Utilization 2*29% vs 1*49%

[Enny]

My understanding is that utilization (per account and overall usage) is put in brackets of 0-9%, 10-19% and 20-49% and more than 49% ....

the means moving from one bracket to another has an impact on the score, am I right?

If that is correct, which would hurt a score less:

2 accounts ,each with not more than 29% utilization

OR

1account with 49% utilitzation

In both cases the overall/total utilization would be not more than 9%

Total amount of revolving accounts is more than 10. And there are 2-3 additional accounts that have utilization but with less than 9% each.

The reason for asking is, I want to do balance transfer but wan to hurt the score as least as possible.

[Anonymous]

There are three factors that deal with revolving balances:

(1) Total utilization (all credit limits combined)

(2) Individual utilization (each card considered separately)

(3) Number of cards showing a positive balance

The breakpoints for #1 are: 9%, 29%, 49%, 69%, 89%.

The breakpoints for #2 are: 29%, 49%, 69%, 89%.

The ideal for #3 is exactly one card showing a positive balance with all others at $0.

Unless you are about to buy a house or a car, I wouldn't worry much about your score.  Do whatever makes the most financial sense as far as the balance transfer (as long as you keep all cards under 49%).  And then -- most importantly -- start paying off your debt.  That is the most crucial thing you should be doing.   Both strategies will end up with the same score if you pay off your CC debt.  If you don't have a clear plan on how you will pay it off, then neither strategy matters.

[SouthJamaica]

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@Enny wrote:

My understanding is that utilization (per account and overall usage) is put in brackets of 0-9%, 10-19% and 20-49% and more than 49% ....

the means moving from one bracket to another has an impact on the score, am I right?

If that is correct, which would hurt a score less:

2 accounts ,each with not more than 29% utilization

OR

1account with 49% utilitzation

In both cases the overall/total utilization would be not more than 9%

Total amount of revolving accounts is more than 10. And there are 2-3 additional accounts that have utilization but with less than 9% each.

The reason for asking is, I want to do balance transfer but wan to hurt the score as least as possible.

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I would say 28% and 48% rather than 29% and 49%.

Two accounts each at 28% is better for your FICO score than 1 account at 48%.

[Anonymous]

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@Anonymous wrote:

There are three factors that deal with revolving balances:

(1) Total utilization (all credit limits combined)

(2) Individual utilization (each card considered separately)

(3) Number of cards showing a positive balance

The breakpoints for #1 are: 9%, 29%, 49%, 69%, 89%.

The breakpoints for #2 are: 29%, 49%, 69%, 89%.

The ideal for #3 is exactly one card showing a positive balance with all others at $0.

Unless you are about to buy a house or a car, I wouldn't worry much about your score.  Do whatever makes the most financial sense as far as the balance transfer (as long as you keep all cards under 49%).  And then -- most importantly -- start paying off your debt.  That is the most crucial thing you should be doing.   Both strategies will end up with the same score if you pay off your CC debt.  If you don't have a clear plan on how you will pay it off, then neither strategy matters.

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+1 I do this for years, Im very very very happy with my score low 700 - high 600. Me, personally, I cant afford all my cards under 9 %.

So basically , it depends on each individual financially and their goal.

[Thomas_Thumb]

It's a good policy to keep all card utilizations under 29%. Two cards at 28% with two other cards reporting small balances may result in a slightly higher Fico 8 score than one card at 48% with two others reporting small balances - particularly if the OP has 10 cards.

The older Fico "mortgage" versions are more sensitive to # and/or % of cards reporting. I start to see a significant impact on Fico mortgage scores at 4 of 6 cards reporting with the impact getting more pronounced at 5 of 6 and rather severe at 6 of 6 reporting.

Ultimately, either approach is low risk for AA and I would not expect a significant score difference. No need to over analyze. Go with the approach that is easier to manage for payments.

[Anonymous]

I agree with the post above from TT.  I think many times these A vs B "which is better" scenarios do get over-analyzed when quite often the difference we're talking in a single-digit number of points, that is, an insignificant amount.

[Enny]

Thanks everyone, that was helpful.

[Anonymous]

Good thread! Thanks!