Erroneous information on CCF blog?

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otter
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Erroneous information on CCF blog?

Postby otter » Fri Dec 12, 2014 9:53 pm

A recent blog entry about utilization contradicts something I've always been told, believed, and told others...

Using an example, let's say everything on my credit report is identical to yours, we both have the same card with the same limit (assuming we both have only one card for simplicity's sake). We both have 20% utilization but last month I had 80% utilization and yours was 20% (I'm assuming my statement has posted and the new balance has reported). According to the blog entry, your score would be better. Quoting the FICO rep on the blog:

“If you have a history of keeping your balances low and doing all the right things, you’re going to have a better score than someone who has had high balances in the past and struggled with keeping their balances down,” Sprauve says.

This runs counter to what I've been told and also doesn't make sense because I've seen credit reports on various websites and nowhere does it list previous balances. The only things I can think of is this: The column which lists "high balance" is somehow factored in, something I've occasionally pondered- although it doesn't tell anyone reading the report how long ago that balance was.

So have I assumed wrong all this time? Any thoughts from anyone on this (including blog writer Kristin McGrath assuming she reads the forum)? If your FICO score is computed "on the fly" using data in your report today, how can last month's data be factored in?
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450


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PlyrStar93
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Postby PlyrStar93 » Fri Dec 12, 2014 11:01 pm

I indeed can see my previous balances from the TransUnion reports requseted from disclosure.transunion.com, each account has a form listing each month's balance, payment due, actual payment and status (OK, 30 day late, etc.). I think this is the only possibility to get previous balances factored in, in addition to the historical "high balance".

The form looks like:
https://farm4.staticflickr.com/3949/14996319724_63e8c1e38e_b.jpg

However, this form is not always available to see. Purchased a credit report from Equifax and it only shows OK each month without old balances. They might store data on previous balances, though I was not able to find that out. Never tried Experian. These are the only datapoints I know about.
Citi Forward Visa $5000 10/2012 | American Express Blue Cash Everyday $8000 2/2014 | Discover it $7000 5/2014
Chase Freedom Visa Signature $7000 6/2014 | Citi ThankYou Premier Visa Signature $5000 1/2015
All EMV.

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otter
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Postby otter » Fri Dec 12, 2014 11:24 pm

PlyrStar93 wrote:I indeed can see my previous balances from the TransUnion reports requseted from disclosure.transunion.com, each account has a form listing each month's balance, payment due, actual payment and status (OK, 30 day late, etc.). I think this is the only possibility to get previous balances factored in, in addition to the historical "high balance".

The form looks like:
https://farm4.staticflickr.com/3949/14996319724_63e8c1e38e_b.jpg

However, this form is not always available to see. Purchased a credit report from Equifax and it only shows OK each month without old balances. They might store data on previous balances, though I was not able to find that out. Never tried Experian. These are the only datapoints I know about.


Not really familiar with TransUnion... is that information "for your eyes only" and based on information from four months worth of soft pulls requested by you? Even if that information is in your file, it doesn't necessarily mean that it is available to creditors or figured in FICO. You always have more access to your file than others (soft pulls are only seen by you, I believe. If you have a creditor indicating personal medical info ie. "Cancer Treatment Centers" that name is blocked to others).

Ironically, I found a page from nerdwallet, quoting the same guy from FICO which seems to say the opposite... that last month's balance is replaced by this month's balance.

http://www.nerdwallet.com/blog/tips/credit-score/how-long-high-credit-utilization-ratio-hurt-credit-score/
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450

CCRider
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Postby CCRider » Sat Dec 13, 2014 3:46 pm

I've always heard that keeping utilization below a threshold of about 33% was the way to optimize credit scores, so I don't see where the person quoted in the blog was off base. I'm not sure how FICO's score algorithm works exactly but I imagine it keeps a tally of all previous months' utilization levels or at least goes back a certain amount of time, like six months or one year. I don't know if the fact that previous balances aren't reported on credit reports means they're not being monitored in the background. It would just seem to make sense to me that between two people with identical credit lines the person with historically low utilization would appear less risky than one who had high utilization.

takeshi
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Postby takeshi » Mon Dec 15, 2014 8:41 am

Utilization only factors in current balances and limits so it isn't impacted by prior utilization.

However, it is possible for one to run into adverse action due to high utilization and that effect may not be temporary.

Some context and a link might help:
http://creditcardforum.com/blog/common-questions-about-credit-utilization-answered/

CCRider wrote:It would just seem to make sense to me

Be careful with that line of reasoning....

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otter
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Postby otter » Mon Dec 15, 2014 4:05 pm

That's what I thought as well.
In my Wallet:
  • Amex PRG NPSL[3-14, bd 91]
  • Sallie Mae MC $8000[1-14]
  • Chase Freedom $4700[1-14]
  • Discover It $2750[8-13]
  • BoA UCF Alumni Cash Rewards $5000 [3-15]
Sometimes in my Wallet:
  • GM BuyPower WEMC $5000[9-14]
  • Wells Fargo Propel 365 Amex $7000[4-14]
  • Barclaycard Arrival WEMC $7000[3-14]
  • BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450



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