topic Re: Credit cards to improve utilization? in Credit Cards

Credit cards to improve utilization?

tcbofade — Mon, 10 Apr 2017 13:01:50 GMT

First and foremost, I SWEAR I'm asking this for a friend...lol.

Credit scores in the mid 600s, utilization on the high side... 67% overall, nothing maxed out, no baddies.

He is interested in bigger, better cards to reduce his interest rates and the total number of payments he has to make every month. Frankly, with that high of a utilization ratio, I don't believe that he'll be approved for any of the major, bigger, better cards.

So he is looking to open an account or two that does not have to have the best terms, but doesn't want to waste applications on $300 credit limits.

Any ideas for high credit line approvals in the 640-660 FICO score range with that high of a utilization?

Please and thank you.

Re: Credit cards to improve utilization?

HeavenOhio — Mon, 10 Apr 2017 13:14:20 GMT

To start with, if your friend can reduce his utilization before applying, his scores will rise, and he'll be in a better position for "better" cards. I'd suggest optimizing his score by having one major card reporting a small balance with the rest of his cards reporting zero.

Which cards does he currently have, what are their limits, and when did he open those accounts? Knowing that will help those here to offer more specific advice.

Re: Credit cards to improve utilization?

Anonymous — Mon, 10 Apr 2017 13:28:54 GMT

@HeavenOhio wrote:
To start with, if your friend can reduce his utilization before applying, his scores will rise, and he'll be in a better position for "better" cards. I'd suggest optimizing his score by having one major card reporting a small balance with the rest of his cards reporting zero.

Which cards does he currently have, what are their limits, and when did he open those accounts? Knowing that will help those here to offer more specific advice.

Re: Credit cards to improve utilization?

Anonymous — Mon, 10 Apr 2017 13:38:10 GMT

What is the friend's history on utilization? Usually friends who have near 70% utilization will add 2 new credit cards and after a few months they'll now be at 75% utilization including the new TLs.

Getting that utilization down before applying makes sense if only to see if they can be more responsible with credit lines.

Re: Credit cards to improve utilization?

medicgrrl — Mon, 10 Apr 2017 13:44:02 GMT

I think he would have better luck trying for CLI's on his current cards right now to reduce utilization. If he can get to the 680 range I think he would have a good shot at Amex, which would grow fairly quickly.

Re: Credit cards to improve utilization?

HeavenOhio — Mon, 10 Apr 2017 13:51:13 GMT

While the scoring models and underwriters don't consider 67% to be particularly responsible, I'm assuming the friend is a responsible person. Given that he's making payments several times a month on low-limit cards, I'm guessing that getting utilization down won't likely be a money issue. Rather, it's probably a matter of adjusting his payments so his cards can take a breather come statement time.

Re: Credit cards to improve utilization?

Anonymous — Mon, 10 Apr 2017 16:00:07 GMT

If your friend is paying zero interest on the debt then simply wait stick it out and continue making payments. Apply when 30% or less. if he is paying interest on debt, consider a personal loan which will make UTIL go to zero instantly, will pay less interest on the personal loan, and the loan itself scores better on fico. Sometimes new loan does not show up for two months so that really makes a huge boost to your scores when all the credit cards have reported zero.

The key is to not fall into habits and run up cards at the same time as carrying than loan load.

Re: Credit cards to improve utilization?

CreditInspired — Mon, 10 Apr 2017 16:13:17 GMT

Agree with everyone's advice here. What is the highest limit card your friend has? If it's $1K, he is hardly going to score bigger and better cards, IMHO. Also, in addition to requesting CLIs, he should also ask about APR reductions, especially if he's paying interest! Yep, main thing is he definitely needs to reduce his utilization substantially! Hope he listens to your advice.

Re: Credit cards to improve utilization?

Anonymous — Mon, 10 Apr 2017 16:28:40 GMT

I'm with the pay it down crowd. What he is wanting to do will not reduce the amount of debt, so regardless of choice, he will still owe what he owes now....it will just be spread around. That's not really fixing the situation.

If he can pay it down, he will more easily get better cards. If he can't pay it down now, how will more cards change anything?

Re: Credit cards to improve utilization?

Anonymous — Mon, 10 Apr 2017 16:50:34 GMT

If he is interested in a card just to lower utilization, I would recommend an Alphaeon Credit Card, it is issued through Comenity Capital Bank, it is a medical credit card, like CareCredit. I got this card thinking of future dental work for my son. All of my scores at the time were in the 500s, and I was instantly approved for $4500. And this being a Comenity Card, I have managed a monthly CLI every month since I got the card, I got it in December it is now up to $7750. With this being a medical credit card, he isn't likely to use it for random purchases.

Re: Credit cards to improve utilization?

AverageJoesCredit — Mon, 10 Apr 2017 18:16:07 GMT

Wow Hypno, never heard of that card. Still learn something new here everyday

Re: Credit cards to improve utilization?

tcbofade — Mon, 10 Apr 2017 21:20:49 GMT

@HeavenOhio wrote:
To start with, if your friend can reduce his utilization before applying, his scores will rise, and he'll be in a better position for "better" cards. I'd suggest optimizing his score by having one major card reporting a small balance with the rest of his cards reporting zero.

Which cards does he currently have, what are their limits, and when did he open those accounts? Knowing that will help those here to offer more specific advice.

Unfortunately, I'm not privy to all of those answers...

Most of his existing accounts are NOT new, but I don't know the details.

Thanks all for the responses.

He is generally a responsible guy, I know him well and have known him for some time. He works full time hours at a part time job while putting himself through college. Seems to me that he ends up living off of credit cards during certain times of the year...then tax refund day / next semesters school loan arrives, and he pays down his debt as far as possible, just to start the cycle over again.

Upon graduation from college, he certainly expects that to change, but that's still a little bit out there in the future...