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sankofa wrote:
I was reading an article from rismedia.com (www.rismedia.com, dated July 18, 2007 which states "make sure your maximum limit is reported," says Jamison (a Los Angeles-based credit attorney). "When no limit is reported, credit scoring software presumes the account is "maxed out". The credit scoring software scores more favorably the closer a balance is to zero. Balances over 70% damage credit the most, followed by the next tier of 50% and again by the tier of 30% of the maximum credit limit."My question is, is it alright to use up to 70% of one's credit limit without being seriously damaged? I have been told that using up to 70% on just one card won't seriously impair your credit. Is this true?SandyK
cheddar wrote:
sankofa wrote:I was reading an article from rismedia.com (www.rismedia.com, dated July 18, 2007 which states "make sure your maximum limit is reported," says Jamison (a Los Angeles-based credit attorney). "When no limit is reported, credit scoring software presumes the account is "maxed out". The credit scoring software scores more favorably the closer a balance is to zero. Balances over 70% damage credit the most, followed by the next tier of 50% and again by the tier of 30% of the maximum credit limit."My question is, is it alright to use up to 70% of one's credit limit without being seriously damaged? I have been told that using up to 70% on just one card won't seriously impair your credit. Is this true?SandyKSandy,Would you mind editing your message to include a link directly to the article you mention? I went to the site you linked to, but there are so many links on the front page, I couldn't find the article you were quoting.There is one item in the quote that is not quite accurate. If no limit is reported, FICO does not automatically treat it as maxed out. Instead, it will use the value in the High Balance (or High Credit) field as a susbstitution for the credit limit. This means that the credit limit will be assumed to be the highest balance that was ever on the card.If, for example, you have a card with a $10K unreported limit, which at one time in the past had a $5K balance and currently has a $1K balance, FICO will not see it as maxed out, but will see it as 20% utilization. ($1K current balance / $5K high balance = 20%)To answer your question, no, it is not OK to use up to 70% of the limit. You will get dinged for anything over 9%, with major damage when you cross 50%. Utilization of 70% is viewed as seriously high utilization, and your score will suffer for it.
Message Edited by cheddar on 03-11-2008 03:43 PMCheddar,Ooops sorry this is the complete article!SandyK
@Anonymous wrote:Thanks for the link to the full article.Aside from the minor point I mentioned above about how FICO treats CLs that don't report, I think this is a pretty good article. I was kind of surprised to see that the author even discusses GW and PFDs.Sandy, if you find that you are using around 27% of your limits and are letting that amount of utilization report, you might want to consider trying to get some CLIs on your existing cards so that your reported utilization wil lbe lower. Otherwise, you can try playing the "pay before statement date" game that a lot of us here play in order to control the balances that the CCs report.
Message Edited by cheddar on 03-11-2008 04:03 PM
cheddar wrote:Thanks for the link to the full article.Aside from the minor point I mentioned above about how FICO treats CLs that don't report, I think this is a pretty good article. I was kind of surprised to see that the author even discusses GW and PFDs.Sandy, if you find that you are using around 27% of your limits and are letting that amount of utilization report, you might want to consider trying to get some CLIs on your existing cards so that your reported utilization wil lbe lower. Otherwise, you can try playing the "pay before statement date" game that a lot of us here play in order to control the balances that the CCs report.
Message Edited by cheddar on 03-11-2008 04:03 PM