does your credit limit and ultilization help affect your credit score

[Jagajaga]

i'm not sure if the subject helps. let me give an example. If I have a total credit limit of 5000 and my utilization is 9% and my limit goes from 5000 to 25000 and my utilization is still 9% with this help my credit score to increase or will it be the same when it was at 5000 with a 9% utilization?

[Berk]

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@Jagajaga wrote:

i'm not sure if the subject helps. let me give an example. If I have a total credit limit of 5000 and my utilization is 9% and my limit goes from 5000 to 25000 and my utilization is still 9% with this help my credit score to increase or will it be the same when it was at 5000 with a 9% utilization?

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Yes, it does. Assuming all else remains equal, your credit score should go up. 

[Anonymous]

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@Jagajaga wrote:

i'm not sure if the subject helps. let me give an example. If I have a total credit limit of 5000 and my utilization is 9% and my limit goes from 5000 to 25000 and my utilization is still 9% with this help my credit score to increase or will it be the same when it was at 5000 with a 9% utilization?

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Hello JJ!  I'm pretty sure I understand your question, but just to be sure I will punt it back to you and you can tell me if I have it right.

Suppose you have a total credit limit of $5000 and your CC debt is $450.  That gives you a utilization of 9%.

Two months later, you get a big credit limit increase.  Now your limit is $25,000.  But your CC debt also increases, so that it is now $2250.  That also gives you a utilization of 9%.

In both months, your utilization is the same: 9%.  Your question is: Does FICO now give you any extra points on your score for having a much higher credit limit?

Answer: No.

At least, as far as anyone has been able to discover, you get no extra FICO benefit purely in itself from having a big CL. 

But there are some scoring systems (outside FICO) that do give you a benefit for having a high average credit limit.  For example, if you had exactly three credit cards with limits of 10k, 15k, and 20k, then you'd have an average credit limit of 15k.  The insurance industry looks at this number and may "score" you (using their own system) higher for having a high average credit limit than somebody who has a bunch of little CL cards.  And it is possible that VantageScore takes into account your total or average credit limit.  Finally individual lenders could have their own internal scoring system where they consider this.

FICO, however, does not.

[Thomas_Thumb]

CGID is correct - No score increase on Fico scores if we are talking a one trick pony. However, if the CL is due to adding cards it gets a bit more complicated

Now ... for Auto and Property credit based insurance scoring models (LexisNexis and TransUnion): average per card credit limit is a scoring factor. In general an average CL of $10k or more put you the top tier for this CBIS category.

[Jagajaga]

No what happenes if my credit limit is now 50000 and my balance is $500 will my score go up? 

[Thomas_Thumb]

I allow aggregate utilization to float between 1% and 5% month to month. No score change anywhere in this range. Also, you will not see a score boost associated with a micro utilization of 0.1% relative to the 1% to 5% range.

I have read some posts reporting a trivial Fico score rise (3 to 5 points) dropping from 9% to the (1% to 5%) range.

[Anonymous]

Hi Jagajaga.  I am still not 100% clear (from your response just now) what your original question was.  I told you what I thought it was, asked if I was right, and you wrote back just now and said "No."

Here is your original post:

"If I have a total credit limit of 5000 and my utilization is 9% and my limit goes from 5000 to 25000 and my utilization is still 9% with this help my credit score to increase or will it be the same when it was at 5000 with a 9% utilization?"

It's clear that you are starting with a total credit limit of $5000 and a 9% utilization.  That means your debt must have been $450.

It's also clear that you are wondering what happens if your credit limit goes up to $25,000.

Question for you:

Does your total debt stay fixed with the new big credit limit?  Does it remain $450?

Or does the debt go up to $2250?  (To keep your utilization at 9%?)

Just trying to understand what your original question was so that we can give you the best answer.

[Jagajaga]

It remains at 450 or less than 450. 

[Anonymous]

Ahhhh!  OK.  See, where we all got confused is that your original language said that "my utililzation is still 9%" with the higher credit limit.  If your utilization was still 9%, then your debt would have gone up.

So what means is that your utilization starts at 9% (450/5000) and then goes down to < 2% (450/25000).  As Thom Thumb mentioned, some people have reported a score increase by going from 9% to the area of 1-5%.

The key idea, however, is that it's the utilization going down that would have made the difference, not the credit limit going up.  A college student with a $200 credit limit can lower his utilization to 1-5% just by paying down his balance.  Easy.  He doesn't need a big credit limit to do that. 

[too-much-time]

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I would imagine though aside from util that higher balance as an absolute could decrease your score.