False statements about credit scores: Myth 7, Part 1
A credit utilization ratio is not 30% of a credit score calculation
| By Greg Fisher
See false statements below.
This page documents and records a massive amount of misinformation about credit scores.
Credit Score Myth 7 is the false information that the weight of a credit utilization ratio is 30% in Fico credit scores. That is impossible given that there are other factors in the same category weighted at 30%. Who spreads the myth is surprising and troubling.
Fico credit score company Fair Isaac breaks down scores into 5 categories. One such category is named Amounts Owed and makes up 30% of the scores. Within that category—weighted at 30%—are 5 items:
- The amount owed on all accounts
- The amount owed on different types of accounts
- How many accounts have balances
- Credit utilization ratio on revolving accounts
- How much of the installment loan amounts is still owed, compared with the original loan amount
A widespread error is to overstate the weight of a credit utilization ratio at 30%.
Obviously, if such a ratio determined 30% of a score, that would leave no room in the 30% category for the other 4 factors. The ratio alone cannot make up 30 percent of a score. That is impossible.
Misinformation
The statements below are not true.
- According to myFICO, your credit utilization ratio accounts for 30% of your score.
—rockethomes.com
- According to the FICO scoring model, your credit utilization ratio accounts for 30% of your credit score.
—creditcards.com
- And because your credit utilization ratio accounts for 30% of your credit score, an improvement to this number usually means that you’ve made an improvement to your credit score.
—carolthompsonrealty.com
- As you can see, your credit utilization, or the percentage of open credit that you’re using, accounts for 30% of your credit score.
—thepennyhoarder.com
- As your credit utilization ratio makes up 30% of your credit score, so it’s not a small thing to overlook.
—intuit.com
- But borrowers with a high DTI ratio may have a high credit utilization ratio -- and that accounts for 30 percent of your credit score.
—firstokfcu.org
- But it’s important to remember that your credit utilization ratio accounts for 30% of your credit score.
—121fcu.org
- But one of the least understood factors—credit utilization ratio—is also one of the most important: it accounts for 30 percent of your score.
—chase.com
- Credit utilization ratio makes up 30% of your score.
—unitedfcu.com
- 'Credit utilization' refers to the amount of credit available to you versus how much of that credit you’re currently using. This statistic makes up about 30% of your overall credit score.
—communityfirstfl.org
- Debt-to-limit ratio makes up 30% of your FICO Score.
—Fair Isaac (FICO)
- How much you owe compared with your credit limits – your credit utilization ratio – accounts for 30% of your FICO score.
—C. Bond, usnews.com
- How much you owe compared with your credit limits -- your credit utilization ratio -- accounts for 30% of your FICO score.
—N. Clements, C. Bond, yahoo.com
- How much you owe in relation to your available credit limits — your credit utilization ratio — makes up 30% of your FICO score.
—creditkarma.com
- If you carry high balances on your cards, you are likely to drive up your credit utilization ratio—the amount of available credit you use, which accounts for 30 percent of your credit score.
—consumerreports.org
- Lenders like to see credit utilization under 30%—under 10% is even better. This ratio accounts for 30% of your FICO Score.
—Experian
- Life is slightly more complicated when it comes to your so-called credit utilization ratio, which comprises 30% of your FICO credit score.
—nytimes.com
- Lowering your overall credit limit without reducing your balances will increase your credit utilization ratio, which accounts for 30% of your FICO score.
—riograndecu.org
- Lowering your overall credit limit without reducing your balances will increase your credit utilization ratio, which accounts for 30% of your FICO score.
—wpcu.coop
- One major factor in your credit score is known as your credit utilization ratio. Under the FICO credit scoring system, this accounts for 30% of your credit score.
—self.inc
- Remember, your credit utilization ratio accounts for 30% of your credit score.
—fscu.com
- Since the 'credit utilization ratio' makes up 30% of your FICO score, try to limit your card use to no more than 30% of available credit at any given time.
—self.inc
- That’s because 'amounts owed,' also known as your credit utilization ratio, makes up 30% of your FICO score.
—huffpost.com
- That’s because doing so increases your 'credit utilization ratio' — or the percentage of available credit you’re using — a number that comprises 30% of your FICO scores.
—chime.com
- That’s because this factor, known as your 'credit utilization ratio,' accounts for 30% of your FICO score.
—Nerdwallet, freep.com
- That’s because this factor, known as your 'credit utilization ratio,' accounts for 30% of your FICO score.
—Nerdwallet, usatoday.com
- That’s because it can increase your credit utilization ratio, which accounts for 30% of your FICO score.
—forbes.com
- That's called your credit utilization ratio, and it accounts for 30% of your credit score.
—Motley Fool, foxbusiness.com
- The credit utilization ratio comprises 30% of FICO credit scores.
—rutgers.edu
- The credit utilization ratio makes up 30% of your credit score.
—forbes.com
- The lower your ratio, the better. It accounts for 30% of your FICO score.
—time.com
- Therefore, experts say the credit utilization ratio comprises 30% of your FICO score since it only applies to revolving lines of credit and is defined as the ratio of credit you’re using to the total amount of credit you’ve been extended.
—cnbc.com
- This is known as your credit utilization ratio, and it accounts for 30% of your FICO Score.
—fool.com
- This ratio accounts for 30% of your credit score.
—kiplinger.com
- This ratio—your credit utilization ratio (CUR), aka your credit utilization rate—is important because it determines up to 30% of your credit score.
—creditonebank.com
- To help increase your score even more, pay more than the minimum payment due to help you drive down your credit utilization ratio, which accounts for 30% of your credit score.
—citi.com
- Under the FICO scoring model, your credit utilization ratio makes up 30% of your credit score.
—creditcards.com
- When building your credit score with a credit card, your credit utilization ratio accounts for 30 percent of your credit score.
—intuit.com
- 'With a weighting of 30%, your credit utilization ratio is a key factor used to calculate your credit score,' said Richard Best, a credit specialist at Dontpayfull.com, a consumer discount financial spending platform.
—foxbusiness.com
- You'll want to have a low credit utilization ratio, which comprises 30% of your overall credit score.
—Farnoosh Torabi
- Your credit utilization rate accounts for 30% of your credit score.
—credit.com
- Your credit utilization ratio accounts for 30% of your credit score.
—ascu.org
- Your credit utilization ratio accounts for 30% of your credit score.
—Motley Fool, jsonline.com
- Your credit utilization ratio accounts for 30% of your credit score.
—Motley Fool, knoxnews.com
- Your credit utilization ratio accounts for 30% of your FICO credit score.
—americanexpress.com
- Your credit utilization ratio is the amount you owe across your credit cards (and other revolving credit lines) compared to your total available credit, expressed as a percentage. In the FICO scoring model, this accounts for 30 percent of your overall credit score.
—bankrate.com
- Your credit utilization ratio is the second most important factor in calculating your FICO score, the credit score lenders use more than any other. It accounts for 30 percent of your score.
—US NEWS, wtop.com
- Your credit utilization ratio makes up 30% of a FICO score.
—self.inc
- Your credit utilization ratio makes up 30% of your credit score.
—lakeviewlawgroup.com
- Your credit utilization ratio makes up 30% of your credit score.
—csmonitor.com
- Your credit utilization ratio makes up 30% of your FICO score.
—thepointsguy.com
- Your credit utilization ratio makes up 30% of your FICO Score.
—fool.com
- Your credit utilization ratio makes up 30% of your FICO score.
—time.com
- Your credit utilization ratio makes up 30% of your FICO score.
—creditcards.com
- Your credit utilization ratio--the amount of your debt in relation to the amount of your available credit--comprises 30% of your score, says Craig Watts, a spokesman for Fair Isaac Corporation, the company that calculates and issues the FICO credit score that most lenders use.
—Wall Street Journal, Congressional Record, govinfo.gov
- Your debt-to-credit utilization ratio — how much debt you’ve accumulated on your credit cards divided by the credit limit on the sum of your accounts — comprises 30% of your credit score.
—yahoo.com
- Your utilization rate accounts for 30 percent of your credit score.
—lexingtonlaw.com
The numbered statements above are false.
Consensus does not necessarily equal truth.
Follow the activity of Myth7 using that hashtag.