Usage percentage calculations

[Anonymous]

Hey guys, quick question. In calculating a FICO score is usage percentage calculated off the total amount of credit available or does it go card by card? I.E.: If I have 5 CC all with $1000 limit, is it the same to have 1 maxed out and the other 4 with 0 balance=20% usage than to owe $200 on each=20% usage. Thanks in advance for your help

[Anonymous]

There are 3 things at play here.  First, aggregate [overall] utilization.  Second is individual card highest utilization and last is number of accounts with balances.

Aggregate utilization is King to the other factors mentioned above.  With aggregate utilization being a constant (say 20%) you'd experience a greater score ding with one card maxed out at 100% utilization with the rest at $0 compared to the ding you'd receive in having more (all) accounts with balances at low utilization, as your highest individual card utilization would be 20%.

[Anonymous]

Thank you so much for your help

[SouthJamaica]

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@Anonymous wrote:

Thank you so much for your help

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I agree with what @Anonymous said but would add:

1. Utilization isn't usage; FICO utilization is computed as of the one day out of the month which reports a balance. In most accounts, but not all, it is the statement balance that gets reported.

2. All 3 of the components BBS mentioned count.

It's optimal to:

-have aggregate utilization at 9% or less

-have no individual utilization greater than 28% and

-have most, but not all, cards reporting a zero balance.