Utilization max score??

[Anonymous]

So how to maximize utilization fpr MORTGAGE SCORES.
I hear people saying 2 things.....which is correct??


I know have all cards at zero except 1 reporting a small balance..... $10?? But that works out to be 0.1% total utilization....but 4% card utilization...

1. Get total utilization under 9%
2. Get individual utilization under 9%
3. Both of the above?


Also does it matter if it is a authorized account reporting balance??

[Anonymous]

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@Anonymous wrote:
So how to maximize utilization fpr MORTGAGE SCORES.
I hear people saying 2 things.....which is correct??


I know have all cards at zero except 1 reporting a small balance..... $10?? But that works out to be 0.1% total utilization....but 4% card utilization...

1. Get total utilization under 9%
2. Get individual utilization under 9%
3. Both of the above?


Also does it matter if it is a authorized account reporting balance??

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As you know, I believe that there is no evidence that there is an individual utilization penalty at 10%.  None whatsoever.  That is a meme that keeps being repeated (I think) due to its similarity to the well established fact that there is a penalty for total utilization that begins at 8.99%.

Many veterans are on record as agreeing with me here.  Assuming that one's total util is very low, the lowest that an individual penalty is likely to exist is 49%.  And certainly none below 29%.

I'd be interested in hearing what Tom Thumb, Revelate, and others think.  I will say that Brutal Body Shots hopes to have a credit card with a small credit limit very soon, which he plans to use precisely to test where such breakpoints for individual U might exist.

As far as your question about whether the one card reporting should be an AU card.... great question!  The answer is that it should NOT be an AU card.  All of the following should be the case:

*  The balance should be at least $5.

*  It should be a true credit card, not a charge card.

*  It should be a card in your name, not an AU card.

*  The credit limit on the card should be < $34.900.

If any of those are not the case it could cause it to be treated as $0 by the FICO utilization.  As far as that last bullet goes, a somewhat higher CL is possibly ok, but < 34k is safest and almost everyone has a card like that.

PS.  You ask about what happens when one's utilization is very small, like 0.1%.  FICO rounds all percents UP.  Therefore it will be treated as 1%.  But ultra-tiny dollar values (like $1-3) can be treated as $0.  Thus the advice to make sure one is showing $5 or more.

[Thomas_Thumb]

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@Anonymous wrote:
So how to maximize utilization fpr MORTGAGE SCORES.
I hear people saying 2 things.....which is correct??


I know have all cards at zero except 1 reporting a small balance..... $10?? But that works out to be 0.1% total utilization....but 4% card utilization...

1. Get total utilization under 9%
2. Get individual utilization under 9%
3. Both of the above?


Also does it matter if it is a authorized account reporting balance??

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Authorized user (AU) accounts are counted in Fico mortgage scores. However, AU accounts are NOT always counted in Fico 8. So, if you want to ensure best results for all Fico models, it would be best to report a balance on an individual account.

As you mention total utilization needs to be under 9% and you should report a balance on a NON AU revolving credit card.

Does the individual card UT% need to be under 9%? No - really anything 29% or less is rock solid for the card as long as total utilization is kept below 9%. No harm iin ensuring the card reports under 9% but, no real need.

[Anonymous]

I have these cards...Crédit limits....

1. Target $300
2. Visa $2300
3. Visa $17,000
4. Mast $1,000

All have zero. Card #2 has $1,100 balance. Should I pay it all the way down. To $10??

Just need to maximize mortgae score for next credit pull at the beginning of February

[Anonymous]

But don't want to lose points for scoring...

I was thinking of leaving $400 Balance to report......that would be 2% TOTAL utilization, but 18% individual util

[Anonymous]

Just want to be sure they round up I guess.....sorry

[Anonymous]

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@Anonymous wrote:
I have these cards...Crédit limits....

1. Target $300
2. Visa $2300
3. Visa $17,000
4. Mast $1,000

All have zero. Card #2 has $1,100 balance. Should I pay it all the way down. To $10??

Just need to maximize mortgae score for next credit pull at the beginning of February

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I am certainly no expert on mortgage scores, but T. Thumb can chime in on that.  With respect to FICO 08 scores, you don't need to pay it all the way down to $10.  What you are looking to achieve is single-digit aggregate utilization while not having more than 29% utilization on any single card. 

This means you could bring your balance on Card #2 down to $667 (29% utilization) and assuming all of your other cards have reported $0 balances you aggregate utilization would sit at 4% for scoring purposes.  It would really be 3.2%, but as CGID explained above, utilization is always rounded up to the nearest whole number. 

Basically if you have all of your cards reporting $0 balances and you bring Card #2 down to $667 or less you will be in the best possible position to maximize FICO 08 scores.  I would imagine this is also true of mortgage scores, but someone else like T. Thumb will have to verify.

Some have suggested that a 49% threshold exists on a single card.  If that's the case, you could try letting $1127 or slightly less report on Card #2 which could yield the exact same scores as the scenario above.  This would raise aggregate utilization from 4% to 6% which shouldn't matter scoring wise.

If you have the money, there's no reason NOT to pay down your balance(s) when you can really.  I'd suggest knocking it down to $667 or less if you are able to (your $400 target that you stated would be more than sufficient) and you will maximize the utilization sector of FICO scoring.

[Anonymous]

Ok thanks for the info.

And I am ONLY worried about mortgage score right now.....could care less about fico 8
.....lol

[Revelate]

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@Anonymous wrote:
Ok thanks for the info.

And I am ONLY worried about mortgage score right now.....could care less about fico 8
.....lol

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If you pay it down to $10 or whatever and everything else is zero that will be optimal regardless of file.  If you need simple and fast I wouldn't screw around and just pick a known good number on an account you are individually responsible for (i.e. your own card).

I wouldn't leave a balance on an AU account if I were going for a mortgage personally, see if that can be zeroed for the application too.

[vanillabean]

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@Anonymous wrote:

As you know, I believe that there is no evidence that there is an individual utilization penalty at 10%.  None whatsoever.  That is a meme that keeps being repeated (I think) due to its similarity to the well established fact that there is a penalty for total utilization that begins at 8.99%.

Many veterans are on record as agreeing with me here.  Assuming that one's total util is very low, the lowest that an individual penalty is likely to exist is 49%.  And certainly none below 29%.

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I can't say I'm sure of any of this.