Question on My Credit Report

I just got my full credit report. Overall, my credit scores are pretty good, but below the numbers it gives reasons why they are not better. Some of the reasons make sense, such as “too many inquiries” (I deleted the ones that make sense from the list below).

Background: I only have two types of credit, education loans and revolving credit (credit cards). The credit report cites these numbers:

Education loans: Total of $7,650 remaining from loans of $24,000

Revolving credit: Total of $2,180 with a limit of $19,100 (I pay this off every month by the way)

Here are the reasons why my score is not higher:

EQUIFAX/FACTA BEACON 5.0
–00010 - PROPORTION OF BALANCES TO CREDIT LIMITS IS TOO HIGH ON BANK REVOLVING OR OTHER REVOLVING ACCOUNTS
–00011 - AMOUNT OWED ON REVOLVING ACCOUNTS IS TOO HIGH
–00033 - PROPORTION OF LOAN BALANCES TO LOAN AMOUNTS IS TOO HIGH

TRANSUNION/FICO CLASSIC (04)
–003 - PROPORTION OF LOAN BALANCES TO LOAN AMOUNTS IS TOO HIGH
–011 - AMOUNT OWED ON REVOLVING ACCOUNTS IS TOO HIGH

EXPERIAN/FAIR, ISAAC (VER. 2)
–01 - AMOUNT OWED ON ACCOUNTS IS TOO HIGH
–10 - PROPORTION OF BALANCE TO HIGH CREDIT ON BANK REVOLVING

Are you kidding me? What are these people smoking?

So having paid off 68% of my educational loans and having only 32% remaining is “PROPORTION OF LOAN BALANCES TO LOAN AMOUNTS IS TOO HIGH??”

Utilizing 11.4% of my credit limit is considered “PROPORTION OF BALANCE TO HIGH CREDIT ON BANK REVOLVING??”

The fact that I only owe $9,830 to anyone anywhere translates to “AMOUNT OWED ON ACCOUNTS IS TOO HIGH??” That makes no sense. If owing $9,830 means I owe too much, what would happen if I actually obtained gasp a MORTAGE?!

Does anyone have any suggested explanations for this? Am I reading these incorrectly?

If I used a debit card more often and reduced my credit card utilization from 11% down to say 4%, would it really make that much of a difference?

As a former finance manager for a car dealership, I’ve seen hundreds of credit reports, from the best to the worst. Even the people with credit scores north of 800 had this type of language on their reports. Don’t give it another thought. There isn’t anything you can do to change it, and it’s meaningless as far as I can tell.

We’re forced to put SOMETHING on there as to why the score isn’t perfect.

I’ve seen scores 10 points shy of perfect, but they had to have the top reasons it could be better.

Yep. My wife and I both have scores of 800+. We both pay off our credit cards each month. I have no loans whatsoever. My credit utilization, at any given time is in the single digits percentage wise. Still, when we got our reports, both of us had similar language. It left me scratching my head, but I just figured it’s something they had to put down for why the score wasn’t perfect.

Clark Howard suggests keeping you credit utilization under 30% so that’s just fine. The balances are reported at each closing date so even if you pay them off every month the balances will still be reported, which is why your credit utilization is not zero. If you wanted to have a credit utilization of zero% you could pay your credit cards online before the closing date each month so you receive a statement balance of $0.00 each month. That’s what I do and that’s how I understand it. You might want to check with a real expert before taking that as gospel though.

Ah. Thanks for the comments everyone. I guess that is a better way of thinking about it. I guess you get a perfect score if you have high limits, no debt, never use your credit cards, have tons of credit history, and never have credit inquiries (in other words you are probably dead).

Another question if I may. Why is the score range from 300-850?

Did they ever consider something more user-friendly and reasonable, like maybe 0-100 or 0-1000 (if they want more graduations)?

I really don’t know the whole answer, but zero is just bad. That’s a psychological thing and might be best to avoid implying someone’s credit is absolutely worthless and a zero.

Why not 1000? Again, I am guessing the original algorithms worked out best computing up to 750 or 800 back in the day.

As of a few months ago, I had a perfect score. I was in the process of refinancing my mortgage. The broker I was dealing with stopped in mid sentence and said something like “I’ve never seen this before! Your credit report has no adverse notes!”

FWIW, I do have high limits and my only debt is my mortgage, and the current month’s credit card. But I do use the cards.

I actually had to justify another time why I didn’t have more credit inquiries. I was getting an increase in available balance on a card so I could buy all my new kitchen appliances in one shot, and part of the check they did caused them to ask me why I hadn’t been applying for new cards more often. They suggested that a valid answer was that I was happy with my current cards, and I agreed that was the case.

-D/a

Yeah, I’ll chime in with another mee-too. My credit score has been consistently really good for years, and I get those diagnostic “why your score is so shitty” reports too. Yeah, it just seems like so much boilerplate stuff there.