Utilization / score question

[Anonymous]

Hello everyone,

I am a long time browser, first time poster. I enjoy the site.

My scenario: I have between 740-760 on all 3 scores. Recently my bank doubled my cc limit.  My utilization was over 85% on this account but with my new limit, its under 50%.

Question:  With my overall utilization dropping from 57% to < 40% (all credit cards combined) do you think my credit score will increase in the next 1-2 months? I realize a hard inquiry is a slight loss.

Why do I care?

I'm chewing on applying for a 0% APR card and I am not sure if I should do it now, or wait for my lowered utilization to hit my credit reports.

Thoughts?

[RobertEG]

Scoring of util of revolving credit is a combination of three major factors.

Overall % util, the individ % util of each card, and the percentage of cards reporting a balance (generally in that order of weighting).

If overall % util is reduced along with the % util of that one card, and the other cards dont show increased % util, then you will almost assuredly see some score increase.

However 40-50% is still not ultil levels that produce substantial score improvments.

[Anonymous]

Welcome!! Yes your score will come up with the extreme drop in utilization. However, you might want to try to get it under 20% at least before you apply. Not saying that you would not be approved but the outcome may work more in your favor when it comes to SL. Good luck!!

[Anonymous]

Totally agree with doingit1! Welcome to myfico skydivingisgreat! 

[Anonymous]

Thank you everyone for your replies, the information helps my decision.

With a >40% utililzation drop on one card and a 20% drop on utililization across the board, I will wait 1-2 months and then apply for a 0 APR card. I'm hoping my scores hit 760-780.

Most likely the Alliant CU card (they have zero fee on the balance transfer) will be my choice

[Anonymous]

I agree, getting it under 20% would be a good route.

However,  my 15 month goal is to free up short term cash, so I will go the zero-apr route for the next 12-18 months instead of making a balloon payment.

[Anonymous]

Remember that score changes resulting from a change in reported utilization is instant.  The second the bureaus update your account(s) to reflect the new utilization, your scores will drop.  There's no need to wait 1-2 months.  As soon as your new balance(s) report, your score will immediately change so you can app any time after that.

[Glen_M]

---

@RobertEG wrote:

Scoring of util of revolving credit is a combination of three major factors.

Overall % util, the individ % util of each card, and the percentage of cards reporting a balance (generally in that order of weighting).

If overall % util is reduced along with the % util of that one card, and the other cards dont show increased % util, then you will almost assuredly see some score increase.

However 40-50% is still not ultil levels that produce substantial score improvments.

---

Thank you for that.  When utilization questions come up, people almost always only mention AZEO without trying to explain the rest of it.  I knew I had seen more of an explanation somewhere before.

[sarge12]

---

@Anonymous wrote:

Remember that score changes resulting from a change in reported utilization is instant.  The second the bureaus update your account(s) to reflect the new utilization, your scores will drop.  There's no need to wait 1-2 months.  As soon as your new balance(s) report, your score will immediately change so you can app any time after that.

---

BBS is 100% correct, but it is important to remember that when each creditor reports each month to the 3 CRA's vary by creditor, but most report the new statement balance a few days after the statement cuts. If a large drop in utilization is seen on the pulled report, the resulting increase in score will be instantaneous, however the pull will only reflect the most recently reported statement balance recieved by each CRA from each creditor and there will be some lag time between when you pay the account down and when it is reported.

[Anonymous]

---

@Glen_M wrote:

---

@RobertEG wrote:

Scoring of util of revolving credit is a combination of three major factors.

Overall % util, the individ % util of each card, and the percentage of cards reporting a balance (generally in that order of weighting).

If overall % util is reduced along with the % util of that one card, and the other cards dont show increased % util, then you will almost assuredly see some score increase.

However 40-50% is still not ultil levels that produce substantial score improvments.

---

Thank you for that.  When utilization questions come up, people almost always only mention AZEO without trying to explain the rest of it.  I knew I had seen more of an explanation somewhere before.

---

It's a tough thing to balance.  Sometimes people are seeking the full theory behind why AZEO (all zero except one) is the ideal move (prior to any app for credit).  But a lot of time they just want to be told what to do -- they don't care why it is best.  And explaining the theory is over overkill to them and even confusing.

I tend to err on the side of explaining too much, but as I say it's hard always to know up front how much theory a person wants.

Great post by RobertEG.  BTW, he is also the god of all things legal.  I am always stunned by how much he knows about the FCRA and tons of other stuff.