topic Re: Managing Debt and Effect of New Available Credit in Understanding FICO® Scoring

Managing Debt and Effect of New Available Credit

Anonymous — Tue, 24 Jul 2018 15:56:05 GMT

Hello all,

I'm new to the forums, and relatively new to myFICO.

You can bet my young self applied for much credit, and got denied multiple times.

If you read my last post, you'll see that I quickly racked credit debt in the two years of my short credit history. I'm starting to pay down my debts at about $300 a month (overall), thanks to a new full time job.

While I really should be gardening as I pay down my debt (hee, feels inclusive to use forum lingo), I did apply for credit a few months ago out of youthful curiosity.

I got two responses.

Apsire FCU - $1k, 18% APR (actually my lowest rate, and a higher limit)

Axiom Bank - $1k, 28% APR (Woah! I misread the rate after I got prequalified. If I do go on to use this, I'll have to always PIF/keep small transactions to be able to PIF)

These are both Platinum cards with no particular/remarkable reward/point benefit.

These cards bring up my total/aggregate limit from $3690 to $5690.

My last total util ratio was around 80%-85%.

Given the new credit, will this help buffer my scores at all with the drop in utilization?

Re: Managing Debt and Effect of New Available Credit

Anonymous — Tue, 24 Jul 2018 16:00:42 GMT

P.S. No derogs, AAoA is gonna take a big hit from 1 year and 10 months to under a year with three new accounts.

Scores were last at:
(EQ) 615
(TU) 644
(EX) 640

(I was rising above 670 last year before a financial situation caused my payment amounts to stagnate [no missed payments, however])

Thank you for any reply, I appreciate this forum.

Re: Managing Debt and Effect of New Available Credit

xaximus — Tue, 24 Jul 2018 19:40:05 GMT

It should make a difference in bringing your utilization down depending on which threshold it's over and the impact of adding 2k.

Example - if your debt is 3000/3690 = 81%
Adding 2k - 3000/5690 - 53%
The thresholds are 88.9%, 68.9%, 48.9%, 28.9%, 8.9%.
You'll fall under 1 threshold so that should bring your scores up (not sure how much but it might be a little, since your AAoA will drop a bit and the inquiries)

As you decrease the debt, you'll see your scores rise and the impact of the inquiries should lessen as well as your CR ages.

Re: Managing Debt and Effect of New Available Credit

Appleman — Tue, 24 Jul 2018 19:49:33 GMT

As you can see you are approaching getting below the 50% utilization which will help your score. Sitting at 90% or above is considered maxxed.

At this point I would recommend hitting the garden. If you currently do not budget, find a program (I am a YNAB fan). This will help you stop creating new debt and get you some savings for unexpected expenses.

Getting out of credit card debt is a great gift you can give yourself.

Re: Managing Debt and Effect of New Available Credit

Thomas_Thumb — Wed, 25 Jul 2018 15:30:44 GMT

@Anonymous wrote:
Hello all,

I'm new to the forums, and relatively new to myFICO.

You can bet my young self applied for much credit, and got denied multiple times.

If you read my last post, you'll see that I quickly racked credit debt in the two years of my short credit history. I'm starting to pay down my debts at about $300 a month (overall), thanks to a new full time job.

While I really should be gardening as I pay down my debt (hee, feels inclusive to use forum lingo), I did apply for credit a few months ago out of youthful curiosity.

I got two responses.

Apsire FCU - $1k, 18% APR (actually my lowest rate, and a higher limit)

Axiom Bank - $1k, 28% APR (Woah! I misread the rate after I got prequalified. If I do go on to use this, I'll have to always PIF/keep small transactions to be able to PIF)

These are both Platinum cards with no particular/remarkable reward/point benefit.

These cards bring up my total/aggregate limit from $3690 to $5690.

My last total util ratio was around 80%-85%.

Given the new credit, will this help buffer my scores at all with the drop in utilization?

I'd forego the 28% APR card at this time. Get your existing cards below 69% ASAP to reduce the risk of adverse action such as balance chasing/credit limit reduction. Also, you will see more favorable SLs on new cards by getting aggregate (total) utilization under 49%.

Then bring all individual card balances below 49% and total utilization below 29%. You should see a substantial score boost once achieved.