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New Member
Posts: 4
Registered: ‎08-07-2007
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Credit line vs. debt

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
Moderator Emeritus
Posts: 16,374
Registered: ‎03-12-2007
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Re: Credit line vs. debt



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!
 
Credit Profile -
FICO 08 Scores (03-26-2015): EQ 814, EX 817, TU 822
All three scores were 850. Lost points for not having an open installment TL. So, BE WARNED!!!!!
Credit History: 26 years ~ AAoA: 13 years ~ Util: 1% ~ Inqs: EX 1, EQ 1

Credit Cards: Amex BCP ~ Amex Clear ~ Amex Platinum ~ Barclay Ring Mastercard ~ Chase Freedom Visa ~ CITI Dividend Platinum World Mastercard ~ FIA Fidelity Investment Platinum Visa ~ First Hawaiian Bank Gold Visa
Moderator Emeritus
Posts: 2,050
Registered: ‎04-17-2007
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Re: Credit line vs. debt



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.
-----------------
Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.
New Member
Posts: 4
Registered: ‎08-07-2007
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Re: Credit line vs. debt

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!
Regular Contributor
Posts: 218
Registered: ‎07-29-2007
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Re: Credit line vs. debt



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.
 
From BK to 700 FICOs in 4.5 yrs.
Moderator Emeritus
Posts: 2,050
Registered: ‎04-17-2007
0

Re: Credit line vs. debt



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.  :smileyhappy:
-----------------
Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.
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