I've been keeping my utilization way low, with most accounts reporting zero, and the others reporting nominally, so that my utilization has been about a third of a percent.
This week I decided to get some postponed dental work done, and to pay for it with some zero-interest-rate cards and not worry so much about the FICO scores. And I'm considering letting the balances ride for awhile, not paying them off totally, and letting my reported balances go up to the neighborhood of 5% overall utilization, with the zero interest cards just under 30%.
How much of a hit can I expect on my FICO scores if I do in fact let my utilization go from a third of a percent to five percent?
Even if you tell me I can expect a bad hit, I might do it anyway, just as an experiment...My scores are of only academic interest at this point since I should be gardening at this stage of the game. But I do wonder what lies ahead.
Updates:
5/17 Started May 16th with: 10 accounts at zero balance, 3 accounts posting total balance of $241, representing less than .3% overall utilization Over the next 5 days, I allowed 3 of the 13 revolving accounts to post a total of $1524.33, for 1.7% overall utilization, with individual account utilization ranging from 2.13% to 49%.
5/22 EX dropped 2 points.
5/29 Balances up to $2700, representing 3% overall. No other score changes yet.
6/3 The entire $2700 has been reported to TU, and my TU score has not budged.
6/5 As of today I'm up to $3500, for 3.9% overall utilization. My only FICO change so far has been -2 on EX. But both my FAKO scores at Credit Karma just dropped 5 points, which makes me nervous. So I will probably let it peak at 3.9% and start bringing the numbers down now.
6/8 Boom! EQ FICO dropped 11 points!
6/11 No new change in scores. 6/17 will start reducing utilization
6/16 30 days from the start of my experiment: EX -2, EQ - 11, TU - No change
6/24 down to 2% overall utilization, no change
6/27 Today TU dropped 3. After my utilization dropped from 3.9% to 2%. Go figure.
7/3 OK now I'm back down to .3% overall utilization, right where I started on 5/16. No further change in scores....yet.
@Anonymous wrote:Great question, SouthJamaica.
Short answer:
(1) My guess is that, if you still have a number of accounts reporting zeroes, you will probably have little impact from this event. The "total utili" factor by itself (apart from all others in the Amounts Owed category -- see below) doesn't seem to make a big distinction between 1% and 8.9%.
(2) Remember that the factors in Amounts Owed are snapshots in time, and therefore the impact only lasts for as many months as the amounts are owed. This is by far the most fluid and easiest controlled FICO category.
(3) It's great to see you have the self-awareness to realize that you are just in a gardening phase, and therefore you have a huge amount of freedom to experiment and play. Since you don't need the scores for any impending purchase, you can and should play around. Track what happens and then let us know.
Longer answer:
There are a number of different factors that are all lumped into the Amounts Owed category, which as you know is 30% of your score. One such factor is the person's total utilization (in which all credit limits across all revolving accounts are added together and compared against your total revolving balances). Total util is an important factor, but it is only ONE of the many factors in this group. FICO also looks at the utilization of each revolving account considered by itself. It also considers the raw dollar amount of your revolving balances -- in these "dollar amount" factors it doesn't matter what your credit limits are. Another metric still looks at open non-mortgage installment loans and compares the amount you currently owe vs. the amount you originally borrowed. Another metric still looks at how many open accounts have a non-zero balance. And so on.
Your question focuses on one metric (total util) amongst several that FICO will consider. You do give some helpful info which is that each individual card will be under 30% with total util being 5%. Let's assume additionally no particular card will have a huge raw dollar amount on it, e.g. $7000.
Given that, my feeling was that your dental work won't have much effect, and the effect that does occur will have to do with (a) reducing the number of zero-balance accounts and (b) significantly raising the raw dollar amount being reported on certain accounts.
Thank you very much for all that information 
If I chicken out on my plan, I won't have anything to report.
But if I go through with it, I'll come back in a couple of months and update.
@SouthJamaica wrote:I've been keeping my utilization way low, with most accounts reporting zero, and the others reporting nominally, so that my utilization has been about a third of a percent.
This week I decided to get some postponed dental work done, and to pay for it with some zero-interest-rate cards and not worry so much about the FICO scores. And I'm considering letting the balances ride for awhile, not paying them off totally, and letting my reported balances go up to the neighborhood of 5% overall utilization, with the zero interest cards just under 30%.
Or I might chicken out and pay them off rather than take advantage of the zero interest rate.
How much of a hit can I expect on my FICO scores if I do in fact let my utilization go from a third of a percent to five percent?
Even if you tell me I can expect a bad hit, I might do it anyway, just as an experiment...My scores are of only academic interest at this point since I should be gardening at this stage of the game. But I do wonder what lies ahead.
There should not be much change by having your utilization go to 5%, as far as how it affects your score.
I would suggest, though, that you are in a phase with your cards where you do not want to pay before statement cuts on any cards. I'm guessing you got a number of cards recently, thus the gardening mode. As you try to build your relationship with those CCC, they SP you periodically to see how your file is working. If you don't show any activity on many of your cards, they may be a little concerned. If they see a steady flow of PIF activity on most or all your cards, they will see a potential profitable customer and are more likely to not overreact if you start using their card more. There is something to be said for acting boldly and showing you can handle debt and payments.
As to the 0% APR on the dental work, that's a way to show you can take on debt and pay it back, with no cost to you. This is another behavior you want all your CCC to see, to make them more comfortable with your file.
The "All cards at zero but one" is fine for absolutely tweaking the last point out of your score (and thats about all I think it gets the cardholder). As a long term way to build the confidence of your several CCC so they don't overreact? In my opinion, it is not helpful to hide your good payment activity by this pay before statement cuts method. Your long term relationship with the cards you do have, that is your main goal now, not getting a bunch more cards. As your file ages and these cards show activity, adding the one or two other cards you want later, will be a cake walk, regardless of FICO score. By the time you get to adding the one or two other cards, your scores will have risen nicely anyway, even if you show PIF balances paid by the statement due date, boldly broadcasting that activity for all to see.
Good luck!
@NRB525 wrote:There should not be much change by having your utilization go to 5%, as far as how it affects your score.
I would suggest, though, that you are in a phase with your cards where you do not want to pay before statement cuts on any cards. I'm guessing you got a number of cards recently, thus the gardening mode. As you try to build your relationship with those CCC, they SP you periodically to see how your file is working. If you don't show any activity on many of your cards, they may be a little concerned. If they see a steady flow of PIF activity on most or all your cards, they will see a potential profitable customer and are more likely to not overreact if you start using their card more. There is something to be said for acting boldly and showing you can handle debt and payments.
As to the 0% APR on the dental work, that's a way to show you can take on debt and pay it back, with no cost to you. This is another behavior you want all your CCC to see, to make them more comfortable with your file.
The "All cards at zero but one" is fine for absolutely tweaking the last point out of your score (and thats about all I think it gets the cardholder). As a long term way to build the confidence of your several CCC so they don't overreact? In my opinion, it is not helpful to hide your good payment activity by this pay before statement cuts method. Your long term relationship with the cards you do have, that is your main goal now, not getting a bunch more cards. As your file ages and these cards show activity, adding the one or two other cards you want later, will be a cake walk, regardless of FICO score. By the time you get to adding the one or two other cards, your scores will have risen nicely anyway, even if you show PIF balances paid by the statement due date, boldly broadcasting that activity for all to see.
Good luck!
Thank you for all that good stuff. I have some questions:
"As you try to build your relationship with those CCC, they SP you periodically to see how your file is working. If you don't show any activity on many of your cards, they may be a little concerned".
They would take a zero statement balance on an active account as a sign that there was no activity?
" If they see a steady flow of PIF activity on most or all your cards, they will see a potential profitable customer and are more likely to not overreact if you start using their card more. "
By "PIF activity" you mean "PIF after letting a statement balance show" activity?
"As to the 0% APR on the dental work, that's a way to show you can take on debt and pay it back, with no cost to you."
They would know that it was promotional interest rate borrowing?
"The "All cards at zero but one" is fine for absolutely tweaking the last point out of your score (and thats about all I think it gets the cardholder). As a long term way to build the confidence of your several CCC so they don't overreact? In my opinion, it is not helpful to hide your good payment activity by this pay before statement cuts method."
Well basically "tweaking the last point out of [my] score" is what my question is about. I know that making my present credit card banks happy isn't impaired by my using their cards a lot so long as I pay them off. My question only relates to what kind of temporary hit my FICO scores will experience in the process.
"Your long term relationship with the cards you do have, that is your main goal now, not getting a bunch more cards."
Well I don't know about that; some of my cards aren't as good as others,, and none are low interest. Some have exorbitant balance transfer and cash advance fees. I would like to have some other cards which charge lower interest rates.
@NRB525 wrote:
@SouthJamaica wrote:I've been keeping my utilization way low, with most accounts reporting zero, and the others reporting nominally, so that my utilization has been about a third of a percent.
This week I decided to get some postponed dental work done, and to pay for it with some zero-interest-rate cards and not worry so much about the FICO scores. And I'm considering letting the balances ride for awhile, not paying them off totally, and letting my reported balances go up to the neighborhood of 5% overall utilization, with the zero interest cards just under 30%.
Or I might chicken out and pay them off rather than take advantage of the zero interest rate.
How much of a hit can I expect on my FICO scores if I do in fact let my utilization go from a third of a percent to five percent?
Even if you tell me I can expect a bad hit, I might do it anyway, just as an experiment...My scores are of only academic interest at this point since I should be gardening at this stage of the game. But I do wonder what lies ahead.
There should not be much change by having your utilization go to 5%, as far as how it affects your score.
I would suggest, though, that you are in a phase with your cards where you do not want to pay before statement cuts on any cards. I'm guessing you got a number of cards recently, thus the gardening mode. As you try to build your relationship with those CCC, they SP you periodically to see how your file is working. If you don't show any activity on many of your cards, they may be a little concerned. If they see a steady flow of PIF activity on most or all your cards, they will see a potential profitable customer and are more likely to not overreact if you start using their card more. There is something to be said for acting boldly and showing you can handle debt and payments.
As to the 0% APR on the dental work, that's a way to show you can take on debt and pay it back, with no cost to you. This is another behavior you want all your CCC to see, to make them more comfortable with your file.
The "All cards at zero but one" is fine for absolutely tweaking the last point out of your score (and thats about all I think it gets the cardholder). As a long term way to build the confidence of your several CCC so they don't overreact? In my opinion, it is not helpful to hide your good payment activity by this pay before statement cuts method. Your long term relationship with the cards you do have, that is your main goal now, not getting a bunch more cards. As your file ages and these cards show activity, adding the one or two other cards you want later, will be a cake walk, regardless of FICO score. By the time you get to adding the one or two other cards, your scores will have risen nicely anyway, even if you show PIF balances paid by the statement due date, boldly broadcasting that activity for all to see.
Good luck!
Very well-considered post here with a lot of thoughtful information. Makes perfect sense and could well explain why some people with perfect payment records suddenly attract AA seemingly out of the blue. I think you're onto something here, NRB.
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@SouthJamaica wrote:
@NRB525 wrote:Thank you for all that good stuff. I have some questions:
"As you try to build your relationship with those CCC, they SP you periodically to see how your file is working. If you don't show any activity on many of your cards, they may be a little concerned".
They would take a zero statement balance on an active account as a sign that there was no activity? It will be visible to each CCC that has a particular card, I don't think it is visible to the rest of your report with a statement balance $0. There is no negative, to be sure, but I don't think it reflects usage with an amount.
" If they see a steady flow of PIF activity on most or all your cards, they will see a potential profitable customer and are more likely to not overreact if you start using their card more. "
By "PIF activity" you mean "PIF after letting a statement balance show" activity? Yes
"As to the 0% APR on the dental work, that's a way to show you can take on debt and pay it back, with no cost to you."
They would know that it was promotional interest rate borrowing? No, they would see a relatively large balance, and then a sequence of payments (more than minimum payment hopefully) as that balance is paid down.
"The "All cards at zero but one" is fine for absolutely tweaking the last point out of your score (and thats about all I think it gets the cardholder). As a long term way to build the confidence of your several CCC so they don't overreact? In my opinion, it is not helpful to hide your good payment activity by this pay before statement cuts method."
Well basically "tweaking the last point out of [my] score" is what my question is about. I know that making my present credit card banks happy isn't impaired by my using their cards a lot so long as I pay them off. My question only relates to what kind of temporary hit my FICO scores will experience in the process. Adding utilization to 5% will have some reduction of your score, when you first allow more cards to report balances, there will be some reduction to your score, because both those sets of events are a shock to the FICO calculation. But my opinion is those points will work back up as FICO gets used to the new profile.
"Your long term relationship with the cards you do have, that is your main goal now, not getting a bunch more cards."
Well I don't know about that; some of my cards aren't as good as others,, and none are low interest. Some have exorbitant balance transfer and cash advance fees. I would like to have some other cards which charge lower interest rates. With 13 active cards (from your siggy) you are not in a mode to app spree 6 more cards
Thanks for getting back to me; much appreciated.
OK so I started allowing some of the balances to post. I'm going to do it for 31 days, and then report in on where my scores are after that.
I expect that the real movement on the scores, if any, will occur after that initial report, so I'll then report whenever anything interesting happens.
In the unlikely event that something interesting happens before I get to the end of my 31st day, I'll report on that too.
I started out on 5/16/15 with the following:
Scores EQ 715 TU 717 EX 695
Total reported balances: $214, or .3%
10 out of 13 revolving cards reporting 0 balance
(I will also mention the following variables which are in place at the outset, since improvements in these could
eclipse any negative effect from changes in utilization and render my little experiment
meaningless: negs TU 3, EQ 4, EX 6, inqs TU 12, EQ 6, EX 21)
My goal is to go up to 5% overall utilization by June 16th, with less cards reporting zero balances, and see how that change affects my scores.
Up til now I've been a wimp about allowing balances to post, let alone ride for a month or two, even where they would have cost me zero interest.
I was wrong about the first real movement occurring after a month. As soon as my Discover reported a $490, or 49%, balance, my EX score dropped 2 points.