does credit limit matter?

[Anonymous]

Or is it strictly a matter of utilization?  Does FICO care if you have $500 available credit versus $5000, if your util is >9%?

[haulingthescoreup]

No, it's strictly the percentage (the util.)

There are plenty of people with very few cards, which are all low-limit, yet they have great scores.

High limits are handy if you ever do have to have a balance report, but if you only use the cards to keep them active, it's perfectly fine to have low limits.

It might be different if you are trying to get CLI's or new accounts, as there is some indication that existing low limits make it hard to get higher limits. But that's not the same thing as FICO scoring.

This is so important to realize for rebuilding! You only need to have a couple - three cards going, with whatever the CL might be, and take immaculate care of them.

[Anonymous]

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@haulingthescoreup wrote:
No, it's strictly the percentage (the util.)

There are plenty of people with very few cards, which are all low-limit, yet they have great scores.

High limits are handy if you ever do have to have a balance report, but if you only use the cards to keep them active, it's perfectly fine to have low limits.

It might be different if you are trying to get CLI's or new accounts, as there is some indication that existing low limits make it hard to get higher limits. But that's not the same thing as FICO scoring.

This is so important to realize for rebuilding! You only need to have a couple - three cards going, with whatever the CL might be, and take immaculate care of them.

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Thanks!  I just got a $200 secured Orchard card and am hoping to get approved for a $300 unsecured Visa (through credit union).  I was worried because I applied online and in addition to asking me if a couple of things on my credit report were paid, they wanted to know how much I was looking for - and I said $300 would be fine.  I was thinking maybe I should have asked for more (although that could mean I'd get denied, too!). 

I really don't want the temptation, so I'm glad I don't have to carry high limits.

[MarineVietVet]

I just got a $200 secured Orchard card and am hoping to get approved for a $300 unsecured Visa (through credit union).

Another thing to remember. If you get that second card try and let only one account report a balance each month and then pay in full before the due date. I've learned on these forums that you can get dinged for having too many accounts reporting balances.

CC interest free as of 8/09
Time can heal all wounds and a low FICO.
"Hello my name is Sandy and I'm a recovering crediholic".

[Anonymous]

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@MarineVietVet wrote:

I just got a $200 secured Orchard card and am hoping to get approved for a $300 unsecured Visa (through credit union).

Another thing to remember. If you get that second card try and let only one account report a balance each month and then pay in full before the due date. I've learned on these forums that you can get dinged for having too many accounts reporting balances.

CC interest free as of 8/09
Time can heal all wounds and a low FICO.
"Hello my name is Sandy and I'm a recovering crediholic".

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Thanks for the advice!  Are you supposed to wait until the statement goes out, and then pay - or pay even before that?  If you pay before the statement goes out, it would report zero balance, right?

I have been charging very little each month so that I never go above 9% util.  (I've heard that Orchard is sometimes late in reporting, so I am keeping the balance very low just in case.)   I guess I could alternate which months I use the cards?

Message Edited by helplessintn on 08-18-2009 05:09 AM

[cobra19]

It never hurts to ask for a high opening cl. The worst that will happen is they'll say - well right now we can't open your account with $700, but we can open it with $300, or whatever.

[MarineVietVet]

Thanks for the advice!  Are you supposed to wait until the statement goes out, and then pay - or pay even before that?  If you pay before the statement goes out, it would report zero balance, right?

Yes wait until the statement posts/cuts/drops, etc. and then pay before the due date. If you pay the balance before the statement posts then a balance of zero will be reported to the CRA's and as a result no activity will show on the account. A zero balance can actually hurt your score as I've learned from the experts here.

[haulingthescoreup]

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marinevietvet wrote:

Thanks for the advice!  Are you supposed to wait until the statement goes out, and then pay - or pay even before that?  If you pay before the statement goes out, it would report zero balance, right?

Yes wait until the statement posts/cuts/drops, etc. and then pay before the due date. If you pay the balance before the statement posts then a balance of zero will be reported to the CRA's and as a result no activity will show on the account. A zero balance can actually hurt your score as I've learned from the experts here.

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Well, mostly, but not completely.

If you use the card during the month, and then pay it off before the statement date, letting it report $0, you will still have activity on the account from the lender's viewpoint. If you do let it report $0 for months and months, and then it shows a balance, you'll get a one-time ding for a dormant account waking up. So two different issues: active from the lender's viewpoint, and active for FICO scoring.

I pay all my cards off before reporting except for one, which changes around, since one often sneaks in a last-minute charge. It's been a good while since I got dinged for the dormant card waking up, though.

For best scoring, only let one card report a balance; maybe two, if you have a lot of cards.

This is sort of a bored-nothing-else-to-do type of score tactics, though. If you're not going for new credit, you really don't have to do this. But if you want to optimize your scores, and show lenders that you're in control of your credit, it's a good tactic.

[happy0510]

So in Orchard's case if the payment due date is the 20th of every month and you make a min. payment, then PIF or to 9% or so on the 25th, and they report on the 31st, what balance are they reporting?

[MarineVietVet]

Well, mostly, but not completely.

If you use the card during the month, and then pay it off before the statement date, letting it report $0, you will still have activity on the account from the lender's viewpoint

I bow to your expertise.