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New Member
Styler
Posts: 4
Registered: ‎06-09-2008
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Utilization

I am trying to bring up my scores (low 700's) early next year, refinance my car at a better rate and possibly open credit with a furniture store.  I will have my $5k Visa paid in full (which is maxed out)!  I have $2k available credit w/Dell (recently opened - never used, probably never will) & $3k available w/Home Depot (3 years old, use all the time, perfect payment history) both with zero balance.  I've read I shouldn't close any of them.  Should I lower the available limits to improve scores, or is more available credit better?  Any advice is appreciated.
Moderator Emeritus
MarineVietVet
Posts: 14,084
Registered: ‎07-14-2009
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Re: Utilization

[ Edited ]

Styler wrote:
I am trying to bring up my scores (low 700's) early next year, refinance my car at a better rate and possibly open credit with a furniture store.  I will have my $5k Visa paid in full (which is maxed out)!  I have $2k available credit w/Dell (recently opened - never used, probably never will) & $3k available w/Home Depot (3 years old, use all the time, perfect payment history) both with zero balance.  I've read I shouldn't close any of them.  Should I lower the available limits to improve scores, or is more available credit better?  Any advice is appreciated.

Welcome to the forums.

 

In my opinion you should never close a CC account unless it has annual fees you just can't live with. And lowering credit limits is a bad idea also. Let's look at your situation.

 

Right now you have $10,000 of available credit. You are using 50% because of the balance on your Visa card. That's pretty high overall utilization plus FICO frowns on individual cards being maxed out. If you close the Dell account you will lose $2,000 of available credit which will raise your util to 62%. This is not a good move. Closing the Home Depot card would raise it to 71%. This is an even worse move. Here is some general observations about utilization:

 

Optimal credit utilization for FICO scoring purposes seems to be:
Total revolving utilization > 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.

 

Having higher credit limits can help your score because they lower your utilization plus it gives you a buffer from the adverse effects of any possible future credit limit decreases that have hit so many people lately including myself.

 

 

7/09 TU-742 EQ- 779
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802

CC interest free as of 8/09
"Hello my name is Sandy and I'm a recovering crediholic".

Message Edited by marinevietvet on 12-16-2009 12:59 PM
Message Edited by marinevietvet on 12-16-2009 06:02 PM
Frequent Contributor
TangMeister
Posts: 456
Registered: ‎07-09-2008
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Re: Utilization


Styler wrote:
I am trying to bring up my scores (low 700's) early next year, refinance my car at a better rate and possibly open credit with a furniture store.  I will have my $5k Visa paid in full (which is maxed out)!  I have $2k available credit w/Dell (recently opened - never used, probably never will) & $3k available w/Home Depot (3 years old, use all the time, perfect payment history) both with zero balance.  I've read I shouldn't close any of them.  Should I lower the available limits to improve scores, or is more available credit better?  Any advice is appreciated.

Congrats in advance on paying off the maxed out Visa.  You should see a very nice jump in FICO score, especially if you have a clean credit report with no derogatories hurting you (no late payments, charge-offs, public records, etc..).   Lowering credit limits will do nothing to help your FICO scores in any scenario, so don't worry about that. Enjoy the credit card debt free status and nice score jump!

New Contributor
JoJo74
Posts: 80
Registered: ‎10-09-2009
0

Re: Utilization


marinevietvet wrote:

Having higher credit limits can help your score because they lower your utilization plus it gives you a buffer from the adverse effects of any possible future credit limit decreases that have hit so many people lately including myself.



+1

New Member
Styler
Posts: 4
Registered: ‎06-09-2008
0

Re: Utilization

Thank you all for the great advice!

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