topic Re: Line of credit and utilization in Understanding FICO® Scoring

Line of credit and utilization

JustinA — Sat, 11 Mar 2017 04:29:37 GMT

With a new line of credit, that I don't overly intend on using at all. Will the approval amount (15k) drop my utilization? Just curious...

Re: Line of credit and utilization

Anonymous — Sat, 11 Mar 2017 12:22:51 GMT

Any significant new credit line such as 15k should drop your utilization. Depending how high your utilization is, it may not increase your score unless the new credit line brings your utilization to a threshold that would trigger an increase your score.

Re: Line of credit and utilization

Anonymous — Sun, 12 Mar 2017 00:16:13 GMT

JustinA your new line of credit will likely fall into the credit report uder credit and not installment so you will pick up the padding for utilization. Did the same thing myself and it really is a nice quiet benefit. Checked my credit reports (all three) and the LOC does score as credit not installment.

Re: Line of credit and utilization

JustinA — Sat, 11 Mar 2017 14:48:06 GMT

56% utilization with 23k total credit lines. So it should drop to high 20s low 30s. Now do I use it to consolidate...hmmm

Re: Line of credit and utilization

Anonymous — Sat, 11 Mar 2017 14:59:06 GMT

@JustinA wrote:
56% utilization with 23k total credit lines. So it should drop to high 20s low 30s. Now do I use it to consolidate...hmmm

If you consolidated, what would the utilization be on that line of credit?

Now you have to worry about "line item utilization".

And your aggregate utilization will still remain the same.

This could hurt your scores...

Re: Line of credit and utilization

RobertEG — Sat, 11 Mar 2017 18:51:52 GMT

An LOC is included as a revolving account unless the CL on the line of credit is approx $35K or more.

FICO will score higher LOCs as installment, rather then revolving.

At 15K, it should score as revolving.

Re: Line of credit and utilization

JustinA — Sat, 11 Mar 2017 22:18:34 GMT

About 8700 give or take. So I would be around 55-60% utilization on the LOC with 6 visa and master cards reporting 0.

Re: Line of credit and utilization

Anonymous — Sat, 11 Mar 2017 23:33:29 GMT

I'd make the "consolidate" decision based on what makes the most financial sense. The scoring issue will probably be a wash (or you might take a slight hit). The creation of many $0 balances will help your score and raising an individual tradeline to over 49% will hurt it.

The most important thing is to have a clear plan for how you will be steadily paying off all of your revolving debt.

Re: Line of credit and utilization

JustinA — Sun, 12 Mar 2017 02:52:32 GMT

I think for convenience it may be a good thing to consolidate. In the end it will be 28% total utilization after doing some math. 1 Payment zeroed out cards...I think I may do it.

Re: Line of credit and utilization

JustinA — Tue, 14 Mar 2017 05:10:04 GMT

For those who tuned in...I went for it.

13100 consolidation on 15k LOC at 15.1%

The 15.1% is better than any credit card I have.

I know will have:

3 capital one cards- 0 Balance
1 chase- 0 Balance
1 gander mountain 0 Balance
1 Cabelas- 0 Balance
1 credit one-0 Balance
1 walmart store card- 0 balance
1 amazon store card- 0 balance

What it amounts to is 1 higher Balance credit line at 2% Payment over 9 maxed out or high balanced store cards/major creditors.

It will save money in the event I have to pay a minimum, and clear high Balance fatal mistakes in the credit world.

Thoughts and input are welcome.

Re: Line of credit and utilization

JustinA — Tue, 14 Mar 2017 05:13:54 GMT

And in a week or so, I will have 4k to pay down that LOC.

Re: Line of credit and utilization

HeavenOhio — Tue, 14 Mar 2017 15:38:47 GMT

@JustinA wrote:
Thoughts and input are welcome.

Ditch Credit One. You don't need them anymore.

Don't use your credit cards for anything you can't pay for before the statement cuts. The exception would be to let one of your Cap One cards report a statement balance of about $10. Pay the $10 after the statement cuts. Allowing one major card to report a small balance optimizes your score.

The typical advice around here is to "let one major card report." However, Chase will follow up and report again if you pay it down to zero.

Re: Line of credit and utilization

JustinA — Tue, 14 Mar 2017 16:59:20 GMT

That is certainly the plan. It was depressing carrying that credit one card again.