topic Re: Debt to credit line ratio? in General Credit Topics

Debt to credit line ratio?

Anonymous — Wed, 25 Jun 2008 21:25:51 GMT

I was told once that if you have a say $700 credit line that you should keep your debt at a certain percentage below what your credit line is - so say if you had $700 and you were supossed to keep it at 50%, you'd only have $350 charged on that account. I can't for the life of me remember or find what the maximum percentage that you should have in debt on a credit line anywhere. Can anyone help?

Brandy

Re: Debt to credit line ratio?

Anonymous — Wed, 25 Jun 2008 21:27:49 GMT

Thanks for asking that question I would like to know as well.

Re: Debt to credit line ratio?

Anonymous — Wed, 25 Jun 2008 21:33:18 GMT

Ok, I finally found some info right after I posted that, that it should be kept between 25 and 50% of your credit line, anything above that sends out a "red flag" to a creditor. It did not however say how that would effect your FICO score.

Re: Debt to credit line ratio?

Anonymous — Wed, 25 Jun 2008 21:37:14 GMT

For optimum FICO score effects, utilization should be between 1 and 9%.

Re: Debt to credit line ratio?

Anonymous — Wed, 25 Jun 2008 21:41:55 GMT

BrandyGLEE,

If you are looking to optimize your FICO score because you will be applying for a new card, mortgage, or other loan in the near future you should have a loan revolving account report a balance under 5%.

If you just want to know what to avoid in order to make your creditor avoid getting nervous and lowering your line or canceling your card, you are usually safe if you keep it under 50% and are paying at least double the minimum payment on time each month.

Re: Debt to credit line ratio?

RobertEG — Thu, 26 Jun 2008 10:24:23 GMT

Percent utiilization is a sliding scale, and only FICO knows the exact impact at various %util levels. Anecdotal experience from most on this site is that util above 50% has substantial impact, and that %util below 10% is best.

Your situation is a great example of why having larger CLs is real important. If you charge $300 on a $500 CL card, that will put you above 50% util, while charging the same $300 on a $5000 CL card will put you under 10% util.

Re: Debt to credit line ratio?

glamchick — Thu, 26 Jun 2008 17:32:10 GMT

Yes keep it at under 10%.

Divide your total balance by all of your total Credit limits. That will give you your utilization total.