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New 25,000 CL Card

Frequent Contributor

New 25,000 CL Card

Hey all,

 

I was all giddy last week about receiving a new 25,000 Visa Platinum and then got a Lowe's card due to me working on my house and needed it as no interest on Lowe's over 299.00.

 

BUT, I think now my debt to income just swung way out due to having 25,000 out there. Is this true?

Also, I see from the FICO simulator the Instant card from Lowe's was a bad idea.

 

 

 

Message 1 of 7
6 REPLIES
Valued Contributor

Re: New 25,000 CL Card


zman wrote:

Hey all,

 

I was all giddy last week about receiving a new 25,000 Visa Platinum and then got a Lowe's card due to me working on my house and needed it as no interest on Lowe's over 299.00.

 

BUT, I think now my debt to income just swung way out due to having 25,000 out there. Is this true?

Also, I see from the FICO simulator the Instant card from Lowe's was a bad idea.

 

 


Hi zman...your debt-to-income ratio won't be affected until you have a payment due on the card. Just having the open tradeline doesn't affect the ratio.

 

The FICO simulator is not an exact science. You may get a point ding for the inquiry for the Lowe's card. It will also lower your average of accounts and will count as a new account. Those things are temporary point losses, and not everyone loses points. Don't worry about what the simulator says "may" happen...wait, and then let us know what does happen when it reports.

Message 2 of 7
Moderator Emerita

Re: New 25,000 CL Card

Your $25K isn't debt. It's credit. So unless you go wild and max out the card, your debt-to-income won't change. And actually, DTI is a concept that's used more when you're applying for credit, especially a loan product.

And I agree with Lynette --on the Lowe's card, you're looking at a temporary ding. Yes, you dropped your AAoA, etc., but if you are saving finance charges on needed home repairs, that's more important than a relatively small change on your FICO's. They will recover, and in the meantime, your bank account is happier.
* 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
Message 3 of 7
Senior Contributor

Re: New 25,000 CL Card

There is such a concept as available revolving credit to income and a new $25K CC will definitely effect that. Exactly what is will effect and how much is anybody's guess. I'd just be happy to have the card were I you!
Message 4 of 7
Valued Contributor

Re: New 25,000 CL Card


creditwherecreditisdue wrote:
There is such a concept as available revolving credit to income and a new $25K CC will definitely effect that. Exactly what is will effect and how much is anybody's guess. I'd just be happy to have the card were I you!

Back when I was a real estate broker (late 80's early 90's), a lot of my buyers were asked/forced by mortgage lenders to cancel some of their credit cards for having "too much available credit." It was seen as a risk. Buyers would often ask me to speculate as to whether I thought they had too much open credit. I haven't heard that concept for quite some time, but...it seems to me...it's a legitimate thought. With FICO scoring the way it is now, however, buyers would not like being forced to close cards.

Message 5 of 7
Senior Contributor

Re: New 25,000 CL Card

I never suggest that anyone close an account unless it has an AF - then it may merit condsideration. However, available revolving debt to income is an issue with many issuers. It has come up as a factor regarding CL's and initial approvals for revolving debt. Two organizations who have been prominent in their mention of this as a reason for denial are BofA and PenFed. It is not really a factor in real estate transactions.
Message 6 of 7
Highlighted
Super Contributor

Re: New 25,000 CL Card

Congrats!  That's a lot of credit. 
Message 7 of 7