topic Re: Question about 30% limit on credit card in General Credit Topics

Question about 30% limit on credit card

Anonymous — Sat, 03 Nov 2012 05:11:06 GMT

I've heard that you can use up to 30% of your credit before your credit score starts dropping. Is this 30% talking about per credit card or TOTAL credit limit? I'm currently using about 11% of my total credit but a majority of that is from one credit card (that is 0% interest and maxed out) that will be paid in full before the offer ends and the interest is accrued. I want to know if it's hurting my credit score that I have a "maxed out" credit card, even though I am only using 11% of my total credit card limit. If it is, then I will pay it off as soon as possible as I'm trying to raise my credit score so I can get approved for a mortgage loan within the next year. Thanks in advance.

Re: Question about 30% limit on credit card

llecs — Sat, 03 Nov 2012 05:32:05 GMT

@Anonymous wrote:
I've heard that you can use up to 30% of your credit before your credit score starts dropping. Is this 30% talking about per credit card or TOTAL credit limit? I'm currently using about 11% of my total credit but a majority of that is from one credit card (that is 0% interest and maxed out) that will be paid in full before the offer ends and the interest is accrued. I want to know if it's hurting my credit score that I have a "maxed out" credit card, even though I am only using 11% of my total credit card limit. If it is, then I will pay it off as soon as possible as I'm trying to raise my credit score so I can get approved for a mortgage loan within the next year. Thanks in advance.

Welcome!

If you were to track util out over time, you'll find that your scores will start dropping at 10% and onwards. YMMV of course on your credit and credit profile.

Even if overall util is low, a maxed out CC provides an extra score ding per FICO. FICO looks at individual and overall util.

Re: Question about 30% limit on credit card

Anonymous — Sat, 03 Nov 2012 05:34:57 GMT

Thanks for the quick response! My score is at 699 and I'm trying to get it into the mid 700's before applying for a mortgage loan. I figured since I was only using a low percentage of my credit limit that I would be OK but I guess I was wrong haha. One last question, what does YMMV stand for?

Re: Question about 30% limit on credit card

llecs — Sat, 03 Nov 2012 05:36:45 GMT

YMMV = Your Mileage May Vary....aka, different stroke for different folks.

For max FICO scoring per util, get all CCs but one to report $0, and get the remaining CC to report a balance of under 9% of the CL.

Re: Question about 30% limit on credit card

Anonymous — Sat, 03 Nov 2012 05:39:18 GMT

Thanks for the advice! So basically I need one card to be < $2880 (CL is $32000) and all other cards at $0 and my credit score will go up?

Re: Question about 30% limit on credit card

brother7 — Sat, 03 Nov 2012 05:50:59 GMT

I think he means the one card that reports should be <9% of THAT CARD's CL, not the sum of all your cards' CLs.

Re: Question about 30% limit on credit card

Anonymous — Sat, 03 Nov 2012 05:53:44 GMT

Ah I see thanks for the clarification... so that one card has a $2500 credit limit so I need to be < $225 on that card, and $0 on all other cards?

Re: Question about 30% limit on credit card

llecs — Sat, 03 Nov 2012 05:56:38 GMT

@Anonymous wrote:
Ah I see thanks for the clarification... so that one card has a $2500 credit limit so I need to be < $225 on that card, and $0 on all other cards?

For max points. Again, YMMV. You can micromanage even further. Some have posted a point or two extra by edging that 9% down to 5% or even less. Others see no change between 5% and 10% as an example. YMMV.

Re: Question about 30% limit on credit card

Anonymous — Sat, 03 Nov 2012 06:31:13 GMT

Awesome again, thanks for the clarification. Looks like I will be paying off that CC in full this month instead of waiting until february '13 when the 0% interest ends on it! Thanks again guys I'm glad I asked...

Re: Question about 30% limit on credit card

bettercreditguy1 — Sat, 03 Nov 2012 10:34:10 GMT

If you are apping for a home mortage, try to get as many accounts down to zero as possible. Allow about six weeks for that to happen due to reporting times vary with cc companies. Near or at application time, you can show proof of a canceled check/money order/cashiers check to show the current (last statement reported balance) has been paid on all other accounts. It makes you look more favorable in the lenders eyes.

Re: Question about 30% limit on credit card

Anonymous — Sat, 03 Nov 2012 10:40:27 GMT

Ah I see. Thanks for the tip. I talked to a lender and they said with the job I currently I have I need two years work history with this company since I "switched industries" so I can't apply for a mortgage loan until November 2013. That means I have one whole year to pay everything off but I actually will pay off every bit of it this month when I get paid two weeks from now. Now all I have to do is maintain the 0 balances and keep 1 or 2 of them at < 9% CL.