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Utilization Question - Single Card vs Multiple

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Regular Contributor

Utilization Question - Single Card vs Multiple

Hello all,

 

So the question I have is, what hits a fico more; having a single card over 75% utilization but multiple other cards at or near zero, or spreading the balances out among many cards? What if those other cards charge far higher interest rates?

























Think I am going to garden until at least March of 2020 as that is when 3 inquires will drop and all but one will be over a year old. At that point, I may do a hard pull for a line increase on my chase prime card or maybe go for a savor card assuming it is not offered to me as a promotional upgrade. By June of 2020, I will be apping for a Citibank personal line of credit and overdraft line to equal what I have at USBank, so I may just do nothing until then.
Message 1 of 20
19 REPLIES 19
Super Contributor

Re: Utilization Question - Single Card vs Multiple


@TwilightSymphonie wrote:

Hello all,

 

So the question I have is, what hits a fico more; having a single card over 75% utilization but multiple other cards at or near zero, or spreading the balances out among many cards? What if those other cards charge far higher interest rates?


1. FICO is indifferent to the interest rates. It doesn't give you points for financial astuteness in getting a lower interest rate or even zero interest.

 

2. My impression is that overall percentage utilization is a bigger point factor than individual percentage utilization in FiCO 8, but they both count. In my experience 29-30% is an important breakpoint in individual utilization, so I would try to limit any individual account to 28% or less.


Total revolving limits 719k (592500 reporting) FICO 8 scores: EQ 735 TU 782 EX 746
Message 2 of 20
Valued Contributor

Re: Utilization Question - Single Card vs Multiple

Spreading it out might get you some points but not worth paying more interest, finances always come first unless you got a mortgage application coming up, which still puts finances first.
Message 3 of 20
Moderator Emeritus

Re: Utilization Question - Single Card vs Multiple

Probably scorecard dependant, so YMMV.

 

For me, I'd rather be carrying it all on a single line at the lowest APR possible: financial win to Oldman's point.

 

It's probably going to be your best scoring decision too underneath the 80% line (or 90%, I really hate revolving datapoints which come in all over the place, less is better though, nuff said).

 




        
Message 4 of 20
Highlighted
Super Contributor

Re: Utilization Question - Single Card vs Multiple

Take the lower interest cost option first, because it gives you a better chance to pay off that debt.

FICO score is second to hard dollar financial decisions.

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 5 of 20
Regular Contributor

Re: Utilization Question - Single Card vs Multiple

Okay thank you all for the advice!

I have one other question.. if the card utilization is under 8.9% but still has a balance, does it ding the FICO?
























Think I am going to garden until at least March of 2020 as that is when 3 inquires will drop and all but one will be over a year old. At that point, I may do a hard pull for a line increase on my chase prime card or maybe go for a savor card assuming it is not offered to me as a promotional upgrade. By June of 2020, I will be apping for a Citibank personal line of credit and overdraft line to equal what I have at USBank, so I may just do nothing until then.
Message 6 of 20
Moderator Emeritus

Re: Utilization Question - Single Card vs Multiple


@TwilightSymphonie wrote:
Okay thank you all for the advice!

I have one other question.. if the card utilization is under 8.9% but still has a balance, does it ding the FICO?

Different part of the algorithm measures number of revolvers (or number of accounts in some models).  Fewer is better, most but not all $0 FTW.

 




        
Message 7 of 20
Regular Contributor

Re: Utilization Question - Single Card vs Multiple

So you are saying that it would be a little better to just pay that card to 0 rather than keep a small balance?

























Think I am going to garden until at least March of 2020 as that is when 3 inquires will drop and all but one will be over a year old. At that point, I may do a hard pull for a line increase on my chase prime card or maybe go for a savor card assuming it is not offered to me as a promotional upgrade. By June of 2020, I will be apping for a Citibank personal line of credit and overdraft line to equal what I have at USBank, so I may just do nothing until then.
Message 8 of 20
Moderator Emeritus

Re: Utilization Question - Single Card vs Multiple


@TwilightSymphonie wrote:

So you are saying that it would be a little better to just pay that card to 0 rather than keep a small balance?


Optimal is 1 card with a small balance on it, national bank card ideal, when we're talking FICO scoring.  That works for any file and any model, certainly any file with 3+ tradelines.

 

You don't want all credit cards at zero as there's a penalty for "no recent activity on a revolving tradeline" but ultimately the more at $0 you have the better off you are from a scoring perspective.




        
Message 9 of 20
Senior Contributor

Re: Utilization Question - Single Card vs Multiple

If you are carrying a sizeable balance, there are situations where splitting a balance amoung two cards is better score wise than having the entire balance ope one card - especially for Fico 8.

 

For example, If you have 4 cards with $500 CL per card and a total balance of $450 it would be better to split the $450 evenly between 2 cards as opposed to having the entire balance on one card.

1) $450 on one card => 90% card utilization (substantial score penalty)

2) $225 on each of 2 cards => 45% card utilizations (small score penalty)

 

In both the above cases aggregate utilization is 22.5%

Fico 8: .......EQ 850 TU 850 EX 850
Fico 9: .......EQ 850 TU 850 EX 850
Fico 4 .....:. EQ 809 TU 823 EX 830 EX Fico 98: 842
VS 3.0:...... EQ 835 TU 835 EX 835
Fico 8 BC:. EQ 892 TU 900 EX 900
CBIS: ........EQ LN Auto 940 EQ LN Home 870 TU Auto 902 TU Home 950
Message 10 of 20
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