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Utilization question?

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hombre14
Member

Utilization question?

Sorry if this has been answered elsewhere- I searched and couldn't find it.

 

Is overall utilization computed using total credit lines, or total credit available?

 

For instance-  I have a Chase Slate with zero balance, 15k credit line.  I just requested a balance transfer of 10k.   My statement prints tomorrow-  so the balance transfer won't hit the balance (ie still should report a zero balance on 1/1), but my available credit for the card has been reduced to 5k from 15k.

 

So my question is-  when reporting to the credit agencies, will it report zero balance, 15k credit-   or zero balance, 5k available?    Just wondering.

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RobertEG
Legendary Contributor

Re: Utilization question?

% util is computed by the ratio of current balance to current credit limit. 

Available credit does not enter into the computation, as it is a redundant number that is the mathematical difference between credit limit and current balance.

 

While I presume that it is possible for a creditor to reduce your available credit and not increase your balance, it is mathematically not proper to change the right side of an equation with no changes to the left.  Both sides must be adjusted by the same amount to maintain the equation.  Until the 10K entered on the right, you dont have an equation.  Example

          Available credit = Credit Limit - current balance

          5K  =  15K  -  10K   (not 15K  -  0K)

 

         Your new % util would become 10K/15K  =  67%

Message 2 of 3
hombre14
Member

Re: Utilization question?

Thank you for the reply.

 

Not to quibble-  but if your first line is correct  (that credit limit is used in the calculation)-  then doesn't that mean that in my example, my reported utilization for my Chase card will be 0%  (ie 0 balance, 15k credit limit)?

 

I understand that once the balance transfer posts, it will be 67% (10k/15k)... however they tell me the balance transfer won't post for 5-7 days.     So shouldn't my reported utilization for 1/1 on this card be zero?

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