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Is 40% utilization bad? Looking for best % before applying for new lines of credit.

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Mario4
New Contributor

Is 40% utilization bad? Looking for best % before applying for new lines of credit.

I currently have 3 revolving credit cards and 3 store credit cards.

 

The balances are currently ridiculously high, some over the limit. 

 

I am playing off all balances today to the point where each one is at 39%. (Making my overall utilization 39%)

 

 

***I have never missed a payment on any account.**** 

 

I know MyFico suggests 30% or lower, but I dont have enough to do that currenlty. I will lower them to 39%

and then possibly within the next month down to 29% or so. 

 

 

MY MAIN QUESTION IS:  Is my Fico going to be THAT much different with utilization at 39%, than it would at 29%? 

 

Would my chances of being approved for lets say.. an auto loan or a new line of credit be affected that much? Just looking for some advice. 

I know all the other factors that go into the application process, but utilization is my main concern. 

 

 

THANKS IN ADVANCE!!

 






Message 1 of 8
7 REPLIES 7
user5387
Valued Contributor

Re: Is 40% utilization bad? Looking for best % before applying for new lines of credit.

There's no general answer to the question -- it depends on individual lenders.  The higher the utilization, the more limited your options become.

 

There's also the DTI factor, that is calculated to see if you can meet your monthly debt obligations based on your income.

 

Also, if some of your cards have low CLs, it might work better to clear them out entirely, and let the others have slightly higher utilization.

 

Message 2 of 8
Creditaddict
Legendary Contributor

Re: Is 40% utilization bad? Looking for best % before applying for new lines of credit.

Could you list the banks you have, card limits and current balances?

If your goal is to let the new util update and apply for some 0% cards to then consolidate the remaining debt you will probably see a larger score jump in my opinion by having less accounts reporting a balance vs. having all accounts under 40%... meaning pay some to $0 vs. pay a little on all but that's why I ask about current limits and balances on what type of cards to help judge that.

Message 3 of 8
nois
Regular Contributor

Re: Is 40% utilization bad? Looking for best % before applying for new lines of credit.


@Mario4 wrote:

I currently have 3 revolving credit cards and 3 store credit cards.

 

The balances are currently ridiculously high, some over the limit. 

 

I am playing off all balances today to the point where each one is at 39%. (Making my overall utilization 39%)

 

 

***I have never missed a payment on any account.**** 

 

I know MyFico suggests 30% or lower, but I dont have enough to do that currenlty. I will lower them to 39%

and then possibly within the next month down to 29% or so. 

 

 

MY MAIN QUESTION IS:  Is my Fico going to be THAT much different with utilization at 39%, than it would at 29%? 

 

Would my chances of being approved for lets say.. an auto loan or a new line of credit be affected that much? Just looking for some advice. 

I know all the other factors that go into the application process, but utilization is my main concern. 

 

 

THANKS IN ADVANCE!!

 


Reducing UTIL from >90% to 39% will likely net a significant FICO increase. From 39% to 29% will probably not be much of a boost though. Once you get to <9% you will see another boost.

 

UTIL and DTI are things lenders will look at in addition to your FICO which will affect your approval odds and terms the most.

 

Do you have a scorewatch report where you can use the FICO score simulator?  Recommended for a general idea of what you can expect. It allows you to experiment with different % UTIL. and some other metrics.


FEB 2014 EQ: 798 EX: 780 TU: 798
Message 4 of 8
Mario4
New Contributor

Re: Is 40% utilization bad? Looking for best % before applying for new lines of credit.


@nois wrote:

@Mario4 wrote:

I currently have 3 revolving credit cards and 3 store credit cards.

 

The balances are currently ridiculously high, some over the limit. 

 

I am playing off all balances today to the point where each one is at 39%. (Making my overall utilization 39%)

 

 

***I have never missed a payment on any account.**** 

 

I know MyFico suggests 30% or lower, but I dont have enough to do that currenlty. I will lower them to 39%

and then possibly within the next month down to 29% or so. 

 

 

MY MAIN QUESTION IS:  Is my Fico going to be THAT much different with utilization at 39%, than it would at 29%? 

 

Would my chances of being approved for lets say.. an auto loan or a new line of credit be affected that much? Just looking for some advice. 

I know all the other factors that go into the application process, but utilization is my main concern. 

 

 

THANKS IN ADVANCE!!

 


Reducing UTIL from >90% to 39% will likely net a significant FICO increase. From 39% to 29% will probably not be much of a boost though. Once you get to <9% you will see another boost.

 

UTIL and DTI are things lenders will look at in addition to your FICO which will affect your approval odds and terms the most.

 

Do you have a scorewatch report where you can use the FICO score simulator?  Recommended for a general idea of what you can expect. It allows you to experiment with different % UTIL. and some other metrics.


 

Gotcha. Does score watch provide all 3 scores?






Message 5 of 8
nois
Regular Contributor

Re: Is 40% utilization bad? Looking for best % before applying for new lines of credit.

You can get the FICO score 3-report all in one but I don't think it includes the score simulator.

 

The score simulator can be found in the Report products for Equifax and TransUnion.


FEB 2014 EQ: 798 EX: 780 TU: 798
Message 6 of 8
JediNeo
Frequent Contributor

Re: Is 40% utilization bad? Looking for best % before applying for new lines of credit.

I would be more concerned with the card(s) that are over limit before looking at your FICO or adding new TLs. This is hurting your score more and could lead to AA by the lender.
NFCU Cash Rewards | CSP | Freedom Unlimited | WalMart MC | Target Red MC | Citi Costco | AMEX BCE
Message 7 of 8
Settemio
Regular Contributor

ot onRe: Is 40% utilization bad? Looking for best % before applying for new lines of credit.

@Not only does the Util % affect your score... But having balances on many cards at once does too... My Util is @0% with one card reporting, but I made a mistake last month and another card reported a small balance. The Util % still was 0%, but my score dropped 15 pts because I had more than one card reporting. I noticed when I paid off my cards last time that I got a good score jump when I reduced the cards from say 6 to 1 or 2 reporting. So maybe a better strategy would be to only have 1-2 cards reporting, but higher util % on these cards themselves. Make sure no one card is using more than 90% of the CL...


@Mario4 wrote:

I currently have 3 revolving credit cards and 3 store credit cards.

 

The balances are currently ridiculously high, some over the limit. 

 

I am playing off all balances today to the point where each one is at 39%. (Making my overall utilization 39%)

 

 

***I have never missed a payment on any account.**** 

 

I know MyFico suggests 30% or lower, but I dont have enough to do that currenlty. I will lower them to 39%

and then possibly within the next month down to 29% or so. 

 

 

MY MAIN QUESTION IS:  Is my Fico going to be THAT much different with utilization at 39%, than it would at 29%? 

 

Would my chances of being approved for lets say.. an auto loan or a new line of credit be affected that much? Just looking for some advice. 

I know all the other factors that go into the application process, but utilization is my main concern. 

 

 

THANKS IN ADVANCE!!

 




Message 8 of 8
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