one card that reports a balance -- that's pretty uncontroversial.

Note that his self-description is pretty over the top as well: "the world’s most successful FICO and Vantage achiever since the invention of the computer."  He's got an 850, but hundreds of other people have an 850.  Maybe even thousands.

Below is the relevant text from the article:

SAN RAFAEL, Calif.--(BUSINESS WIRE)--“Earlier in the year, I expanded and corrected oversimplified content from Liz Weston which appeared in publications including the LA Times, Bloomberg, and NBC,” commented David Howe, SubscriberWise founder and the world’s most successful FICO and Vantage achiever since the invention of the computer. “Specifically, the misinformation stated: ‘More than two in five (41 percent) mistakenly believed that carrying a small balance on a credit card month to month could help improve a person's credit scores’

“Today I want the record to reflect that carrying a small balance, in fact, does improve a person’s credit score,” Howe emphasized.

“For the last several months I’ve been controlling specific trade accounts to demonstrate the positive impact that ‘carrying balances month to month’ actually has on the calculation of a FICO Score. And as I’ve reported - and proved in the past - there’s definitely a benefit in terms of the total number of points when obligations are indicated and credit-to-debt ratios are favorable at the very moment a FICO score is generated.

“In fact, with my particular credit profile the impact of not carrying any balances is 52 points from the max high of 850,” the FICO GOAT added. “Moreover, there’s not an individual on the planet that today will achieve an 850 FICO score without utilization present at the moment a FICO score is generated.

[NRB525]

The FICO GOAT. 

ROFLMAO

I wonder if his testing puts all Intallment accounts, Mortgage, and credit cards at zero? 

[sto0pyd]

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@Anonymous wrote:

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@sto0pyd wrote:

Since FICO 9 is gaining popularity with my main credit unions, does anyone know how the new model works in terms of utilization? I tried searching through the forum and couldn't find anything. Does the < 30% utilization apply to your aggregate limit, or to just one card? When do you start losing points?

Basically, I have ~280k in revolving with 0% utilization. @I received an offer to use one of my cards @ 0% for 12 months with no transaction fee. I'm about to spend ~$7k to help a family member out (already regretting the decision, but I'll be OK). Instead of using my savings for the family loan, I figured why not use the 0% offer and use the money I get back every month to pay the balance down. The card I want to get the advance from has a limit of $22k, so the balance would be close to the 30% threshold but would still be ~2% of the overall available credit. This would also be the only card carrying a balance. 

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Responding to blue above:

Total or aggregate utilization counts all your credit limits together.  For total utilization you begin losing FICO points when you cross 8.99% into 9.0%.

Individual utilization looks only at each card and its limit by itself.  Some people have been unable to see a scoring loss even when their individual U is as high as 48.9% (as long as their total U is low).  The general consensus is that < 29% is safe for a zero point penalty.

Responding to green above:

When you say that you have 0% utilization, do you means that all of your cards are reporting $0?  If so, you are being penalized by FICO.  Probably about 20 points.  This penalty goes away if you allow one card to report a balance of at least a few dollars.

As far as the FICO 8 vs. 9 distinction, in both models all of the above is true.  Also in both models, the scoring penalties are termporary -- they vanish once your CC balances change (i.e. to the recommended low but positive util).  Because they are temporary, it probably isn't worth worrying about them, given your general tendency to have low util most months.

PS.  Nice responses by ABCD.

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Thank you all! Based on the summary, I have 0% utilization, but in reality, I had 1 account reporting a small balance of $34. From my last report, aggregate limit was at $269,700. I'm wondering if I'm getting penalized for this... The reason for my question is because I've been pampering my credit ever since I've started rebuilding from 3 years ago. Even though I have no major purchases coming up, it's just a bummer to see scores take a dip.

@Anonymous far as my FICO 9 score, Equifax (NFCU) has it recorded at 739; Experian (San Diego County CU) @ 718. 

[Revelate]

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@sto0pyd wrote:

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@Anonymous wrote:

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@sto0pyd wrote:

Since FICO 9 is gaining popularity with my main credit unions, does anyone know how the new model works in terms of utilization? I tried searching through the forum and couldn't find anything. Does the < 30% utilization apply to your aggregate limit, or to just one card? When do you start losing points?

Basically, I have ~280k in revolving with 0% utilization. @I received an offer to use one of my cards @ 0% for 12 months with no transaction fee. I'm about to spend ~$7k to help a family member out (already regretting the decision, but I'll be OK). Instead of using my savings for the family loan, I figured why not use the 0% offer and use the money I get back every month to pay the balance down. The card I want to get the advance from has a limit of $22k, so the balance would be close to the 30% threshold but would still be ~2% of the overall available credit. This would also be the only card carrying a balance. 

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Responding to blue above:

Total or aggregate utilization counts all your credit limits together.  For total utilization you begin losing FICO points when you cross 8.99% into 9.0%.

Individual utilization looks only at each card and its limit by itself.  Some people have been unable to see a scoring loss even when their individual U is as high as 48.9% (as long as their total U is low).  The general consensus is that < 29% is safe for a zero point penalty.

Responding to green above:

When you say that you have 0% utilization, do you means that all of your cards are reporting $0?  If so, you are being penalized by FICO.  Probably about 20 points.  This penalty goes away if you allow one card to report a balance of at least a few dollars.

As far as the FICO 8 vs. 9 distinction, in both models all of the above is true.  Also in both models, the scoring penalties are termporary -- they vanish once your CC balances change (i.e. to the recommended low but positive util).  Because they are temporary, it probably isn't worth worrying about them, given your general tendency to have low util most months.

PS.  Nice responses by ABCD.

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Thank you all! Based on the summary, I have 0% utilization, but in reality, I had 1 account reporting a small balance of $34. From my last report, aggregate limit was at $269,700. I'm wondering if I'm getting penalized for this... The reason for my question is because I've been pampering my credit ever since I've started rebuilding from 3 years ago. Even though I have no major purchases coming up, it's just a bummer to see scores take a dip.

@Anonymous far as my FICO 9 score, Equifax (NFCU) has it recorded at 739; Experian (San Diego County CU) @ 718. 

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Any non-zero reported balance escapes the all revolvers = $0 penalty.