The Truth about Credit Card Utilization

[sarge12]

I think we can take away from all this that counting on AU accounts to boost someones credit scores is something you can not count on. Like many things in life, in order to have good reliable results, you have to do it yourself. Relying on piggybacking off of someone else to get score improvements is unreliable at best.

[Anonymous]

Very informative. Thank you for so much detail. Your soo right about saving. It is the responsible thing to do. It’s hard and requires a whole lot of disepline but like you said, it is obtainable. LIFE

[Anonymous]

Right. But authorized user cards exist for a reason. The discussion here is about legitimate authorized user cards- meaning you place charges on the card yourself, and also pay them monthly- yourself. Piggybacking is when you pretend you're the one using the card responsibily, when you aren't. It's not 'piggybacking' if you're actively repaying a debt. 

The FICO scoring has a responsibility to report cards that are being used legitimately, authorized user or not. 

[sarge12]

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@Anonymous wrote:

Right. But authorized user cards exist for a reason. The discussion here is about legitimate authorized user cards- meaning you place charges on the card yourself, and also pay them monthly- yourself. Piggybacking is when you pretend you're the one using the card responsibily, when you aren't. It's not 'piggybacking' if you're actively repaying a debt. 

The FICO scoring has a responsibility to report cards that are being used legitimately, authorized user or not. 

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The AU on a credit card is not legally responsible for that debt period, and there is not any way that card issuers can tell if the AU is the one making the payments on the card. They can only know the payments are being paid as agreed. AU cards are mainly to give card access to a family member, that the primary card holder either is willing to pay the charges, or trusts the AU to pay their charges. In either case, the only one legally liable for the charges is the primary card holder...not the AU.

[Anonymous]

This was awesome, thank you very much!

[ruhul]

All contributors - Thanks a lot for great information in this thread.

Instead of asking on a separate thread, I decided to ask for suggestion on my scenario here and contribute back the outcome in next few weeks.

Questions: I am looking for a mortgage refinance in 2-3 months. Details of my credit report/score is given below. Out of 2 things that is hurting my score, I can change card utilization only. No control (in short term) on delinquencies.

1. I can pay of all credit card debt. I am planning to bring 2 of them to 0 and leave few hundred to the 3rd. Any other suggestions?
2. If I execute #1 right away, What is the score bump I can expect? Put your best educated guess. Do I have a shot at additional 30-40 to reach 740+

Thanks in advance, Here you go …

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FICO 8 Scores as of 2/10/2019

EQ: 711

TU: 708

EX: 708

No collections

Inquiries in last 24 months: 1 on 11/2018

No public Records

5 Open Accounts: 3 Credit Cards, 2 Installments:  Mortgage and Auto loan

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Credit Cards:

Time Since Negative:        1 Year 11 Months

Average Account Age:        11 Years 6 Months

Oldest Account:         15 Years 2 Months

Most Recent Account: Credit Card : 12.5 years, Auto loan: 2.5 Years .. Not sure which one counts

Bank 1 : CL $12700//BAL $5765//USAGE 45%  --- Current, No Delinquencies

Bank 2 : CL $5000//BAL $1408//USAGE 28%  --- Current, **30 DAY on 9/2016

Bank 3 : CL $20000//BAL $11697//USAGE 58%  --- Current, **30 DAY on 2/2017, **60DAY on 3/2017

Aggregate od all revolving: CL $37700//BAL $18870//USAGE 50%

--------------------------------

Installment:

Mortgage:  356K //Starting balance 480K// Current, No Delinquencies

Auto Loan: 7.8 K //Starting balance 14K// Current, No Delinquencies

-------------------------------

Closed Accounts: 16

Includes previous mortgages, auto loans, Credit cards  -- All Paid, Closed

2 Delinquencies visible:

Auto Lease: **30 DAY 8/2016

US Bank:  **30 DAY on 7/2013, **60DAY on 8/2013

[Anonymous]

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@ruhul wrote:

Questions: I am looking for a mortgage refinance in 2-3 months. Details of my credit report/score is given below. Out of 2 things that is hurting my score, I can change card utilization only. No control (in short term) on delinquencies.

1. I can pay of all credit card debt. I am planning to bring 2 of them to 0 and leave few hundred to the 3rd. Any other suggestions?
2. If I execute #1 right away, What is the score bump I can expect? Put your best educated guess. Do I have a shot at additional 30-40 to reach 740+

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In taking your aggregate utilization down from 50% to under 8.9% and also taking your highest individual utilization card down from 50-something% to under 8.9% my best guess is that you'd pick up around 40 points on your FICO 8 scores.

The problem, though, is that FICO 8 scores are not what you should be concerning yourself with right now when talking a mortgage app.  Your mortgage scores are King here.  Do you know what they are?  If not, you'll definitely want to find out ASAP.  Regardless of the scoring model, going from your current utilization to ideal with AZEO in place is going to result in a significant score gain.

[ruhul]

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@Anonymous wroteIn taking your aggregate utilization down from 50% to under 8.9% and also taking your highest individual utilization card down from 50-something% to under 8.9% my best guess is that you'd pick up around 40 points on your FICO 8 scores.

From what I read in this forum, This bump happens as snap shot. So..This will reflect in the score soon, right?

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@Anonymous wrote:

The problem, though, is that FICO 8 scores are not what you should be concerning yourself with right now when talking a mortgage app.  Your mortgage scores are King here.  Do you know what they are?  If not, you'll definitely want to find out ASAP.  Regardless of the scoring model, going from your current utilization to ideal with AZEO in place is going to result in a significant score gain.

Not sure about that. I have Experian CreditWorks. Beside 3 FICO 8, I got the following scores:

FICO 2: 715

FICO AUTO SCORE 2: 709

FICO AUTO SCORE8: 738

FICO BANK CARD SCORE2: 719

FICO SCORE 3: 692 -- Ouch!

FICO BANK CARD SCORE2: 713

All of the above  are from Experian.

I think FICO 2 is the mortgage score. Please correct me. Is there any cheaper options to get Mortgage Score all 3 agency?

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[Anonymous]

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@ruhul wrote:

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@Anonymous wroteIn taking your aggregate utilization down from 50% to under 8.9% and also taking your highest individual utilization card down from 50-something% to under 8.9% my best guess is that you'd pick up around 40 points on your FICO 8 scores.

From what I read in this forum, This bump happens as snap shot. So..This will reflect in the score soon, right?

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@Anonymous wrote:

The problem, though, is that FICO 8 scores are not what you should be concerning yourself with right now when talking a mortgage app.  Your mortgage scores are King here.  Do you know what they are?  If not, you'll definitely want to find out ASAP.  Regardless of the scoring model, going from your current utilization to ideal with AZEO in place is going to result in a significant score gain.

Not sure about that. I have Experian CreditWorks. Beside 3 FICO 8, I got the following scores:

FICO 2: 715

FICO AUTO SCORE 2: 709

FICO AUTO SCORE8: 738

FICO BANK CARD SCORE2: 719

FICO SCORE 3: 692 -- Ouch!

FICO BANK CARD SCORE2: 713

All of the above  are from Experian.

I think FICO 2 is the mortgage score. Please correct me. Is there any cheaper options to get Mortgage Score all 3 agency?

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Just get the myFICO 3B Ultimate for $29.95. It will give you your scores from all 3 bureaus which includes mortgage scores. 

[Anonymous]

I agree that the mortgage scores are the thing to look at and that the mYFICO Ultimate is the simplest tool to use to obtain them.

I would not, however, subscribe to the Ultimate until all three credit reports have the new (much lower) CC balances.  There are many free tools out there that our OP could use to check his credit reports frequently.

Once all three reports have the much lower balances, I'd subscribe to the $40/mo Ultimate.  The $40 flavor will get him his scores once per month (the $30/mo flavor only gives the mortgage scores every 90 days).  And of course he should cancel once he has no further need of it.