topic Re: Small Credit Card Limits in Credit Cards

Small Credit Card Limits

Amie — Fri, 04 Jan 2008 23:06:30 GMT

I'm trying to clean up our credit and raise our FCIO score. We have 1 credit card with a $2000 and two others with $1000. All are about 24% - 50% used. I heard that because they are low credit lines this is hurting us. Does anyone know? Should I close all, but one?

Also, I plan to pay off an auto loan in April and heard this will lower the score. I don't know what to do. We have low FCIO scores and I thought by paying off a loan would help. Are we better off paying a new car? Doesn't make sense, but I don't want to score to go down.

Thanks

Re: Small Credit Card Limits

sunrise — Fri, 04 Jan 2008 23:28:08 GMT

Are you paying off the car early? Or is the last payment in April?

Re: Small Credit Card Limits

marty56 — Sat, 05 Jan 2008 00:28:51 GMT

Dont close the cards, lower your util to < 10% on them. Think 5% of 3k CL is better then 50% 20k CL.

This will improve your FICO score.

The PIF car loan with a good payment record will be worth more to help you get a new car loan. I dont know about the affect on a PIF car loan on your FICO score.

Best ways to improve your score:

1. Never pay late

2. low util PIF (FICO score game)

3. Dont apply for too much credit.

4. Despute wrong derog information on your credit report.

5. Never pay late

Message Edited by marty56 on 01-04-2008 04:28 PM

Re: Small Credit Card Limits

Amie — Fri, 04 Jan 2008 23:35:43 GMT

Paying it off early. Only by 4 months.

Re: Small Credit Card Limits

haulingthescoreup — Sat, 05 Jan 2008 00:21:43 GMT

Hi, Amie, welcome to the forums!

When it comes to paying off your loan, usually it wouldn't hurt, but if it's your only installment loan, you might lose more points for no longer having an open loan in your credit mix. Dumb, but there it is. Do you have an open mortgage, student loan, or any other installment loan? If so, I don't think you'll lose but a few points for paying off the loan, and financial good sense is important, too!

Your best bet will be to do as the others say and pay down your cards to under 10%. And for a maximum boost, pay the two smaller cards off completely, and let only the $2K card report. And Lordy, no, don't close them!

If your payment history is clean on your cards, you might consider asking your CCC's for CL increases once you pay down what you have. A lot of lenders are freaking out these days, so I would definitely have your util down before asking. And you want to be sure that they will do it without a hard inquiry on your reports, ouch.

Do you know about how to pay your cards down or off before they report balances to the credit bureaus? Just paying a couple of weeks early can bump your scores up nicely.

Don't know if you've done this yet, but please read Credit Scoring 101:

http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&thread.id=2654

You'll have a much better understanding of how credit works, and why it would be an awful, awful idea to close your existing cards! ;)

Re: Small Credit Card Limits

Gotagoal — Sat, 05 Jan 2008 08:03:25 GMT

Dear Hauling it up... you did such a nice job of explaining all of that info. Good job! It's people like you who helped people like me to realize this Fico world and it's not out of reach !!!! Thank you!

Re: Small Credit Card Limits

Timothy — Sat, 05 Jan 2008 08:11:00 GMT

Yep - Kuddos to HTSU

It helps she types 60-80 words per minute.

Gotagoal wrote:
Dear Hauling it up... you did such a nice job of explaining all of that info. Good job! It's people like you who helped people like me to realize this Fico world and it's not out of reach !!!! Thank you!

Re: Small Credit Card Limits

haulingthescoreup — Sat, 05 Jan 2008 13:18:26 GMT

Timothy wrote:
Yep - Kuddos to HTSU
It helps she types 60-80 words per minute.
Gotagoal wrote:
Dear Hauling it up... you did such a nice job of explaining all of that info. Good job! It's people like you who helped people like me to realize this Fico world and it's not out of reach !!!! Thank you!

Wow, thank you both! Although the words-per-minute is significantly hampered when the 12-pound cat decides to lie on my left arm. :P

Re: Small Credit Card Limits

miguelon — Thu, 05 Jun 2008 03:10:28 GMT

Hi, the whole credit score system is quite new for me since I've just arrived to the US, and so I have opened a checking account and have deposited 900$, and the only way to get a credit card was to request a secured credit card with CL 800$, so I need to know; What would be my starting credit score? How do I increase this credit score? Where should I request credit cards? If I ask for a car loan, should I do it, at the Bank itself or by a dealer? would it be denied?

Appreciate your help,

Miguelon

Re: Small Credit Card Limits

wmarat — Thu, 05 Jun 2008 03:27:51 GMT

miguelon wrote:
Hi, the whole credit score system is quite new for me since I've just arrived to the US, and so I have opened a checking account and have deposited 900$, and the only way to get a credit card was to request a secured credit card with CL 800$, so I need to know; What would be my starting credit score? How do I increase this credit score? Where should I request credit cards? If I ask for a car loan, should I do it, at the Bank itself or by a dealer? would it be denied?

Appreciate your help,
Miguelon

Regarding Autoloan. From experience a bank may offer lower APR but if you apply to bank you probably will be denied. Dealer, however, will approve you but you'll get outrageous APR. Check out your local CU. I had chosen to buy my first car in the States in cash, it was much cheaper.

Forget about FICO for at least 6 mos, better off for 9 mos. Let your secured card to graduate to unsecure. Be patient, patience is a virtue and never, but never be late.

Re: Small Credit Card Limits

TheNewWorldMan — Sat, 21 Jun 2008 22:36:43 GMT

miguelon wrote:
Hi, the whole credit score system is quite new for me since I've just arrived to the US, and so I have opened a checking account and have deposited 900$, and the only way to get a credit card was to request a secured credit card with CL 800$, so I need to know; What would be my starting credit score? How do I increase this credit score? Where should I request credit cards? If I ask for a car loan, should I do it, at the Bank itself or by a dealer? would it be denied?

Appreciate your help,
Miguelon

You might find this chart I created to be helpful:

http://allaboutthebenjamins.org/youngandstarting.html

I intended it for American teenagers. In the eyes of the U.S. credit scoring system, that's what you're functionally equivalent to. :-)

Re: Small Credit Card Limits

Alsofromabroad — Wed, 04 Mar 2009 22:28:22 GMT

Hi, Miguelon. I am also from overseas, and have been familiarizing myself with the whole credit score system over time. First of all, there are many cc lenders that will work with you to get you a secured credit card, starting at $200, so you shouldn't have to start with a secured balance of $800 if this is not a good fit for you. You could take a look at Bank of America or CapitalOne as a for instance (wherever you search, make sure that you review the lender's terms before committing to that card). My security was returned to me after 9 months. I paid my balances on time, every time, and kept these low. After a year, my score 'started' at 720. High FICO scorers generally keep their revolving credit below 8%. Bear in mind that your account must be opened for at least 6 months before it is reported to the credit bureaus. When it is reported, your score does not change from day to day. I thought that any changes in my balances were automatically reported to the bureaus, but this is not the case. Changes occur only when the lender reports to the bureaus with whatever balance is showing on their reporting day. It is my observation that this occurs about every 10 weeks. As for increasing the score, I needed age on my side, which raises your score. To do this, I became a joint account holder (not the same as an 'authorized user') with my husband on one of his credit cards, which was ten years old. This aging also appears to have raised my score. One of the best books on the market is 'Best Credit' by Dana Neal. I have read a number of publications and this one trumps most of them. Good Luck!

Re: Small Credit Card Limits

Pappy214 — Wed, 04 Mar 2009 22:33:26 GMT

Also remember it is not the limit on the card that hurts or helps a score, it is the utilization percentage. Always pay that down before the statement cuts (try to keep it under 10 percent reporting), and always pay on time.

If you do these two simple things your scores will go up.

Re: Small Credit Card Limits

llecs — Sat, 17 Jul 2010 02:12:30 GMT

Post split to form a new thread within Understanding FICO Scoring