| By Greg Fisher
Tom Quinn of Fair Isaac, the credit score company, has testified before Congress. Recently, on an official FICO blog, he described people confused about the level of debt on credit cards:
About 50% of responders thought having a 30% utilization ratio on credit cards generates maximum points. Not true. Generally speaking, the lower revolving utilization the more points awarded. I think the confusion is that people see that the category Amounts Owed makes up about 30% of a FICO Score and interpret that as meaning that a 30% revolving utilization ratio results in the optimal amount of points generated.
In agreement, a previous article on bankrate.com quotes another credit score expert from FICO stating, "There is some misconception out there that there's a hard and fast threshold above which the consumer will start hurting their score, below which it's helping the consumer's FICO score."
So, two experts (whose company maintains the secret formula) say that there is nothing special about 30 percent.
As if to dispel the myth, Fair Isaac ran a scenario where a person had a ratio of 100 percent on a credit card. The subject's credit score: 757. Quinn describes 750 as "very good."
Unfortunately, however, the U.S. Consumer Financial Protection Bureau states, "Credit scoring models penalize you for using too much of the credit you have available to you. This means your credit score may drop if you use more than 30% of the revolving credit you have available to you."