Utilization and What can I do to help me?

[Anonymous]

Hi.  Wow I really wish I had found these forums months ago.  I am trying to bump up asap and think I have been messing up with utilization.  Wondering what I can do to help raise my score.

1.  Is utilization based on each card--do I have to try to use cards I don't use for small amounts?  Or is utilization based on my entire credit limit of all cards put together (including authorized user cards). 

 2.  One of my cards has a negative balance of $215 due to a return.  I have just left the negative balance on the card but should I try to get rid of the balance? 

Card #1 - 0 balance $3500 limit (have not actually used this card in over a year)  6+ years old

Card #2 - -215 credit  $800 limit (last used this card 2-3 months ago)  2 years old

Store Card - 0 balance $2000 limit  (have not used in over a year) 2 years old

Student Loan $65000 -- automatic payments so paid on time each month -- started repaying loans early this year -- graduated 2008.

Negatives -- I messed up in college and had 9 accounts I stopped paying on for 6 months back in 2006/2007. I have settled or paid all of them so they are listed as paid in settlement of paid in full for less than balance.  One I paid in full and they are not listed on my credit report at all.  None of those cards are active. 

After I messed up my credit, I was added as AU on several cards in 2007/2008: 

Card #3 Authorized User - 0/$3000 limit.  I use this card because it has great rewards--average usage is $800-1000 month and I had just been paying by due date (big mistake) but I just paid off the entire amount before statement so now it is at 0.  However reports list last amount as $983.  I still want to use this card for the rewards, but will pay off before statement asap. 

Card # 4 Authorized User - 0/$14000 limit (dad's card---no one uses this account at all)

Card #5 Authorized User - 0/$9000 limit (dad's card--no one uses this card at all)

Card #6 Authorized User - $22/$13000 limit (husband's card--I bought gas and just sent in check for last statement of around $22).

Card #7 Authorized User - $5500/$13000 limit -- I just removed myself as AU on this card -- my dad needed to buy appliances and had medical expenses he put on this card in the last 3 months.  None of the balance is mine as I do not use this card.  I am hoping this card will be taken off my reports soon.

Scenarios:  

My dad has 2 other high limit cards he does not use 0/$16000 and 0/$18000 that are old accounts.  My dad is very cool and can add me as AU.  My husband also has another card he can add me on as, but not as high a limit.  Would this help me?

Thanks!!! 

[Anonymous]

Having "too much available credit" can be a double edged sword.

Your goal should be to maintain few balances, with a total utilization at 9% or less, and individual utilization best to be under 30%.

You also want to make sure the AU accounts have a long age, clean history, low or no balances.  If they are new accounts they won't help, they will hurt.

Basic rule of thumb.  If it lowers utilization, increases AAoA and/or oldest account ages, this is good.  If it gives you a higher CL, this can be good depending on how much credit you are showing.

It is possible to be denied new credit because your income to available credit ratios aren't good.  So don't get too carried away with it.

Try to have 3 or fewer reported balances with under 9% utilization and preferably less than $1200 in dollar balances to get the max FICO boost.

But do have 1 small reported balance.

[Jazzzy]

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@Anonymous wrote:

Hi.  Wow I really wish I had found these forums months ago.  I am trying to bump up asap and think I have been messing up with utilization.  Wondering what I can do to help raise my score.

1.  Is utilization based on each card--do I have to try to use cards I don't use for small amounts?  Or is utilization based on my entire credit limit of all cards put together (including authorized user cards). 

 2.  One of my cards has a negative balance of $215 due to a return.  I have just left the negative balance on the card but should I try to get rid of the balance? 

Card #1 - 0 balance $3500 limit (have not actually used this card in over a year)  6+ years old

Card #2 - -215 credit  $800 limit (last used this card 2-3 months ago)  2 years old

Store Card - 0 balance $2000 limit  (have not used in over a year) 2 years old

Student Loan $65000 -- automatic payments so paid on time each month -- started repaying loans early this year -- graduated 2008.

Negatives -- I messed up in college and had 9 accounts I stopped paying on for 6 months back in 2006/2007. I have settled or paid all of them so they are listed as paid in settlement of paid in full for less than balance.  One I paid in full and they are not listed on my credit report at all.  None of those cards are active. 

After I messed up my credit, I was added as AU on several cards in 2007/2008: 

Card #3 Authorized User - 0/$3000 limit.  I use this card because it has great rewards--average usage is $800-1000 month and I had just been paying by due date (big mistake) but I just paid off the entire amount before statement so now it is at 0.  However reports list last amount as $983.  I still want to use this card for the rewards, but will pay off before statement asap. 

Card # 4 Authorized User - 0/$14000 limit (dad's card---no one uses this account at all)

Card #5 Authorized User - 0/$9000 limit (dad's card--no one uses this card at all)

Card #6 Authorized User - $22/$13000 limit (husband's card--I bought gas and just sent in check for last statement of around $22).

Card #7 Authorized User - $5500/$13000 limit -- I just removed myself as AU on this card -- my dad needed to buy appliances and had medical expenses he put on this card in the last 3 months.  None of the balance is mine as I do not use this card.  I am hoping this card will be taken off my reports soon.

Scenarios:  

My dad has 2 other high limit cards he does not use 0/$16000 and 0/$18000 that are old accounts.  My dad is very cool and can add me as AU.  My husband also has another card he can add me on as, but not as high a limit.  Would this help me?

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#1: I believe utilization is based on both. Your overall utilization is of course based on the total usage, but I don't believe FICO likes cards that are close to being maxed out. If, however, you will be paying all cards off before your statement cuts, utilization (whether total or individual) shouldn't be an issue.

#2: You may as well use this card with a negative balance. The balance will report as zero anyway, so you're not getting any type of credit for being in the hole.

It seems you have your utilization under control. As to being added as an AU on your husband's or father's card...the only benefit that I can see is if those cards are older than your average age of accounts. If that is the case...and if there is no utilization...then that should help a bit.

Are you sending Goodwill letters to the companies where you have charged off accounts? Getting rid of those old charge-offs would be nice, but you're not dealing with a lot of time. Tell them that you are a teacher and are attempting to buy your first home. Some of those companies may remove those old accounts.

[Anonymous]

Thank you for the replies and info!  I looked up the term goodwill letter on this site and immediately drafted a letter I plan to send (or fax) to my old credit card companies tomorrow.  I am really hoping they will delete the closed account from my report.  We saw a house  yesterday we are going to put in a bid and I am hoping we get accepted--and that my credit scores can change just as fast.  =)

I also saw something on the forum on a rapid re-score and am thinking on looking into that.   

[Anonymous]

I also wanted to ask though, in case the old credit cards ask to pay the difference between the settlement and the balance owed, by writing to them about these settled accounts--am I opening them up for a chance for them to do recollection?  

[RobertEG]

As for % util in FICO scoring, Fair Isaac has stated, in their prior webinars, that they score revolving % util as follows:

1.  Half of scoring of revolving % util is based on overall % util, and

2.  The other half is based,in some unspecficied mix, on evaluation of % util on each CC, and on the % of total cards showing any balance.

No one can tell you the exact scoring mix, but clearly the signal is to first keep overall % util low, then to consider each card % util, and then to maintain at least half of your cards with no reported balance each month, for optimization.

AU accounts, once added, are scored the same as any other account.  The problem with any AU account is that you dont have control. As you havve seen.  And they dont impress me, or a potential creditor, upon manual review, because they are not based on earning of individual credit history.

I think you have one misconception.  If you had accounts that went delinquent back in 2006/2007, paying them, in full or in part through a settlemtent, does not erase the derogs previously reported on the accounts.  They should still be in your CR, and dinging your score substantially.

[Anonymous]

Hi.  I sent off (or faxed) my letters today and I am hoping for a holiday miracle (of sorts).  I called all of my cards before sending my letters to confirm address or fax # and explained my situation.  Most were very nice.  I know it is a long shot but I have to try.  One card representative said they could change it to report paid in full (instead of settled for less) but I don't know if that would've made a difference. 

I did have one credit card a few months ago delete all my lates and change my status to closed, never late.  This was a card I stopped paying for 6 months and paid the balance in full when I had the money.  I disputed the info on my credit report earlier this year when I saw that they still had me listed as currently past due.  I asked them to change me to paid in full and they did much better than I realized.  I thought it had been deleted but I now see this credit card is listed in accounts in good standing (not the negative section--woo hoo!).  My score is 690 and I am very grateful that I have come a long way from what it used to be (though I never actually checked my FICO score), but I know it was probably in the tank.

[Jazzzy]

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@Anonymous wrote:

Hi.  I sent off (or faxed) my letters today and I am hoping for a holiday miracle (of sorts).  I called all of my cards before sending my letters to confirm address or fax # and explained my situation.  Most were very nice.  I know it is a long shot but I have to try.  One card representative said they could change it to report paid in full (instead of settled for less) but I don't know if that would've made a difference. 

I did have one credit card a few months ago delete all my lates and change my status to closed, never late.  This was a card I stopped paying for 6 months and paid the balance in full when I had the money.  I disputed the info on my credit report earlier this year when I saw that they still had me listed as currently past due.  I asked them to change me to paid in full and they did much better than I realized.  I thought it had been deleted but I now see this credit card is listed in accounts in good standing (not the negative section--woo hoo!).  My score is 690 and I am very grateful that I have come a long way from what it used to be (though I never actually checked my FICO score), but I know it was probably in the tank.

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Keep us posted on how this turns out. A lot of us here hope you get that holiday miracle.

[Anonymous]

Thanks!  I appreciate all the help.  

Sorry to be a pest and ask another question:  I got married this year and my husband opened a new account and added me as AU so this account is about 5 months old.  I am now thinking this was a mistake.  Can I remove myself from AU on this account?  Would this be better or worse because it has a 0/13000 balance?  Once removed, would my score bounce up fairly quickly? 

[Jazzzy]

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@Anonymous wrote:

Thanks!  I appreciate all the help.  

Sorry to be a pest and ask another question:  I got married this year and my husband opened a new account and added me as AU so this account is about 5 months old.  I am now thinking this was a mistake.  Can I remove myself from AU on this account?  Would this be better or worse because it has a 0/13000 balance?  Once removed, would my score bounce up fairly quickly? 

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This AU card is negatively impacting your average age of accounts. If you don't need the $13K credit limit for utilization purposes, then it is not helping you.

You don't have any cc balances, right?

You can call and have yourself removed as an AU. He can always add you again later. We did this with my husband. I added him...then I called and had him taken off. Unfortunately, ours was an AmEx, and that took another call to finally get it off. Yours isn't an AmEx, is it?