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creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009
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Re: INCREASING CREDIT CARD LIMIT: GOOD IDEA?

[ Edited ]

creditwherecreditisdue wrote:

 

Optimal credit UTIL is:

  • Total UTIL of >0 and <=9%, the lower the better, and
  • Reporting a balance on less than half of your revolving TL's, and
  • Reporting a balance on half or less of all TL's.

This is the real deal.

Message Edited by creditwherecreditisdue on 09-03-2009 07:48 AM
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JUJU-SF
Posts: 6
Registered: ‎09-01-2009
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Re: INCREASING CREDIT CARD LIMIT: GOOD IDEA?


creditwherecreditisdue wrote:

 

Optimal debt UTIL is:

  • Total UTIL of >0 and <=9%, the lower the better, and
  • Reporting a balance on less than half of your revolving TL's, and
  • Reporting a balance on half or less of all TL's.

This is the real deal.

 ---

 

OK, will make sure I ciomply!

 

So I read my credit score and it says that i have 12 revolving accounts but only 3 with balance. Of coruse the 9 others are actually closed, or old accounts. Would that be calculated in the 50%?

 

And then I have  7 in Real Estate, 3 "INSTALL", 0 "COLLECT" and 1 "OTHER". Which ones qualify as TL in the count above? And are they counting for the clsoed/old oens as well or only those which are active?

 

Thanks

 

Juju 

 

 

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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: INCREASING CREDIT CARD LIMIT: GOOD IDEA?

It should be counting all open accounts (for the denominator.)

So if you have 4 open CC's and 6 closed CC's, use 4, not 10.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
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score_building
Posts: 3,551
Registered: ‎01-10-2008
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Re: INCREASING CREDIT CARD LIMIT: GOOD IDEA?


creditwherecreditisdue wrote:


creditwherecreditisdue wrote:

 

Optimal debt UTIL is:

  • Total UTIL of >0 and <=9%, the lower the better, and
  • Reporting a balance on less than half of your revolving TL's, and
  • Reporting a balance on half or less of all TL's.

This is the real deal.


 

yes indeed, great summary!

 

OP- keep in mind that optimal util is most important when you are seeking credit or trying to impress an individual or organization that is reviewing your cbr.  it's always a good habit to PIF but if no balance reports on accts one month for. eg., or a small unexpected balance reports on an acct., it won't typically be a huge ding on your score. 

 

FICOS:
06/13 EX 765 (PSECU) EQ 771 (DCU) TU 779 (Barclays)
Senior Contributor
creditwherecreditisdue
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Re: INCREASING CREDIT CARD LIMIT: GOOD IDEA?


haulingthescoreup wrote:
It should be counting all open accounts (for the denominator.)

So if you have 4 open CC's and 6 closed CC's, use 4, not 10.

 

Closed accounts with a balance are included in the UTIL % calc. I believe they are included in the other sections as well.
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haulingthescoreup
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Re: INCREASING CREDIT CARD LIMIT: GOOD IDEA?

They are included in util calc, although most people don't have closed accounts with balances. That's because it's an amount that you owe, so it needs to be factored in.

Closed accounts without balances are not included in the number of accounts with balances calculation. In other words, the formula is looking at how many of your open, active accounts are reporting balances. It wouldn't make sense for it to include closed accounts in the denominator. Including them would lessen your reported risk, by making it seem that you were carrying relatively fewer balances.

It's possible that a closed account with a balance would factor into this, but closed accounts with $0 balances are not.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009
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Re: INCREASING CREDIT CARD LIMIT: GOOD IDEA?


haulingthescoreup wrote:
They are included in util calc, although most people don't have closed accounts with balances. That's because it's an amount that you owe, so it needs to be factored in.

Closed accounts without balances are not included in the number of accounts with balances calculation. In other words, the formula is looking at how many of your open, active accounts are reporting balances. It wouldn't make sense for it to include closed accounts in the denominator. Including them would lessen your reported risk, by making it seem that you were carrying relatively fewer balances.

It's possible that a closed account with a balance would factor into this, but closed accounts with $0 balances are not.

Only sick puppies like me have this... for years. The farthest back I can go on statements is 08SEP2003 and it was closed then. This is also my oldest account.

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iDShaDoW
Posts: 175
Registered: ‎11-07-2007
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Re: INCREASING CREDIT CARD LIMIT: GOOD IDEA?

[ Edited ]

creditwherecreditisdue wrote:

 

There is no penalty incurred when you increase your CL's. However, if you are enganged in a yet incomplete real estate financing transaction I would not do it. Merely returning that account to a PIF status will recover your original FICO score. (Assuming you haven't done anything else to stir the pot and as soon as the account reports to the CRB's. That may take a  while as Amex cards report behind.) After your financing is completed you can go ahead an obtain whatever kind of CLI's you want.


I'm just curious about this.  You say that he should just pay off the credit card itself and it'll fix his score which it will, but if he's offered a CLI from $4800 to $25,000, why not just take it?

 

If he won't be penalized in any way (ie. increased APR, lowered credit score, new annual fee tacked on), then why not just take it and fix his utilization rate for the time-being until he PIF's his card?

 

I doubt he'd suddenly get a $25,000 limit and decide to go on a shopping spree of some sort.  Is there some other reasoning behind why you advised him against getting that CLI?  Maybe he'd get a hard inquiry in order for them to approve his CLI?  I'm sure if they offered, they already did a soft pull and OK'd him for the CLI.  He could always ask them, to be sure, before he told them he'd accept it.

 

You definitely have more experience in credit stuff than I do so I just wanted to take this chance to see if I can learn something.

Message Edited by iDShaDoW on 09-03-2009 02:17 PM
Walmart Discover TU08 FICO 10/06/14: 786 AMEX EX FICO 08/21/13: 775 PSECU EX FICO 10/04/14: 790
Senior Contributor
creditwherecreditisdue
Posts: 4,923
Registered: ‎04-19-2009
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Re: INCREASING CREDIT CARD LIMIT: GOOD IDEA?


iDShaDoW wrote:

creditwherecreditisdue wrote:

 

There is no penalty incurred when you increase your CL's. However, if you are enganged in a yet incomplete real estate financing transaction I would not do it. Merely returning that account to a PIF status will recover your original FICO score. (Assuming you haven't done anything else to stir the pot and as soon as the account reports to the CRB's. That may take a  while as Amex cards report behind.) After your financing is completed you can go ahead an obtain whatever kind of CLI's you want.


I'm just curious about this.  You say that he should just pay off the credit card itself and it'll fix his score which it will, but if he's offered a CLI from $4800 to $25,000, why not just take it?

 

If he won't be penalized in any way (ie. increased APR, lowered credit score, new annual fee tacked on), then why not just take it and fix his utilization rate for the time-being until he PIF's his card?

 

I doubt he'd suddenly get a $25,000 limit and decide to go on a shopping spree of some sort.  Is there some other reasoning behind why you advised him against getting that CLI?  Maybe he'd get a hard inquiry in order for them to approve his CLI?  I'm sure if they offered, they already did a soft pull and OK'd him for the CLI.  He could always ask them, to be sure, before he told them he'd accept it.

 

You definitely have more experience in credit stuff than I do so I just wanted to take this chance to see if I can learn something.


Pushing a credit limit while engaged in a financing process (particularly a change that drastic) will alter the available revolving credit to income ratio which may be viewed by many lenders as changing your risk profile. (And not for the better.) This has nothing to do with scores. Once they pull the first CBR's for financing as long as they say everything is good you don't want to tamper with things until closed. That is unless you want to be involved in a continually mutating negotiation process. If you have not been instructed to correct a negative on your CBR just leave it alone!


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