Assume that identical twins A and B both have the same credit card, credit score, credit limit, and credit history. For the next year, twin A does not use his credit card at all, while twin B each month uses 10% of his credit limit and pays it off at the end of the same month.

After one year, whose credit score is higher?

I have read or heard contradicting information about this, with some saying to keep the credit utilization ratio as low as possible and some saying that 10% are optimal.


To start with: FICO does not disclose the exact metrics of their credit scoring algorithm, so anybody who tells you they can answer this question precisely is lying to you, or in breach of their NDA with the Fair Isaac corporation. However, some general things are public knowledge.

Utilization typically makes a very small dent in your credit score, unless you're fairly high in utilization (significant hits start over 25% of a high credit limit) or have a very high credit score. The history of said utilization is not significant (or even kept); only the point in time utilization. However, someone who uses their cards will have some point in time utilization in a typical month.

For example, using the credit score simulator on Credit Karma (no endorsement meant or implied), my (very high) credit score has about a 30 point swing between optimal and 20% utilization. Optimal seems to be around 5% for me. There's about a 10 point swing between 0 and 5% (0 being a bit lower).

But I would emphasize: this is significant only because I have no negatives on my report, a very high total credit limit, and a long history. Nothing negative at all. My credit score swings significantly in the high 700 to low 800 range on a regular basis, with no specific reason other than the oddities of the algorithm and coincidental timing.

I would suggest that the answer is that so long as both twins had good credit history, sufficient total credit, and sufficient history paying off their balances, they would both have similar scores, and be eligible for similar loans.

I would also note that there's a big difference with the actual "score" used by the bank/etc. based on what you apply for. If you apply for a car loan, you don't have the same actual score as for a credit card or for a mortgage. Many of those lenders have their own proprietary algorithms, and even if they don't FICO has multiple scores they give depending on what the requester needs. A mortgagor or a car lender is much less interested in your revolving credit balance than a credit card company, who might see you as a bit of a risk if you've not used credit cards for a long time and suddenly asking for a card might be a sign that you just got laid off (or simply are going to change your behavior).

Edit after some comments from Bananach and LorenPechtel: I checked my credit report for a credit card that I own that I do not use (I don't carry it around, it's locked in a file cabinet as my emergency card) and has been used maybe 3x in the last five years (as check overdraft protection) and always instantly paid off before utilization would be reported.

That card shows "good" payments (identically to the card I use regularly) as far back as it shows any history at all. Now, different credit card companies may behave differently as far as reporting (since reporting is at their discretion), but it's certainly possible for cards with no utilization to appear identically to cards with utilization from a payment history point of view. Since there is no "balance history", only payment history and current utilization, for the twins above this would appear identical for the pair, except for their current utilization (if that is different in the scenario).

  • I must disagree. The twin that uses the 10% will have a year's worth of paid-as-agreed marks on his credit score that the one who doesn't use it at all won't have. Thus that twin will have a higher credit rating at the end. Now, if twin A had used 10% and twin B had used .10% the ratings would be the same. May 2 '17 at 0:31
  • Note my use of 'similar' not 'same'. I am not sure I agree with you - but there may be something to what you say. Fair Isaac has not confirmed this though so it's not definitely true - more like 'common knowledge' at best.
    – Joe
    May 2 '17 at 1:12
  • While Fair Isaac hasn't released their formulas you can look at the inputs--what's on your credit report. Whether the bill was paid is there, historical balances are not. Thus it's not possible for historical balances to matter other than in the binary sense of whether the bill was paid. May 2 '17 at 1:23
  • @Loren So there is no zero-dollar-owed bill when you don't use your credit card? I find it hard to believe that credit bureaus would have such an irrational mechanism to distinguish so heavily between 0.01$ and 0.00$ (I haven't had a credit card in the US yet, so I don't know)
    – Bananach
    May 2 '17 at 6:11
  • 1
    Actually, Bananach makes a good point. @LorenPechtel, I just checked a credit card that I carry solely as emergency - I never spend on it, it is tied to my bank as my check overdraft protection but it's been used maybe 3x total in the last 5 years and always instantly paid off (prior to reporting utilization in every case I believe) - and the credit report indicates I've made monthly payments every month as far back as it goes. Even for zero balance or payment (nearly all of those months).
    – Joe
    May 2 '17 at 15:13

Credit score is a reflection of credit-worthiness - the history of one paying his credit obligations. If there is no history, the score will actually decline

Twin A will have a lower score. Twins B will likely experience a little credit score improvement if his history was similar to his previuos year.

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