Credit line increase and credit score question

Anonymous · ‎11-24-2014

Hi everyone,

let me start off by saying I'm pretty new to all of this (first post) as my wife and I will be looking into getting a home in the next 6 months. We've started to consolidate some things, pay others off and get negative items off our credit. My question is the following. My last credit score was not that great, around 690 and my credit card utilization was VERY bad...out of $1100 was using about $800 of it (older charges, really don't use it anymore)

I recently request and got approved for a line of credit increase (no hard pull) from $1100 to $3000 with the theory that it would help my CC utilization and my overall credit score quickly. Am I on the right track here or am I thinking about this the wrong way? I was thinking tripling my CC available credit but keeping the balance at $800 (lower as I pay it off) would give me a quick boost (permanent if I dont use the card anymore) to the credit score in preperation for the upcoming mortage stuff.

This correct?

takeshi74 · ‎11-25-2014

@Anonymous wrote:
I recently request and got approved for a line of credit increase (no hard pull) from $1100 to $3000 with the theory that it would help my CC utilization and my overall credit score quickly.

Utilization (Amounts Owed) is 30% so it is a significant factor.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

Going from 72% to 27% is a signficant reduction in utilization. However, keep chipping away at the derogs as they will hold you back.

Anonymous · ‎11-25-2014

Great thanks for the information!! Trying to get a spike in my credit score and thought this was a good move!

9CLINE · ‎11-25-2014

Hi kellian1 and welcome to the forum, seems to me you are on right track. Would be nice if derogs could be removed within the 6mths. If they are old they might be falling off soon. Any answers you need this is the place to find them...

MarineVietVet · ‎11-25-2014

@Anonymous wrote:
Hi everyone,

let me start off by saying I'm pretty new to all of this (first post) as my wife and I will be looking into getting a home in the next 6 months. We've started to consolidate some things, pay others off and get negative items off our credit. My question is the following. My last credit score was not that great, around 690 and my credit card utilization was VERY bad...out of $1100 was using about $800 of it (older charges, really don't use it anymore)

I recently request and got approved for a line of credit increase (no hard pull) from $1100 to $3000 with the theory that it would help my CC utilization and my overall credit score quickly. Am I on the right track here or am I thinking about this the wrong way? I was thinking tripling my CC available credit but keeping the balance at $800 (lower as I pay it off) would give me a quick boost (permanent if I dont use the card anymore) to the credit score in preperation for the upcoming mortage stuff.

This correct?

Hello there and welcome.

FICO scores both individual account utilization and overall utilization.

If you'll list all your CC acounts with credit limits and balances it would give a clearer picture.

Anonymous · ‎11-25-2014

@MarineVietVet wrote:
@Anonymous wrote:
Hi everyone,

let me start off by saying I'm pretty new to all of this (first post) as my wife and I will be looking into getting a home in the next 6 months. We've started to consolidate some things, pay others off and get negative items off our credit. My question is the following. My last credit score was not that great, around 690 and my credit card utilization was VERY bad...out of $1100 was using about $800 of it (older charges, really don't use it anymore)

I recently request and got approved for a line of credit increase (no hard pull) from $1100 to $3000 with the theory that it would help my CC utilization and my overall credit score quickly. Am I on the right track here or am I thinking about this the wrong way? I was thinking tripling my CC available credit but keeping the balance at $800 (lower as I pay it off) would give me a quick boost (permanent if I dont use the card anymore) to the credit score in preperation for the upcoming mortage stuff.

This correct?
Hello there and welcome.

FICO scores both individual account utilization and overall utilization.

If you'll list all your CC acounts with credit limits and balances it would give a clearer picture.

Hi thanks for the welcome,

This is the only CC I have. I do have some student loans and a car loan, but as far as Credit Cards go, this is the one and only one I currently have. Really more of a personal choice thing than anything else. So the balances here would be my overall balance for my CC utilization. So I'm just under 30% with the raise in my credit limit right now vs, the 70-80% I was at prior to the raise (and I don't have any plans on using the additional balance)

MarineVietVet · ‎11-25-2014

@Anonymous wrote:
@MarineVietVet wrote:
@Anonymous wrote:
Hi everyone,

let me start off by saying I'm pretty new to all of this (first post) as my wife and I will be looking into getting a home in the next 6 months. We've started to consolidate some things, pay others off and get negative items off our credit. My question is the following. My last credit score was not that great, around 690 and my credit card utilization was VERY bad...out of $1100 was using about $800 of it (older charges, really don't use it anymore)

I recently request and got approved for a line of credit increase (no hard pull) from $1100 to $3000 with the theory that it would help my CC utilization and my overall credit score quickly. Am I on the right track here or am I thinking about this the wrong way? I was thinking tripling my CC available credit but keeping the balance at $800 (lower as I pay it off) would give me a quick boost (permanent if I dont use the card anymore) to the credit score in preperation for the upcoming mortage stuff.

This correct?
Hello there and welcome.

FICO scores both individual account utilization and overall utilization.

If you'll list all your CC acounts with credit limits and balances it would give a clearer picture.

Hi thanks for the welcome,

This is the only CC I have. I do have some student loans and a car loan, but as far as Credit Cards go, this is the one and only one I currently have. Really more of a personal choice thing than anything else. So the balances here would be my overall balance for my CC utilization. So I'm just under 30% with the raise in my credit limit right now vs, the 70-80% I was at prior to the raise (and I don't have any plans on using the additional balance)

You went from 73% to 27% utilization with the credit limit increase.That is a significant drop.

Since revolving credit is 30% of your total score as you keep paying down that balance you will continue to be helped. Exactly how much remains to be seen.

RobertEG · ‎11-26-2014

You are on the right track if you have more restraint than the average consumer.

Creditors want to increase credit limit, not to help consumers increase their credit score, but rather to have consumers increase their use of revolving credit (within, of course, reasonable risk limits).

More swipe fees and more interest.

Their research shows that most consumers, when granted a CLI, will stick to old habits and increase spending proportionally, often close to their historical % util.

If you are the abnormal consumer who can maintain $ use of credit at prior levels, and thus reduce their % util, it can be beneficial.

The CCCs are betting that you cant/wont.

HiLine · ‎11-26-2014

Interesting info, RobertEG. Do you have a particular source for the research results that you can share? I'd like to read more on this topic.

---> HiLine's personal finance blog - Follow my journey!