"High credit usage" vs "High revolving balances"

[SouthJamaica]

Just noticed that in EX my FICO 2 score says "High credit usage" while the other 6 EX scores say "High revolving balances".

Any significance to the different terminology?

[Tuscani]

No difference in terms of scoring the utilization. It is just verbiage  

[Anonymous]

I’ll have to go back and check my notes but one algorithm I had 2 separate reason codes, one for too many credit cards with a balance and another for too many credit accounts with the balance.

Not exactly the same thing, but noteworthy I thought.

[Anonymous]

@SJ, high revolving balances seems to refer specifically to credit cards. High credit usage would imply to me that installments are also being taken into account. If you have any installments, it may be considering those as well. That’s really the only distinction in the wording that makes sense to me. Being that EX2 is a mortgage score, involving installment accounts would make sense.

[Anonymous]

I do believe I concur with that astute observation and hypothesis; it seems most reasonable.

[SouthJamaica]

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@Anonymous wrote:
@SJ, high revolving balances seems to refer specifically to credit cards. High credit usage would imply to me that installments are also being taken into account. If you have any installments, it may be considering those as well. That’s really the only distinction in the wording that makes sense to me. Being that EX2 is a mortgage score, involving installment accounts would make sense.

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That would be a reasonable hypothesis, but it doesn't prove out.

1. Although EX FICO 2 is used as a mortgage score, it was not designed for mortgage lending, it's just an old FICO Classic scoring model.

2. It is less, rather than more, responsive to installment loan issues.

[Anonymous]

^^^ interesting. I fully admit that I don’t know the subtleties such as the sensitivity to installments.

If the difference in verbiage doesn’t hint toward revolving cards only vs cards plus installments, then I’m not sure what else to think. The choice of wording for the two reason codes seems to imply one involves revolvers only, and the other encompasses additional types of credit.

[Anonymous]

It definitely was not designed for mortgages and I don’t think the other two mortgage scores were either. It still sounds reasonable to me, but it’s good that you are aware of the subtleties of it because I’ve never tested that, that’s why I can only say observation and hypothesis.

But based on the verbiage that’s the only reasonable explanation I can think of.

[iv]

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@Anonymous wrote:
It definitely was not designed for mortgages and I don’t think the other two mortgage scores were either. 

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Correct. None of the three "mortgage" scores were designed specifically for mortgage lending, they were just general-purpose scores that Fannie and Freddie selected.

Interestingly, FICO did design mortgage-specific industry option scores (just like the Auto and Bankcard versions)... but they fizzled. (Mostly due to the GSEs not adopting them.)

[Anonymous]

I’ve got another hypothesis for you SJ. If the only balance you have is on a card with a limit above the exclusion amount, in other words say a $40,000 credit limit card, you will get the negative reason code for no revolving balance but you will also get the one for high credit usage.

Therefore you can have high credit usage without high revolving usage because revolvers over a certain amount are excluded for certain purposes.

As a matter of fact, I think you have several cards, including some credit union cards that are excluded like that. So I could see a difference there.