FROM: Greg Fisher, greg@truthandfalsity.com
TO: Elizabeth Gravier, CNBC; John R. Rhea, president and CEO, Robins Financial Credit Union; Ken Lin, CEO, Credit Karma
DATE: May 13, 2020
SUBJECT: Unnamed experts on credit score utilization ratio, Part 1

OPEN LETTER

According to Fair Isaac, the credit score company

There is nothing 'optimal or significant' about 30% revolving utilization. It’s relative. Having a 30% revolving utilization is less risky and results in more points awarded compared to having a 40%, 50% or higher utilization percentage, but generates fewer points compared to having 20%, 10% or lower utilization percentage.

However, media, financial institutions and industry players state that 30 percent or below is significant according to unnamed experts.

There is nothing significant about 30 percent. If a person recommends that, then he is not an expert.

Ms. Gravier, you wrote: "Your credit utilization rate, or how much of your available credit you use, should be no higher than 30% according to experts, or even 10% utilization to see the best score. Lenders and issuers want to see that you don’t use all of your credit limit, so the higher the limit you have and the less of a balance you carry, the better. This factor makes up 30% of your FICO score calculation."

Mr. Rhea, you published, "While experts recommend keeping your credit card utilization below 30 percent, it’s important to note that creditors also check the total dollar amount of your available credit. This means that if you have a low credit limit, it probably won’t result in a huge blow to your credit score if your credit card utilization ratio is slightly higher than recommended."

Mr. Lin, you published, "Most experts recommend keeping your overall credit card utilization below 30%. Lower credit utilization rates suggest to creditors that you can use credit responsibly without relying too heavily on it, so a low credit utilization rate may be correlated with higher credit scores."

What are the names of two such experts, Mr. Gravier, Mr. Rhea and Mr. Lin?

Please reply today.

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Greg Fisher
Truth and Falsity
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The Credit Scoring Site
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