topic Re: High Balance - Credit Limit in Understanding FICO® Scoring

High Balance - Credit Limit

natasjlp — Tue, 31 Mar 2009 20:48:46 GMT

Hello,

I have a few CC's that the High Balance is higher than the Credit Limit.

Is this bad or how does this affect my credit score?

Thanks

Re: High Balance - Credit Limit

Anonymous — Tue, 31 Mar 2009 21:02:22 GMT

This impacts your score negatively.

Your situation impacts utilization (util). In your situation, you have a utilization of over 100% of your available credit lines on those particular credit cards. Depending on where you are in relationship to your other available credit, you might have a total utilization of over 100%.

Hard to say how much this impacts you, but the ideal utilization (what you're shooting for to get ready to apply for credit) is 9% of your total available credit or less.

Re: High Balance - Credit Limit

natasjlp — Tue, 31 Mar 2009 21:04:54 GMT

What I mean is that (for example) my 'Balance' is $863 my 'High Balance' was $4,940 and my 'Credit Limit' is $3,400.

What does this mean for my credit score?

Re: High Balance - Credit Limit

Anonymous — Tue, 31 Mar 2009 21:12:16 GMT

I think that only shows on a manual review (like for a mortgage) if it's an open account. You're talking about a historical high balance being over your current credit limit. Is the account still open?

It probably counts more if the account was closed with that high balance. I think the rule is that balances on closed accounts count against the use of credit line, but the old credit limit does not count towards your available credit. So if you have a closed account with a balance, that is much worse than an open account with balance in terms of how your util is calculated.

Are there late payments on those accounts?

Maybe the mods can address whether that kind of historical info impacts the score?

Re: High Balance - Credit Limit

Anonymous — Tue, 31 Mar 2009 21:14:45 GMT

Actually, (thinking about this some more), not sure how they could penalize you for that at all in light of all the reduced credit limits.

When you had the high balance of 4940, your credit limit could have been 5000. So to penalize you for a high balance when your credit limit was higher seems unfair.

Not sure if that is your situation or not.

Re: High Balance - Credit Limit

natasjlp — Tue, 31 Mar 2009 21:20:22 GMT

I am thinking the same thing about the 'reduced credit' situations. How could they penalize someone - maybe my limit was $5000.

By the way it is 'closed by consumer' (which I think is a good thing relatively) and I am having issues with them.

I would apprectiate your thoughts : http://ficoforums.myfico.com/fico/board/message?board.id=rebuildingcredit&thread.id=57256

also - is it possible to reopen my account with a CC after it had been closed for years? it is my oldest account and didn't realize the damage I was doing when I was younger - doh!

Re: High Balance - Credit Limit

CreditAble — Tue, 31 Mar 2009 22:52:09 GMT

@natasjlp wrote:

I have a few CC's that the High Balance is higher than the Credit Limit.

Is this bad or how does this affect my credit score?

Thanks

It is not bad. It does not affect your score.

I have given another poster an explanation in This_Thread.

Re: High Balance - Credit Limit

Junejer — Wed, 01 Apr 2009 01:17:52 GMT

FICO scoring has no memory of revolving util. So, if you were OTL at that time, your score got killed. Once you get things back in line again, then all is well again. A lender may ask about it during a MR, but you can easily explain it, if your limit was higher back then or whatever.

Re: High Balance - Credit Limit

haulingthescoreup — Wed, 01 Apr 2009 02:02:46 GMT

natasjlp wrote:

Hello,

I have a few CC's that the High Balance is higher than the Credit Limit.

Is this bad or how does this affect my credit score?

Thanks

Not at all.

The highest balance field is not used in calculating your FICO scores. It is probably used by other lenders to see if you actively use your credit.

There is NO negative effect on your credit for having a "highest balance" that is higher than your current credit limit.