Understanding FICO® Scoring

[Skaluva99]

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

[fused]

---

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

---

Hi read these threads!

http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&thread.id=2654

http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&thread.id=32639

[masdeocho]

---

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]

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!

[Joe77]

---

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.

[masdeocho]

---

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.

---

Couldn't have said it better myself.