topic Re: Utilization Question.... in Credit Cards

Utilization Question....

smc733 — Sat, 07 May 2011 19:47:47 GMT

So perhaps I should know the answer to this, but forgive me if this is a stupid question.

If I get my Amex Zync, I have every intention on canceling Discover along with Chase. So now, until I app for BC in Jan 2012 (Backdating), I will be with the following

Amex Zync

Citi

BofA

GEMB/Amazon

If I use Zync and BofA, with Citi and GEMB reporting 0 balances, that effectively is using 1/3 (because we don't want more than 1/2, right?)? There will only be occasional times where I will use 2/3 (GEMB/BofA/Amex).

Thoughts?

Re: Utilization Question....

Anonymous — Sat, 07 May 2011 20:44:30 GMT

Utilization is Balance reporting / Credit Limit. It can be calculated per card or total. I don't understand how you get 1/3 or 2/3.

Re: Utilization Question....

haulingthescoreup — Sat, 07 May 2011 21:31:47 GMT

Are you talking about the number of accounts with balances?

If so, then yes (I think I read your post right.) For number of accounts with balances, it's the number of open accounts, not the number of total accounts, open and closed.

So if you're down to three cards, and one reports a balance, that will be one of three revolving, and therefore fewer than one out of two, so you're OK. If two report, you'll have a ding, but only for that month.

But if you also have open installment accounts, that will throw things off, because they always report a balance. So if you have a car loan, for instance, one CC with a balance plus the car loan = 2 of 4 reporting a balance. If you have a car loan and a mortgage, then one CC + auto loan + mortgage = 3 of 5 with a balance = ding.

This is why some people who have lots of open installment accounts keep multiple CC accounts open --the CC's (when they report $0) help balance out the installment accounts. It's murder for those with unconsolidated SL's, because there's usually one per semester and boom, there you are with 6 or 7 or 8 accounts always reporting a balance.

Number of accounts with balances isn't a biggie, but it's true that it can start messing with your scores, especially if you only have a few open accounts.

Re: Utilization Question....

smc733 — Sat, 07 May 2011 23:08:49 GMT

Well then aren't I screwed? xD.

One of my student loans is reporting a 0 balance (but not closed!), since I paid it off, and there are two more I intend to pay off. Fortunuately, I only need one loan per year, as opposed to semester, and my federal loans keep building on to my directloans account.

PNC 09/09 - 667 - 0 bal

PNC 09/09 - 1000 - hope to pay this one next

PNC 09/09 - 7000

MEFA - 01/10 - 6700 - Want to pay this, soon too.

Then I'll have Directloans at about 18k by graduation, and 3 PNC loans for about 22-24k.

Since 3 of my 4 AU accounts report balances, I want to axe them as well. My main concern is with the Zync I get, though... Will replacing Discover with Zync hurt (util wise not a huge problem, I spend very little).

Re: Utilization Question....

haulingthescoreup — Sun, 08 May 2011 01:02:02 GMT

The ding for "too many accounts with balances" isn't that big. It's annoying, though, if you're on a quest to maximize your scores. If it worries you, keep your CC's open and let them report at $0. After all, you already have them; might as well get some use out of them.

I don't know why replacing Discover with Zync would hurt, unless you let balances report, and losing the reported CL on Discover would raise your util. If it does, just keep the Discover open, but as you say, util isn't really an issue with you.

Re: Utilization Question....

smc733 — Sun, 08 May 2011 05:23:07 GMT

Right, I generally have a $200 balance on BofA, and then I'd probably have a $100 on my Amex, so util won't be a problem.

Re: Utilization Question....

Guava — Sun, 08 May 2011 06:00:01 GMT

Sorry, I'm gonna ninja in a question, kind of about utilization. Since Zync is a charge card, does Zync's balance count toward util calculation (total balance/total available credit)?