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Skaluva99 wrote:
Hi,Just wondering...Say I have a credit limit of $8,000 on a credit card, and I have a current balance of $7,000. My debt ratio would be 87.5%, right? But, if I have other credit cards that aren't in use, and all together my credit lines equal say $50,000 my debt ratio wouldn't be so bad. This won't hurt my credit score, right? They look at your entire credit line, not just one particular card, right?Thanks!Steve
Correct on 87.5% for that card. Your FICO score considers your utilization on each individual card AND the combined total. So your score would take a hit for having such a high utilization on that card but would be OK if you had only $7,000 used on $50k credit line (which equates to 14% util overall). See the threads that fused111 posted.
Skaluva99 wrote:Hi,Just wondering...Say I have a credit limit of $8,000 on a credit card, and I have a current balance of $7,000. My debt ratio would be 87.5%, right? But, if I have other credit cards that aren't in use, and all together my credit lines equal say $50,000 my debt ratio wouldn't be so bad. This won't hurt my credit score, right? They look at your entire credit line, not just one particular card, right?Thanks!Steve
Skaluva99 wrote:OK so you will take a hit for that. But what about down the road after this $7000 is almost paid off, say next year when I apply for a mortgage - my score will have dropped by then right? Or will my score still be lower than it could be because I had such a high balance on one credit card during a period of time.Thanks!
Couldn't have said it better myself.
Joe77 wrote:
Skaluva99 wrote:OK so you will take a hit for that. But what about down the road after this $7000 is almost paid off, say next year when I apply for a mortgage - my score will have dropped by then right? Or will my score still be lower than it could be because I had such a high balance on one credit card during a period of time.Thanks!From what I understand, HISTORY of utilization matters not one iota - it's the ratios of balances to limits AT THE TIME OF CREDIT PULL. Unlike payment history, where a late payment 6 months ago, or 3 years ago, still affects you, the utilization portion of FICO scoring only takes into account your current utilization % at the time of credit pull.