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Question on Debt to Credit Ratio

New Member

Question on Debt to Credit Ratio

Dear Forum:
 
1. Is debt to credit ratio calculated based on Total Debt vs. Total Credit or individually on each credit card? If you have several credit cards, some with a debt to credit ratio of 0% and some at 80%, is it wise to  make the debt to credit ratio the same accross the board or would it even matter (because the final average % would be the same)?
 
2. If it would be better to make the debt to credit ratio the same on all cards, would balance transfers suddenly lower the credit score?
 
Robliski
Message 1 of 6
5 REPLIES
Moderator Emeritus

Re: Question on Debt to Credit Ratio



Robliski wrote:
Dear Forum:
 
1. Is debt to credit ratio calculated based on Total Debt vs. Total Credit or individually on each credit card? If you have several credit cards, some with a debt to credit ratio of 0% and some at 80%, is it wise to  make the debt to credit ratio the same accross the board or would it even matter (because the final average % would be the same)?
 
2. If it would be better to make the debt to credit ratio the same on all cards, would balance transfers suddenly lower the credit score?
 
Robliski


Welcome Robliski!
 
The debt to credit ratio (we call it "util" or "utilization") is calculated on each revolving account AND on the total.  So it is wise to spread out the debt (share the love!) among the cards.  Balance transfers should improve the score if it lowers your util.  Optimum util is 1-9%.  Pay attention to the fine print on balance transfers; some rates are good for a limited time only, some have fees, etc.


Message Edited by masdeocho on 11-20-2007 01:02 PM
-----------------
Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.
Message 2 of 6
New Member

Re: Question on Debt to Credit Ratio

Thank you "masdeocho." I am trying to increase my FICO score and looking for ways to make things better.
 
Robliski
Message 3 of 6
Senior Contributor

Re: Question on Debt to Credit Ratio

We all are Rob. There is a wealth of info here for you, and very knowledgeable people here to help you in that regard. Smiley Happy
"Never ever, ever be late. Never" (FUTR)
Message 4 of 6
Super Contributor

Re: Question on Debt to Credit Ratio

 
 


Robliski wrote:
Thank you "masdeocho." I am trying to increase my FICO score and looking for ways to make things better.
 
Robliski



Ultilzation % is the quickest route - getting it down to below 10% really helps
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Message 5 of 6
Moderator Emerita

Re: Question on Debt to Credit Ratio


masdeocho wrote:
Pay attention to the fine print on balance transfers; some rates are good for a limited time only, some have fees, etc.


With BofA, pay really close attention! They don't seem to have a cap on their BT fees: 3% (minimum $10), and apparently they don't stop counting. So $10 on $100, $30 on $1000, $300 on $10K...

Read those terms and conditions! Smiley Surprised
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 6 of 6