Utilization vs. AAoA

[Asilomar]

Hey forum geniuses, I'd love some advice on my situation.  

I'm an authorized user on my mom's Macy's account.  That wasn't done for credit purposes -- she just added me back in the day when I borrowed her card a time or two (and before I knew that being an AU was a thing).  But, it actually really helped me during the period when my baddies were falling away and I was apping for new credit.  Now, however, I'm not sure if having Macy's report to my credit is still a worthwhile thing or if I should have her remove me.

Here are the details:

--  I have a grand total of 4 open accounts on my credit report, all of which are new credit cards.  The oldest card is 10 months and the other 3 were all opened in March of this year.  So, my AAofA is in the toilet and will be for a loooong time.

--  My current reported utilization is 9%, which includes Macy's.  Without Macy's it would be 5% and dropping (I'm working on paying down the one card that isn't PIF at the end of each month).

--  Because this Macy's account is almost 16 years old, with Macy's reporting my AAoA is 6 years, 6 months.  Without it it's like 6 months (LOL).  

--  My mom keeps a high balance, about 30%.  This month it will be 23% but it could easily top 50% if she's been shopping and not making large payments.

So, I'm trying to figure out which is helping/will help my score more -- the decreased utilization (and the peace of mind gained from being able to control that utilization) without Macy's or the fact that Macy's alone is giving me a far better AAoA than I would have on my own.

To semi quote The Clash, should Macy's stay or should it go now?

 ETA:  This month I got a couple of CLI's totalling 6K that has not yet been reported to my credit.  So obviously that will lower my current 9%/5% situation.

[rmduhon]

Utilization is 30% of your score, length of history is 15%.

[SouthJamaica]

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@WhiteCleats wrote:

Hey forum geniuses, I'd love some advice on my situation.  

I'm an authorized user on my mom's Macy's account.  That wasn't done for credit purposes -- she just added me back in the day when I borrowed her card a time or two (and before I knew that being an AU was a thing).  But, it actually really helped me during the period when my baddies were falling away and I was apping for new credit.  Now, however, I'm not sure if having Macy's report to my credit is still a worthwhile thing or if I should have her remove me.

Here are the details:

--  I have a grand total of 4 open accounts on my credit report, all of which are new credit cards.  The oldest card is 10 months and the other 3 were all opened in March of this year.  So, my AAofA is in the toilet and will be for a loooong time.

--  My current reported utilization is 9%, which includes Macy's.  Without Macy's it would be 5% and dropping (I'm working on paying down the one card that isn't PIF at the end of each month).

--  Because this Macy's account is almost 16 years old, with Macy's reporting my AAoA is 6 years, 6 months.  Without it it's like 6 months (LOL).  

--  My mom keeps a high balance, about 30%.  This month it will be 23% but it could easily top 50% if she's been shopping and not making large payments.

So, I'm trying to figure out which is helping/will help my score more -- the decreased utilization (and the peace of mind gained from being able to control that utilization) without Macy's or the fact that Macy's alone is giving me a far better AAoA than I would have on my own.

To semi quote The Clash, should Macy's stay or should it go now?

 ETA:  This month I got a couple of CLI's totalling 6K that has not yet been reported to my credit.  So obviously that will lower my current 9%/5% situation.

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I think you're better off ceasing your relationship with the Macy's card. You might lose a few points but I don't think it will be drastic.

[NRB525]

OP do you still have any baddies reporting on your account? 

[Anonymous]

I think you could argue this one either way.

If you are planning on applying for any other products, having a 6+ year AAoA is going to help more than one that is 6 months.  The difference between 5% aggregate utilization and 9% aggregate utilization isn't significant.  If you have no intentions of applying for anything for a year or year and a half, your AAoA will be 2 years by that time which is more than solid enough assuming the rest of your profile is sound when seeking out new credit.

Another thing I'd recommend here is perhaps giving your Mom a little credit/utilization 101 talk.  Maybe she doesn't realize that letting that Macy's card hang out at 50% or more on occasion isn't the greatest idea.  Only you know how she'd take to such a talk, but if she were to start rolling with far less utilization on that card you wouldn't have to worry about it really.

[Asilomar]

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@NRB525 wrote:

OP do you still have any baddies reporting on your account? 

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Yes.  I have 13 near-consecutive late payments on a car loan.  Those will begin falling off in October of this year.  

[Asilomar]

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@Anonymous wrote:

I think you could argue this one either way.

If you are planning on applying for any other products, having a 6+ year AAoA is going to help more than one that is 6 months.  The difference between 5% aggregate utilization and 9% aggregate utilization isn't significant.  If you have no intentions of applying for anything for a year or year and a half, your AAoA will be 2 years by that time which is more than solid enough assuming the rest of your profile is sound when seeking out new credit.

My car is getting old and a new one is on the horizon.  Assuming it doesn't start requiring costly repairs that force my hand, the plan is to wait to get a new one until all the late payments from the previous auto loan have fallen off.  That will be in January 2019.  But yeah, no hard pulls planned for two years from March to give my credit time to "heal" from all the apping/inquiries.

2 years is considered "solid enough"?  Because my target goal is a 0% or 1.9% interest rate on a new car.  Though I'm not sure how realistic that is.

Another thing I'd recommend here is perhaps giving your Mom a little credit/utilization 101 talk.  Maybe she doesn't realize that letting that Macy's card hang out at 50% or more on occasion isn't the greatest idea.  Only you know how she'd take to such a talk, but if she were to start rolling with far less utilization on that card you wouldn't have to worry about it really.

*Snort*  Yeah, I actually broached that subject a time or two and the upshot is that she's 73 with a very deep credit file so she gives no **bleep**s that her utilization is high here and there.  Moms.  What can you do?

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[Anonymous]

The only drawback to keeping it is utilizaion, right?  Most months it won't matter because you won't be applying for credit.  (Key principle: your credit score only matters if you need to use it for something.)

If you do need to apply for credit, which sounds like will be a rare event in the next 24 months, you will be able to solve the utilization problem by paying all your cards to zero except one -- the remaining card you will have report at $10 say.

I wouldn't write off the "talk with my mom" idea.  Sure, you can see that getting her to change her credit habits completely and to do so every month will not work.  Point taken.  But if you were to find out when that card typically reports to FICO (easy to do, it's on your report) you could do the following:

*  When applying for credit, ask your mom if just this one time she'd be willing to pay down her credit card about a week before the statement prints.

[SouthJamaica]

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@Anonymous wrote:

The only drawback to keeping it is utilizaion, right?  Most months it won't matter because you won't be applying for credit.  (Key principle: your credit score only matters if you need to use it for something.)

If you do need to apply for credit, which sounds like will be a rare event in the next 24 months, you will be able to solve the utilization problem by paying all your cards to zero except one -- the remaining card you will have report at $10 say.

I wouldn't write off the "talk with my mom" idea.  Sure, you can see that getting her to change her credit habits completely and to do so every month will not work.  Point taken.  But if you were to find out when that card typically reports to FICO (easy to do, it's on your report) you could do the following:

*  When applying for credit, ask your mom if just this one time she'd be willing to pay down her credit card about a week before the statement prints.

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CGID I just want to express my dissent from the commonly held view that one needs only worry about one's credit score when "applying for credit".

I find that credit searches come up repeatedly in life, when one is not really 'applying for credit'..... e.g.

-auto insurance premiums

-cosigning a lease

-changing cell phones

-moving

-opening a savings account with a credit union

etc

When these things come up, one often doesn't have the time [minimum of a month] needed to optimize one's credit profile.

[Anonymous]

That's a sound point, SouthJ.  I think the right thing for people to do is to evaluate your own list of enumerated examples and think about whether they apply to them.  For some people they might, for others not so much.  In my case those basically don't apply to me -- but you are right that they might apply to others, so thanks.

In the very specific case of our OP, he can keep keep his FICO score close to optimal every month by keeping almost all his cards at $0 with one card reporting $10.  From what he has said thus far, it sounds like this would keep his util < 6% most months, and even when his mom went up to 50% he might still be < 8.99%.

PS.  I think you'd agree that worrying about optimizing your score is only important when you need it for something.  You are making the point that the situations where you need it may be more common then just applying for a new card or loan, which is sound.  But the key misunderstanding that people need to avoid is thinking that keeping their util down will help them as a long term strategy for building their score.  It doesn't help with that, as you know, and that was my point to the OP.  Basically he wants to stay in the garden and gradually build his score for two years -- so a hyper focus on utilization may be misplaced.

My feeling is he should keep the AU, leverage it for any new applications for credit in the next three years, but with the plans to drop it eventually.