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The 'All At Just Under 8.99% Utilization' experiment

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Established Contributor

Re: The 'All At Just Under 8.99% Utilization' experiment


@MaizeandBlue wrote:


#2 of your plan doesn't make sense to me.  Its quite possible to spend up to 100% of your credit limit in any given month, then pay down the balance by reporting date so the lender only reports a small (< 8.9%) balance.

 Yes, I am aware, primarily due to posts from people like yourself on these forums!

 

I don't need the extra spending limit from these credit cards at all really. What I do need is a way to prove that I am fiscally responsible and always pay my bills on time. At $68,000 salary, saving for a down payment on a house, I couldn't even put that much on credit cards anyway.

 

I don't intend to rain on your parade but I doubt you will move to Excellent (defined as a FICO score > 800) on all three CRAs in one year.  FICO scores are essentially logarithmic so it becomes more difficult to increase scores rapidly once you're above a 700 score.  Not to mention you have a loan that will be reported as paid, and two new credit accounts.  All three events will negatively affect your score and with a thin profile the effects are magnified.  The loss of the loan affects your credit mix (10% of FICO score), and the two new accounts will temporarily decrease your score because they initially represent increased risk.

 I don't believe it either! I highly doubt it will work, but I do believe sticking to the plan will only have positive impact. I'll have 2 years of perfect payment history by the time I apply for a new auto loan, assuming I even apply for one next year. (My current car is paid off, and each month I keep it means another $400 I put into my Vanguard index fund.)

 

27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Partial update from Experian of 6 EX scores at AoYA 1yr 0mo. Also TU 8 from a myFICO alert. The rest to follow on 12/10.

Message 11 of 98
Senior Contributor

Re: The 'All At Just Under 8.99% Utilization' experiment


@CassieCard wrote:

I don't need the extra spending limit from these credit cards at all really. What I do need is a way to prove that I am fiscally responsible and always pay my bills on time. At $68,000 salary, saving for a down payment on a house, I couldn't even put that much on credit cards anyway.

 I don't believe it either! I highly doubt it will work, but I do believe sticking to the plan will only have positive impact. I'll have 2 years of perfect payment history by the time I apply for a new auto loan, assuming I even apply for one next year. (My current car is paid off, and each month I keep it means another $400 I put into my Vanguard index fund.)


Understood; but perhaps this is an opportunity to put all your normal spending on credit cards in order to get rewards like cashback or points. 

 

It wasn't my intention to be critical so if I came across as such I apologize; I'm simply attempting to temper expectations.  The people you tend to see with rapid increases in their FICO scores generally have had delinquencies/derogatories removed from their credit reports.  Your scores could easily fall to 720 or less when the closed loan and the 2 new credit accounts hit your credit report.  Then you'll be fighting uphill all year to hit 800 since one can only reasonably expect to see a 4-7 point increase in scores each month.  Perhaps one option is to get another credit builder/share secured loan and immediately pay it down to <8.9%; that would certainly offset the loss of the first loan.  The trick would be to find a lender that will allow the term of the loan to continue even if its paid down immediately. 





Message 12 of 98
Established Contributor

Re: The 'All At Just Under 8.99% Utilization' experiment


@MaizeandBlue wrote:
Understood; but perhaps this is an opportunity to put all your normal spending on credit cards in order to get rewards like cashback or points. 

That's exactly how I plan to use these 2 cards - for non-discretionary expenses first. Minus my rent, which I can't pay by credit card, I still couldn't put enough on there to make a huge difference. It would be something like $18,000 a year with a 1%/2%/4% cash back mix. I could maybe see $500 rewards back if I did that.

 

It wasn't my intention to be critical so if I came across as such I apologize; I'm simply attempting to temper expectations. 

 Oh no, I didn't take it that way at all! The only expectation I have from this little experiment is that my FICO 8 score will recover from the upcoming negatives to at least as good as the highest it has ever been - when utilization dropped from 17% to 8.47% on that secured loan.

But, maybe....just maybe....I might win that lottery (hypothesis).

 

The people you tend to see with rapid increases in their FICO scores generally have had delinquencies/derogatories removed from their credit reports. 

 You have now just seen someone with no derogatories - ever, not even if credit reports went back to elementary school - and a clean credit report with not even one HP or account on it,  achieve a +62 point gain on their FICO 8 score. I had no clue it was going to happen like that from a secured loan. I was bracing myself for denial when I walked into my credit union to apply for my first credit card.

 

Your scores could easily fall to 720 or less when the closed loan and the 2 new credit accounts hit your credit report.  Then you'll be fighting uphill all year to hit 800 since one can only reasonably expect to see a 4-7 point increase in scores each month.

 I'll be updating this thread with the scores as I see them drop. My Experian 748 already dropped 19 points to 729 from the 2 HP's over the last week. I'm anxious to see the drop from the paid off secured loan, which should happen by next Friday at the latest. Until those 2 new cards start reporting, I'm going to have zero open accounts and 2 new HP's, so that score should be sufficiently frightening to see for a while.

27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Partial update from Experian of 6 EX scores at AoYA 1yr 0mo. Also TU 8 from a myFICO alert. The rest to follow on 12/10.

Message 13 of 98
Super Contributor

Re: The 'All At Just Under 8.99% Utilization' experiment

OP congrats on your new cards. 

I would suggest you may be over thinking the next few months Smiley Happy

 

It is an interesting experiment but of course Utilization has no memory so all that effort each month won’t necessarily help with the score in December 2019. What will help is always paying on time Smiley Wink 

 

Where are your scores coming from? You mention a CK alert about the INQ. Are your updated scores from CK?

 

I use the MyFICO monitoring, the quarterly 3B version and the regular updates and identity theft monitoring goes with it.  It will be interesting to see your progress reports. 

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
Message 14 of 98
Established Contributor

Re: The 'All At Just Under 8.99% Utilization' experiment


@NRB525 wrote:

OP congrats on your new cards. 

I would suggest you may be over thinking the next few months Smiley Happy

Thank you. And yes, I am. lol

 

Where are your scores coming from? You mention a CK alert about the INQ. Are your updated scores from CK?

 From a myFICO 1B report, and creditchecktotal.com. (It's listed there in the original post.) I only mentioned the CK alert because it's free and alerts fairly quickly to hard pulls - within minutes as I found out while at my credit union.

 

I'll still post those Vantage Score 3.0's from there anyway, just to compare to the FICO 8 scores. I've noticed that Vantage Score 3.0 really doesn't like it if you have no revolving accounts, whereas the FICO 8 score went up dramatically with just 1 installment loan at 8.47% utilization. I have a feeling my Vantage score is going to drop below 600 soon, because the new revolving accounts won't show up for quite a while.

 

For the next few months, I won't even be able to get approval for a CVS card.

 

I use the MyFICO monitoring, the quarterly 3B version and the regular updates and identity theft monitoring goes with it.  It will be interesting to see your progress reports. 


 I think that's my best option as well. I need the monthly updates from the 3B+ to really make this worthwhile. I think I'll start it next week. It's going to be a while before the new cards start reporting.

27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Partial update from Experian of 6 EX scores at AoYA 1yr 0mo. Also TU 8 from a myFICO alert. The rest to follow on 12/10.

Message 15 of 98
Established Contributor

Re: The 'All At Just Under 8.99% Utilization' experiment

[UPDATE] December 31, 2018:

  • Now using myFICO Ultimate 3B+ monthly monitoring.
  • FICO 8 Scores are now: 729 EX, 728 TU, 730 EQ.
  • A 19pt drop on Experian, 20 point drop on Equifax, no drop on TU from the 2 recent hard pulls for the 2 newly approved cards.
  • Installment loan still on report and showing $42 left. No revolving card accounts showing yet.
  • I just used my new credit union $2000CL Mastercard to pay for the first month of the Ultimate 3B+ subscription.
  • That $39.95 charge was the first time in my life that I ever used my own credit card to pay for something. No change in vitals.
27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Partial update from Experian of 6 EX scores at AoYA 1yr 0mo. Also TU 8 from a myFICO alert. The rest to follow on 12/10.

Message 16 of 98
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Established Contributor

Re: The 'All At Just Under 8.99% Utilization' experiment

[UPDATE: January 3, 2019]

 

[This is all Experian data from Experian Creditworks Premium - FICO 8 Scores.]

Starting score with 1 secured loan, 1 HP, no revolving accounts, AoOA 1 year, no derogatories, no public records:
EX 729

All the following changes happened today, January 3, 2019 (new credit alerts from Experian):

  • -81 point drop to 648: My only open account, a secured loan, reported closed.
    • 'What's hurting your score?': No Loan Activity, Few Accounts Paid on Time, Short Account History, No Revolving Activity
  • +51 point gain to 699: My new credit union Mastercard reported a statement balance of $40 out of a $2000 credit limit. 2% utilization. Already paid it online. (Shows as 'Very Good' on 'Amount of Debt'. Experian's report says: "Ideal usage is 6% or less.")
    • 'What's hurting your score?': Short account history, Short revolving history, Few accounts paid on time

I activated my new card only 3 days ago, and already received a statement balance email last night on January 2nd. Also, Experian's credit report shows that this card was opened on December 1st, 2018. I first applied for it on Dec 20 and received it in mail on Dec 31. Made $39.95 charge on it that night. I'm amazed Experian picked up the new card activity so quick!

So contrary to popular opinion that told me I was going to experience nothing but negatives from a loan closure and a new credit card, I have survived the apocalypse and ended up with a 'Good' credit rating.

Experian FICO 8 699 Report:

 

experian-credit_alerts.pngA lovely day.

Payment History: Very Good

  • Late Payments: 0
  • Collections: 0
  • Negative Public Records: 0

Amount of Debt: Very Good

  • Revolving utilization: 2%
  • Accounts with Balances: 1
  • Revolving account Balance: $40

Credit History Length: Poor

  • Average Age: 7 mos
  • Oldest Account: 1 yr 1 mo ( The closed loan still counts here.)

Amount of New Credit: Good

  • Latest Open Account: 1 mo
  • Inquiries in Last Year: 1

Credit Mix: Good

  • Revolving Accounts: Yes
  • Bank-Issued Credit Card Accounts: Yes
  • Installment Loans, Including Mortgages: Yes
27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Partial update from Experian of 6 EX scores at AoYA 1yr 0mo. Also TU 8 from a myFICO alert. The rest to follow on 12/10.

Message 17 of 98
Established Contributor

Re: The 'All At Just Under 8.99% Utilization' experiment

[UPDATE: January 4, 2019]

  • EX 699
  • EQ 684 [From 750, after loan closure and with 1 of 2 cards showing]
  • TU 728
  • Second card now showing at Experian. No change in score. See below.
  • First card now showing at Equifax. EQ is late to the party, but took the time to call.
  • No cards showing at Transunion. TU still has the open loan on it. TU is like that person who is really late to the party and doesn't even bother to make a call, so you wonder if they got into an accident or something.

 I'm posting the updated Experian report from this morning, which is now showing 2 cards with a 2% utilization on Card 1, ZERO on Card 2 - combined credit limit $8500. (2000 and 6500 respectively)

 

AAoA has changed with Card 2 now on report: 5 mos
AoOA: 1 yr 1 mos

 

EX FICO 8: 699 (Didn't move. CL from $2000 to $8500 across 2 cards now.)
'Amount of New Credit' has changed from Good to Fair, moving from 1 revolving to 2 revolving this morning.
'Credit Mix' changed from Good to Very Good, moving from 1 revolving to 2 revolving this morning.
'Length of Credit History' = POOR. Nothing I can do about this one.

 

  • EX FICO 2 is now 727. The second - and final - card showed up this morning on EX. (I haven't even received this card in the mail yet.)
    (Short account history, Short Revolving History, Accounts With Balances (1 @ 2% UTIL, 1 @ ZERO), Many New Accounts)
  • EX FICO Auto Score 8: 683
    (Short account history, Short Revolving History, No Loan Activity, Few Accounts Paid on Time)
  • EX FICO Auto Score 2: 703
    (Short account history, Short Revolving History, No Loan Activity, Accounts with Balances ($40 out of $8500)
  • EX FICO BankCard Score 8: 703
    (Short account history, Short Revolving History, No Loan Activity, Few Accounts Paid on Time)
  • EX FICO BankCard Score 2: 732(Short account history, Short Revolving History, Accounts With Balances, Many New Accounts)
  • EX FICO 3: 712(Short account history, Short Revolving History, Accounts with Balances, Seeking Credit)

experian-jan4-pre.pngRead from bottom to top.

 

27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Partial update from Experian of 6 EX scores at AoYA 1yr 0mo. Also TU 8 from a myFICO alert. The rest to follow on 12/10.

Message 18 of 98
Super Contributor

Re: The 'All At Just Under 8.99% Utilization' experiment

Good updates. Your score is on a roller coaster as these accounts change out.

It will be interesting to see the development of the scores as things stabilize.

What is your apping plans / new account plans for the next few months?

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
Message 19 of 98
Established Contributor

Re: The 'All At Just Under 8.99% Utilization' experiment


@NRB525 wrote:

Good updates. Your score is on a roller coaster as these accounts change out.

It will be interesting to see the development of the scores as things stabilize.

I've been getting updates from Experian, myFICO and Credit Karma today. I'm just waiting until later to collate those changes.

 

Experian is now stable at 699, and won't change again until February 1st or 2nd, I am guessing. It will show score changes from 6.75% utilization on Card 1 ($135 on card now, old $40 balance paid in full, done with this card until next billing cycle), and 7-8% utilization on Card 2 (Depends on if I can charge exactly $520 to Card 2...probably will come in under 8%.)

 

I'm most interested in Transunion. My credit union uses TU exclusively for everything. In the future, I will get my auto and home loans through them.

 

What is your apping plans / new account plans for the next few months?


 No plans for the next 12 months. Besides, with these scores and seriously short 5 months average age of accounts (AAoA - for anyone new to the forums), I doubt I'd get approved for anything anyway. And if they did, they need their head examined, because with my income and non-discretionary expenses, plus saving for retirement and a new home, I surely won't be needing any 'frequent flyer miles'. lol

 

One of the many reasons I am doing this experiment is to see if having only 2 credit cards is 'good enough' for someone with middle class income. I see that question asked a lot on the internet.

27 FICO Scores + 3 VS3. MTG (Mortgage), AUT (Auto), and BKC (Bankcard) are scores 5,4, and 2 from the top.

Partial update from Experian of 6 EX scores at AoYA 1yr 0mo. Also TU 8 from a myFICO alert. The rest to follow on 12/10.

Message 20 of 98
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