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CC UTI ..... Why 1-9%?

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CEOriginal
Contributor

CC UTI ..... Why 1-9%?

Quick question, I have seen pretty much everyone suggest to pay down all CCs to show a 0 balance, and leave one with a 1-9% UTI. Why is that? To show future lenders that you actually use your CCs and are responsible with them?

 

The reason I ask is because last month I was denied for an AMEX because of high UTI. It was around 35% or so. Well now, all of my balances are showing 0. Should I wait for the next statement cut and leave a few dollars showing before I re-apply? Is there a such thing as getting denied because of TOO LITTLE utilization?



Scores as of 7/28/13: EX.683   TU.688   EQ.???
Message 1 of 5
4 REPLIES 4
cwwatts1202
Established Contributor

Re: CC UTI ..... Why 1-9%?

You want it to show that you can use credit and use it responsibly and using 1-9% of your balance shows that you're using it, and using it responsily. I do believe I have also read that you can get denied if you're not using your current cards (or them reporting $0 so it appears as though you're not using them) utilization counts for a pretty big chunk of your credit score, if you're not using your revolving accts there's no way for it to help build your score.

Message 2 of 5
cwwatts1202
Established Contributor

Re: CC UTI ..... Why 1-9%?

You should also see a score bump from paying your utilization down, and yes i'd wait to reapply if that was the only reason they denied you was high utilization.

Message 3 of 5
SSA_2013
Frequent Contributor

Re: CC UTI ..... Why 1-9%?


@CEOriginal wrote:

Quick question, I have seen pretty much everyone suggest to pay down all CCs to show a 0 balance, and leave one with a 1-9% UTI. Why is that? To show future lenders that you actually use your CCs and are responsible with them?

 

The reason I ask is because last month I was denied for an AMEX because of high UTI. It was around 35% or so. Well now, all of my balances are showing 0. Should I wait for the next statement cut and leave a few dollars showing before I re-apply? Is there a such thing as getting denied because of TOO LITTLE utilization?


Well, I don't think anyone knows exactly why the rate is 1-9% but the reason is that it shows usage, no desperate need for credit (you would have been able to charge up more than 9%), rotating accounts each month show you can manage multiple tradelines, etc. You can re-apply with UTL below 25% but the best would be between 1-9%. Finally, it is possible to be denied for 0% UTL. Citi has been quite known for this. The reason is that they don't view it as if you need credit from them, they don't think you will use their card, etc. 

Message 4 of 5
CEOriginal
Contributor

Re: CC UTI ..... Why 1-9%?

Thanks guys, I appreciate the quick responses. I think I'll wait another few weeks when my next statement cuts to re-apply and leave 1% or so on one of my cards. Credit is such a science... Who woulda thunk it? Lol



Scores as of 7/28/13: EX.683   TU.688   EQ.???
Message 5 of 5
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