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07-16-2010 07:12 PM - last edited on 07-16-2010 08:03 PM by llecs
My FICO score as of 6 months ago was a 788, however I recently applied for financing for a new home. When they ran my scores it came up to 733, it turns out my utilization on my business credit card in my name was too high. It only has a limit of $3700 of which I was using $2000. I have already contacted my CCC and asked them to increase the limit to $10000. I have one other credit card that I have not used for over a year that has no balance and a limit of $5000. I have never paid late, and have never missed a payment.
So, those two cards and my mortgage, define my credit picture. How can I go about getting my score to 800+? Should I request higher limits on the card I do not use? Open another card with the maximum limit that the CCC will give me and not use it? I welcome any suggestions.
07-16-2010 07:35 PM - edited 07-16-2010 07:40 PM
Did you have a problem with your score and
financing? 733 is not a bad score.
Opening a new acct. will lower your score but
only temporary. You would be better off making
sure you don't use available credit more than 9 or
07-16-2010 08:04 PM - edited 07-16-2010 08:04 PM
Hi, OP. Welcome to the forums! I split your post to form a new thread found here. I had to change the subject line. If you'd like to change it to something else, click "Options" and then "Edit Message".
07-16-2010 08:46 PM
$2000 / $3700 is 54%. I once experienced a drop of 30 points for inadvertently doing that. More more 50% brings you in the danger zone; less than 30% is better, less than 10% is good, but paying almost all of the balance before the statement cycle date will bring you close to 800.
07-17-2010 07:38 AM
I just did some diging and I was incorrect my total available credit limit is roughly $12,000.
I have a few questions:
1.) If my monthly uitl never goes above 3000, would the correct move be to have my total available credit 31000 or greater so that my util never goes above 9%.
2.) I understand opening a new a card would temporarily hurt my score, however in the long run would it help simply because it increases my maximum credit line?
3.) Does #2 apply if I open the account and never use the card?
4,) My second card has not had a balance in over a year, but is still open. Does the fact that I never use it hurt my score at all?
07-17-2010 08:17 AM
"I just did some diging and I was incorrect my total available credit limit is roughly $12,000."
It would be interesting to know which of your two cards brought about this updated $ total of credit limits.
"I have a few questions:
"1.) If my monthly uitl never goes above 3000, would the correct move be to have my total available credit 31000 or greater so that my util never goes above 9%."
That would be good. But it's simpler to reduce the $ total of reported balances by paying off most before the statement cycle dates.
If on the other hand you go by the due date and you for instance aim for a util of 1%, then your $ total of credit limits needs to be $300,000, which is unrealistic for most people.
And even you do get to that level, credit companies may consider you risky given all that credit you have.
"2.) I understand opening a new a card would temporarily hurt my score, however in the long run would it help simply because it increases my maximum credit line?"
Correct (assuming the credit limit is reported, which isn't always the case).
"3.) Does #2 apply if I open the account and never use the card?"
Yes. (But the credit card company may close your card due to inactivity.)
"4,) My second card has not had a balance in over a year, but is still open. Does the fact that I never use it hurt my score at all?"
No. (As long as you have another card with a balance.)
07-17-2010 12:50 PM
As faf as the two cards go, the limits are as follow. My business card has a limit of 3700 which I have requested be increased to $10000. My other card which I do not use has a limit of $8000, which I previously thought was $5000.
"That would be good. But it's simpler to reduce the $ total of reported balances by paying off most before the statement cycle dates."
Before the statement cycle dates, are you referring to when my payment is due every month? If so, I pay my balance off every month before payment is due. I never carry balances? Is that helpful?
"No. (As long as you have another card with a balance.)"
As I said before I have another card that I do use, however I never carry any balances, I pay them off at the enf of each month. Is that a detriment?
BTW, thank you for answering my questions. I really appreciate the time and effort.
07-17-2010 08:00 PM
"Before the statement cycle dates, are you referring to when my payment is due every month?"
The credit card's statement cycle date is the date at the end of the statement cycle, after which the monthly statement is issued.
Let's say the this cycle is 31 days, after which follows a grace period of say 25 days until the due date, which is a total of 56 days.
What I do is dividing the 56 days by 2, giving 28 days. At this point about on the day after the due date of the previous cycle, I pay off the present cycle. I stop using the card three days earlier to make sure everything has posted by the time I pay. And then I resume using the card once the next cycle has kicked in.
You might say I cut my period of credit in half, but that's more than plenty for me. The tremendous scoop is that my util is very low, yielding a high credit score. It's costing me no money to do so, and as life gets more expensive the lower the score, it potentially saves me a lot of money on future loans and gets me good cards.
Also, when you're on top of it like this, you have credit for a rainy day and can stretch it close to a month and still make the due date without paying interest. There's just all kinds of financial freedom that come with this system. You just have to swallow the first month by keeping it quiet costwise (or whatever time frame works for you).
All of the above is free and fully legit
07-18-2010 10:21 AM
So, let me see if I understand how to utilize this properly. Based on a 56 day cycle, if I pay may card off at roughly a 28 day interval around the day after the previous cycle closes, that can really help my util rate? Because I have paid it off before a new statement is generated?