@llecs wrote:
I'd say you're better off with multiple cards at $0 w/ one card with a high balance vs. multiple CCs with a lower balance. Some may counter that $3800 is maxed out and therefore FICO dings you extra. IME, that ding came when it hit 100% but certainly there's no argument that $3800 on a $4k CL does hurt on the util alone.
Now having a couple of CCs report a balance across several accounts isn't too bad. Your FICO report has a field for # of TLs reporting a balance and once that hits over 50%, then it'll red flag you, though the ding will begin once you add multiple balances; it'll just get much worse when you hit over 50%.
My ballpark estimate on the utilization percentage from one card reporting a balance vs the percentage of cards reporting a balance is that they translate into roughly the same score change. They are potentially about equally harmful, and when either hits about half, things start to get increasingly worse. You may take it or leave it, but that's my theory (TM).
@steve997 wrote:
@llecs wrote:
I can't speak to FAKO scoring, but FICO will start to ding you if you have multiple TLs reporting a balance and will ding you if any util is over 10%.
What's the reasoning for this? I hear this all over the place but nobody really seems to know why. If I've got 10 cards reporting $0 (or, like some people here, 20 or 30), why is it suddenly bad to have 2 cards reporting a balance, especially if they're both well under 10%?
I guess I just don't see why this increases your risk of default, which is supposedly what FICO is about.
The 1-9% cutoff may well stem from some person, who on some day happened to suggest that having a utilization of less than ten percent would help your FICO score. And it does of course. A casual comment using a round number of no particular precision, forgotten as swiftly as it was written. But it was read by many, who needed a guideline for what to do, and before you knew it, the whole thing started snowballing. Books thicker than bricks have been dedicated to this type of human interaction.
@llecs wrote:Think about it in the lender's perspective...if you have an applicant who has multiple CCs charged with some sort of balance, then that'll tell you that the borrower-to-be is 1) actively relying on CCs (or other forms of credit) vs. cash, 2) is juggling CCs vs. using only one or two, and 3) has cash flow issues because they aren't paying off the card (due to a present balance reporting).
And 4) been encouraged to use the cards we get and to pay by the due date!
