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Hello all,
I've always been under the impression that for the most part, the aspect of your score that comes from utilization was based on - primarily - what percentage of your limits on revolving accounts you were using. Curious on how much impact higher limits may have - obviously the same balance with a higher limit means a lower utilization, but does 10% utilization with a total revolving limit of $2,000 count for less than 10% on a max of $20,000?
Understand it's never actually that simple. Trying to find a way to bump my score up by - exactly - 8 points on TU. Major delinquencies are all 4+ years old, utilization is hovering about 7%, no collections/etc... basically nothing I can think of other than I've only got 1 credit card with a $2K limit.
Short answer......NO. 10% of one amount is the same as 10% of another amount. It would make sense that higher limits would be less impacted but not so IME. If i am wrong you can count on a reply from some other knowledge driven people here.
If you only have one open credit card, then you are getting dinged for the fact that all your CCs have balances. Generally FICO likes to see 2 or 3 open cards, and only one carrying a balance.
However remember that there can be a short term ding to your score when you open an account, due to lower AAoA and inquiries.
@namvet wrote:Short answer......NO. 10% of one amount is the same as 10% of another amount. It would make sense that higher limits would be less impacted but not so IME. If i am wrong you can count on a reply from some other knowledge driven people here.
You are absolutely right. I'm always stressing out this fact because there are some FAKO scoring-models out there that simply "punish" you for having a low CL - no matter if your utilization is perfect or not.
@namvet wrote:Short answer......NO. 10% of one amount is the same as 10% of another amount. It would make sense that higher limits would be less impacted but not so IME. If i am wrong you can count on a reply from some other knowledge driven people here.
I agree with this statement, 10% is 10%. However, lenders rather than Fico scoring, like to see somewhat higher limits to your tradelines. I know some lenders will "match" another limits and Capital One defines "Excellent Credit" on their site as #1: I have not been more than 60 days late on any credit card, medical bill, or loan in the last year #2:
I have not been more than 60 days late on any credit card, medical bill, or loan in the last year #3: have never declared bankruptcy or defaulted on a loan (AND)
I have had a loan or credit card for 3 years or more with a credit limit above $5,000.
Since we think of higher Fico scores as a means to get the best interest rates and terms, I think "lenders" look at more than the 10% is 10% factor in the over all pictures, especially if its not an automatic approval situation.
Got it, thanks! My question was based entirely off one FAKO score which complained that I didn't have more open cards. Getting another card is definitely in the plan for the relatively near future, and I think with my score now (hovering around 690) I should be able to get one, but I've been holding off until finishing the mortgage first!