Utilization on one card versus total utilization

[Anonymous]

     I am confused about this issue.  Let's say you came close to maxing out one credit card in order to take advantage of a 0%APR balance transfer offer.  However since your balance was transferred to the new card from your old card, you have no net increase in credit utilization(assuming your old card does not have its credit limit decreased by the bank, or even worse, closed). In fact your total % utilization should go down significantly because you have opened a new line of credit. 

     However I have heard that FICO takes into account the utilization of each card in addition to total utilization.  Is this true?  How much is the utilization on an individual card weighted?

   If so, coming close to maxing out one card could ding your scores.   I am trying to figure out what the net effect to your FICO scores and credit reports would be if you did a situation like this. The average age of your accounts would of course decrease also.

[Junejer]

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urgent_help_needed wrote:

     I am confused about this issue.  Let's say you came close to maxing out one credit card in order to take advantage of a 0%APR balance transfer offer.  However since your balance was transferred to the new card from your old card, you have no net increase in credit utilization(assuming your old card does not have its credit limit decreased by the bank, or even worse, closed). In fact your total % utilization should go down significantly because you have opened a new line of credit. 

     However I have heard that FICO takes into account the utilization of each card in addition to total utilization.  Is this true?  How much is the utilization on an individual card weighted?

   If so, coming close to maxing out one card could ding your scores.   I am trying to figure out what the net effect to your FICO scores and credit reports would be if you did a situation like this. The average age of your accounts would of course decrease also.

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Yes, urgent, it is true, but to what degree--well, that hasn't been disclosed to the public.

[RobertEG]

Definately true.

In one of its recent webinars, FairIsaac stated that they score overall util and the combined effects of indiv utils about equal.  And it is not only the indiv card util that FICO considers, it is the number of cards with balances.

I have seen this on my CRs.  A few months ago, I made a charge on my low CL card that put it at an indiv card util of about 80%, while my overall %util that month went down.  It hit my score for almost 15 points.

It all came back the next month when I paid off that crummy card.  You have to be careful of low CL cards, as they can have a big impact.

Message Edited by RobertEG on 01-26-2009 10:20 PM