Testing Credit Card Utilization Thresholds

[spiritcraft1]

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@Anonymous wrote:

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@spiritcraft1 wrote:

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@Anonymous wrote:
40 points is huge. Do you know how many points were allocated to each metric? Maybe we should revise the parameters if we have an outlier data point.

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I have no idea if this data is useful but it did happen with no other changes.  All bureaus changed but not as drastically as EX. 

Looking back it was 22 in total over a few days as all of her accounts reported zero balance.  Most of her accounts report within a few days at the beginiing of the month)

The final 18 drop was in one day as my NFCU Go rewards reported a zero balance.  She is an AU on that account. 

Just prior, she was at a multi year high in terms of FICO 08 - 752

Again, she has just two 6.5 YO paid CO's and could be changing "buckets" or who knows what.   I will report back in a week to see what happens when an AU and one of her accounts report a small balance.

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@spiritcraft1 I'm pretty sure that your right, it is the AZ penalties. She will experience scorecard reassignment when those COs fall off at 7 years though. Sounds like she'll have a very nice score at the point.

@Thomas_Thumb Point taken.

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Thanks.  Yes, she and I both.  She has also risen from the low 400's in 2014-2016.  I am obviously not in the same situation as I still have a couple CA's along with CO's.  All will be gone by Springtime...  rebirth.

[Anonymous]

@spiritcraft1 Congratulations to you both! I look forward to all the DPs!

[mowglidude]

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@Anonymous wrote:

@mowglidude 8.81% rounds to 9% though we just learned, so actually you aren’t yet under 9% per fico.

I’ll look forward to your dp first week of October, you mean? Btw, if you wanna read what we just learned from the experts, its stickied as the first post in UFS subforum.

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I had a Chase card post today from $26 balance to $0 and my score went up 8 points? How weird. That is the only change in my bureaus today. I went from a 798 FICO 8 to an 806 FICO 8 score today. My aggregate UT only went from 8.81% to 8.79%, which still would be 9%, correct? Don't get me wrong, being over 800 for the first time EVER on EX, is a testament to this board and all the help I have recieved. Curious though, why the 8 point raise in score for such a small change? 

[Thomas_Thumb]

The score change is almost certainly not due to a change in utilization. I suspect it relates to a reduction in # of accounts/% of cards having a balance.

[mowglidude]

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@Thomas_Thumb wrote:

The score change is almost certainly not due to a change in utilization. I suspect it relates to a reduction in # of accounts/% of cards having a balance.

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That could be true. I now have 7 out of 13 credit card accounts with a zero balance and 3 accounts under $100 balances. If I were to zero those 3 out and have 10 out 13 cards at zero, would I see another score increase? Also, I am going to pay one of the two cards I have at a 26% individual UT, down to make my aggregate UT fall below 8% and see what that does. I'm at 8.79% aggregate UT now. 

[Thomas_Thumb]

Yes, in the range of 5 to 10 points. Commonly accepted thresholds for % of cards reporting are:

1) crossing above 30% (or 33%) depending on who you talk to

2) crossing above 50% (some people think hitting 50% is the milestone - not in my book)

 - I saw no change going from 2 of 6 to 3 of 6 cards with balances. However, I did see a drop on EQ Fico going to 4 of 6 (going from 50% to above 50%)

Other thresholds not as widely accepted but with some supporting data include:

1) Going above 20% of cards reporting balances

2) Going above 80% of cards reporting balances

3) Having 100% of cards report balances (profiles with only one card should report a balance on it). The all zero penalty is far greater than 1 of 1 cards reporting a balance.

Side note: Fico also looks at NUMBER of accounts with balances. Accounts are all inclusive with the possible exception of AU accounts. Too many accounts with balances can result in a score penalty independent of % of cards with balances.

[Anonymous]

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@mowglidude wrote:

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@Thomas_Thumb wrote:

The score change is almost certainly not due to a change in utilization. I suspect it relates to a reduction in # of accounts/% of cards having a balance.

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That could be true. I now have 7 out of 13 credit card accounts with a zero balance and 3 accounts under $100 balances. If I were to zero those 3 out and have 10 out 13 cards at zero, would I see another score increase? Also, I am going to pay one of the two cards I have at a 26% individual UT, down to make my aggregate UT fall below 8% and see what that does. I'm at 8.79% aggregate UT now. 

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@mowglidude Hey we have a new and improved utilization chart in the primer now, if you'd like to check it out. We are still confirming everything with rounding and with your testing and Cassie's testing hopefully everything will be confirmed.

Yes number of cards with a balance can definitely affect score, but it's usually not very predominant on EX8 for most profiles.

There's actually a couple things we should probably check. I remember I was helping you with utilization on Excel, but that's not really my forte, and I don't think we truncated the balances. Matter fact, I remember I screwed up I was so tired at the time and had to come back to correct myself.

I'd like to get @Anonymous to give you the proper formula and have you enter that and see if you still come up with the same  utilization, so we can make sure and be precise about this test, if that's all right?

Because we're getting down to tenths of a percent here so truncated balances could make a difference. or you can manually truncate them, meaning no matter what the cents are, you drop them and only use the integer.

I don't think we entered anything about rounding so I'm assuming it's doing normal rounding on its own but that's something Cassie could tell us.

[Anonymous]

@Thomas_Thumb those could likely be the thresholds you may very well be correct. 

[mowglidude]

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@Thomas_Thumb wrote:

Yes, in the range of 5 to 10 points. Commonly accepted thresholds for % of cards reporting are:

1) crossing above 30% (or 33%) depending on who you talk to

2) crossing above 50% (some people think hitting 50% is the milestone - not in my book)

 - I saw no change going from 2 of 6 to 3 of 6 cards with balances. However, I did see a drop on EQ Fico going to 4 of 6 (going from 50% to above 50%)

Other thresholds not as widely accepted but with some supporting data include:

1) Going above 20% of cards reporting balances

2) Going above 80% of cards reporting balances

3) Having 100% of cards report balances (profiles with only one card should report a balance on it). The all zero penalty is far greater than 1 of 1 cards reporting a balance.

Side comment: Could the thresholds for % of cards with balances be 20%, 40%, 60%, 80% and 100%?

Side note: Fico also looks at NUMBER of accounts with balances. Accounts are all inclusive with the possible exception of AU accounts. Too many accounts with balances can result in a score penalty independent of % of cards with balances.

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So it looks like I went below 50% reporting. I can even go down to about 23% reporting and see if that does anything.

[mowglidude]

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@Anonymous wrote:

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@mowglidude wrote:

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@Thomas_Thumb wrote:

The score change is almost certainly not due to a change in utilization. I suspect it relates to a reduction in # of accounts/% of cards having a balance.

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That could be true. I now have 7 out of 13 credit card accounts with a zero balance and 3 accounts under $100 balances. If I were to zero those 3 out and have 10 out 13 cards at zero, would I see another score increase? Also, I am going to pay one of the two cards I have at a 26% individual UT, down to make my aggregate UT fall below 8% and see what that does. I'm at 8.79% aggregate UT now. 

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@mowglidude Hey we have a new and improved utilization chart in the primer now, if you'd like to check it out. We are still confirming everything with rounding and with your testing and Cassie's testing hopefully everything will be confirmed.

Yes number of cards with a balance can definitely affect score, but it's usually not very predominant on EX8 for most profiles.

There's actually a couple things we should probably check. I remember I was helping you with utilization on Excel, but that's not really my forte, and I don't think we truncated the balances. Matter fact, I remember I screwed up I was so tired at the time and had to come back to correct myself.

I'd like to get @Anonymous to give you the proper formula and have you enter that and see if you still come up with the same  utilization, so we can make sure and be precise about this test, if that's all right?

Because we're getting down to tenths of a percent here so truncated balances could make a difference. or you can manually truncate them, meaning no matter what the cents are, you drop them and only use the integer.

I don't think we entered anything about rounding so I'm assuming it's doing normal rounding on its own but that's something Cassie could tell us.

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I'm going to go below 8% aggregate UT next billing cycle for my card. I was thinking maybe try first under 8.499% and see if it rounds down to 8%, maybe like 8.35%. What do you think? I have one more card that posts the next day, if all goes according to schedule, that I can bring that I can pay down, to arrive below 8% aggregate UT.