UTI

[Anonymous]

I’m a Newbie and have been reading on UTI. Some have reported a 13 point drop on their FICO when their cards reported 0 balance. I always thought that paying everything off was a good thing but apparently not. I currently have a UTI of 1%, is there going to be a huge drop if that increased to say 9%? If I kept it at 1% for the next couple of months, will I see an increase? I’m trying to find a way to increase my score which currently sits between 712-728 across 3 CRA. My AAOA is young at only about 14 months (I think). I don’t have any other loans so my credit mix is non existent (just cards). Thank you.

[Anonymous]

There would be a drop if you crossed over the threshold of 8.99%.  The known thresholds for total utilization (all credit limits combined) are:

8.99%,  28.99%,  48.99%,  68.99%,  88.99%

There is a separate penalty that can occur for individual utilization (each card and its limit considered alone).  Those thresholds are the same except that the lowest is probably 28.99%.  (You have a bit more flexibility there.)

Keeping your CC balances at an ultralow level does not hurt you (assuming you have at least one with a balance).  But it does not help you gradually build a higher score over time, either.  The simplest approach is to just use your cards and not worry much about your score -- as long as you keep your total util under 29% and your individual under 49%.  And then, if you need to extract every available extra point (for an important credit application, say), then get all cards reporting $0 except one with the remaining card reporting a small balance.

If you would like to improve your credit mix you should consider implementing the Share Secured Loan Technique.  (You can do a search for that and find out more.) The best bank/CU for that right now is NFCU.

I don't know how many cards you have.  If you have at least three, the best way to raise your score is to stop opening accounts (unless you are implementing the SSLT above). 

[Anonymous]

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@Anonymous wrote:
I’m a Newbie and have been reading on UTI. Some have reported a 13 point drop on their FICO when their cards reported 0 balance. I always thought that paying everything off was a good thing but apparently not. I currently have a UTI of 1%, is there going to be a huge drop if that increased to say 9%? If I kept it at 1% for the next couple of months, will I see an increase? I’m trying to find a way to increase my score which currently sits between 712-728 across 3 CRA. My AAOA is young at only about 14 months (I think). I don’t have any other loans so my credit mix is non existent (just cards). Thank you.

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Keeping your UTI @ 1% every month won't "increase" your scores, but it would prevent you from taking scoring penalties from having either 0% or 9% or above reporting.  If your score rises due to keeping your UTI @ 1% then it is age related factors that is the cause of it.  As your accounts age, you'll certainly gain points that way.  Inquiries become unscorable after 1 year.  You already know that you are not gaining points for having a credit mix.  I don't know how old your youngest account is but you should also see gains when your AoYA reaches 1 year.

[Anonymous]

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@Anonymous wrote:

There would be a drop if you crossed over the threshold of 8.99%.  The known thresholds for total utilization (all credit limits combined) are:

8.99%,  28.99%,  48.99%,  68.99%,  88.99%

There is a separate penalty that can occur for individual utilization (each card and its limit considered alone).  Those thresholds are the same except that the lowest is probably 28.99%.  (You have a bit more flexibility there.)

Keeping your CC balances at an ultralow level does not hurt you (assuming you have at least one with a balance).  But it does not help you gradually build a higher score over time, either.  The simplest approach is to just use your cards and not worry much about your score -- as long as you keep your total util under 29% and your individual under 49%.  And then, if you need to extract every available extra point (for an important credit application, say), then get all cards reporting $0 except one with the remaining card reporting a small balance.

If you would like to improve your credit mix you should consider implementing the Share Secured Loan Technique.  (You can do a search for that and find out more.) The best bank/CU for that right now is NFCU.

I don't know how many cards you have.  If you have at least three, the best way to raise your score is to stop opening accounts (unless you are implementing the SSLT above). 

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Thank you for the advice re: Share Secured Loan. I will definitely look into that,

[Anonymous]

" don't know how many cards you have.  If you have at least three, the best way to raise your score is to stop opening accounts (unless you are implementing the SSLT above)."

I am just gardening and growing my accounts right now. I am 20 years old so they're all quite young. I am hoping to try for CLI with AMEX  SPG soon. I am just waiting to see if my score is higher this month so I can get approved. My income is only $22K so hopefully asking for $5K is reasonable. My score on AMEX is still from Feb (691) so I'm afraid to pull the trigger. Should I wait until end of April since it looks like they're always a month behind?  AMEX typically updates on the 23rd of the month but Credit Dept can't tell me what score they will be looking at. Also,just for kicks, I hit apply for Amex Hilton while I was logged on and it says I'm pre-approved. I dubious since the FICO shows 691. I don't want to add any more cards anyway as I think I have more than enough.

AMEX Delta (opened 9/17)   SL $3100   CLI to $6200 (Jan 2018)

AMEX Clear (Opened 9/17) $1000

AMEX SPG (Opened 8/17)  $2000

AMEX BCE (Opened 8/17) $2800

Citi TY Preferred (Opened 8/17) SL $2000  CLI to $3000 (Jan 2018)

BofA Alaska (Opened 1/18) SL $500

TU 716       2 INQ

EXP 712    4 INQ

EQU  724   0 INQ

[Anonymous]

You do indeed have more than enough.

[SouthJamaica]

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@Anonymous wrote:
I’m a Newbie and have been reading on UTI. Some have reported a 13 point drop on their FICO when their cards reported 0 balance. I always thought that paying everything off was a good thing but apparently not. I currently have a UTI of 1%, is there going to be a huge drop if that increased to say 9%? If I kept it at 1% for the next couple of months, will I see an increase? I’m trying to find a way to increase my score which currently sits between 712-728 across 3 CRA. My AAOA is young at only about 14 months (I think). I don’t have any other loans so my credit mix is non existent (just cards). Thank you.

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1. You will not increase your score by raising your utilization from 1% to 9%.

2. There are 2 utilization percentages, aggregate and individual. And there are other utilization considerations, such as number of accounts with balances. If you want to optimize your FICO scores across all scoring models:

(a) let all but one of your cards report a zero balance and

(b) let the one card report a small balance of 5% or so

3.  For general use, apart from perfect optimization, the basic principles are:

(a) do not let any one card report utilization greater than 28%

(b) do not let your aggregate utilization go above 8.9%

(c) have most of your cards reporting zero