quick queston on utilization ratio please !

Anonymous · ‎05-29-2008

I understand the whole thing about utilization ratio and all. But what if you don't carry a balance on a credit card and you pay it off every month. Does it still matter if the credit limit is 1,000 as opposed to 5,000 ?

Anonymous · ‎05-29-2008

Utilization is utilization no matter what the limit. 0 on 5000 is the same as 0 on 1000, but I don't recommend a 0 balance. You are best served with at least a few bucks charged to your card reporting to the CRAs. It shows that you actually use the cards and are managing credit that you are actually using (even if only a hair).

jmbfl · ‎05-29-2008

"Ideal" UTIL is 1% to 9% of total available lines.

Anonymous · ‎05-30-2008

jmbfl wrote:

"Ideal" UTIL is 1% to 9% of total available lines.

...with fewer than half of all open accounts AND fewer than half of all open revolving accounts reporting a balance.

Anonymous · ‎05-30-2008

ok. So as I understand it, it is not determined on an individual account basis....it's the TOTAL of the balance of all your credit cards combined and the TOTAL of the your available credit. Awesome.

Anonymous · ‎05-30-2008

firstinlastout wrote:
ok. So as I understand it, it is not determined on an individual account basis....it's the TOTAL of the balance of all your credit cards combined and the TOTAL of the your available credit. Awesome.

Nope, and that's not what you asked above. Don't get too excited just yet.

You are scored on BOTH overall and individual utilization.

For example:

All else equal, three cards with utilization of 20%, 20%, 80%, respectively, will result in a lower score than three cards with 30%, 30%, 40%, respectively, even if the overall utilization is the same in both scenarios.

Message Edited by cheddar on 05-30-2008 06:41 AM

Anonymous · ‎05-30-2008

interesting. thanks

Anonymous · ‎05-30-2008

cheddar wrote:

...with fewer than half of all open accounts AND fewer than half of all open revolving accounts reporting a balance.

Does it distinguish between open loans (mortgage, auto , student loan) vs credit cards? I ask because I've been playing around with FICO score estimator. I have 9 credit cards & 3 loans (see above). The estimator specificially asks
5. How many of your loans and/or credit cards currently have a balance?

Anonymous · ‎05-30-2008

MollyGoLightly wrote:

cheddar wrote:

...with fewer than half of all open accounts AND fewer than half of all open revolving accounts reporting a balance.

Does it distinguish between open loans (mortgage, auto , student loan) vs credit cards? I ask because I've been playing around with FICO score estimator. I have 9 credit cards & 3 loans (see above). The estimator specificially asks

5. How many of your loans and/or credit cards currently have a balance?

Yes, from what we've seen it does make that distinction. Ideally, you want fewer than half of all open accounts to report a balance AND fewer than half of your open revolving accounts to report a balance as I said above.

The Score Estimator asks very broad questions, since it's only an estimator. The actual scoring algorithm is much more specific.