Jump to content

Question About Utilization


Jess1120
 Share

Recommended Posts

I've been trying to look this information up...even on MyFico... but I'm still a bit confused.

Does the credit utilization (that your score is really affected by) only include amounts owed on revolving accounts?

I'm going to be able to pay off all of my credit card next month with my tax return, and I'm hoping this will raise my score since I'm pretty well maxed out on them right now. (2 cards...$2300 total... and I owe about $2000)

The problem is, I have several student loans too. None of them are in repayment yet, but do they count towards my overall utilization? I hope not since it's going to be a long time before those get paid off!

Link to comment
Share on other sites

IMO, and I do use opinion; credit utilization only looks at revolving credit such as credit cards. But obviously there is so much more that goes into the score other than utilization such as age of the account and on-time payments.

According to Bankrate, when you do the FICO score simulations, they're are tiers of utilization that weigh into the overall score---FYI,,,,so when you pay off your cc's you should see a double digit (hopefully) increase in your FICO (if you posted the correct total limits, balances and payoffs)

As for student loans they are installment accounts at least they are on my CR and again FICO is looking for age and on-time payments. I don't understand when you say that they aren't in repayment yet? Are you still in school---deferred?

If these SLs aren't on your credit report yet then when they "hit" you may notice a slight drop because of the newness factor and high balance of the total limit on the account but FICO's formula is so individualized that noone on this board would be able to tell you "for a fact." This shouldn't be related to high utilization on revolving accounts; FICO wants to see how you manage credit and rewards you for doing so!

Anyone, please correct me if I am wrong; the last thing I want to do is post false or misleading statements!

Link to comment
Share on other sites

IMO, and I do use opinion; credit utilization only looks at revolving credit such as credit cards.

The big factor is revolving utilization, but installment utilization does also count (contrary to popular opinion). From my myFICO "negative reasons" on my TU report:

The proportion of loan balances to loan amounts being reported on your installment accounts is too high

Simply having installment loans and owing money on them does not mean you are a high-risk borrower. To the contrary, paying down installment loans is a good sign that you are able and willing to manage and repay debt, and evidence of successful repayment weighs favorably on your credit rating. The FICO score examines many aspects of your current installment loan and revolving balances. One measurement is to compare the total outstanding installment balances against the total original loan amounts. Generally, the closer the loans are to being fully paid off, the better the score. Compared to other measurements of indebtedness, however, this has limited influence on the FICO score.

Paying down installment loans on a timely basis generally reflects well on your credit score. But if you want to improve your score, one way to do it is to try to pay the loans, particularly non-mortgage installment loans, down as quickly as you can.

Link to comment
Share on other sites

Yes, I'm still in school so they are deferred. They are all on my reports, but they report it as deferred or not in repayment. I figured once they were in repayment, they would count more...we'll see!

Mine are counting even in deferment: all my open installment accounts are deferred student loans.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
 Share

×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.. For more information, please see our Privacy Policy and Terms of Use.