Utilization Concern..

[backtogood]

Over the last few months of obtaining and maintaining a few different credit cards.. I have noticed that with utilization rate you must take each card individually?

Example, Here are apx accounts and balances.. revolving curr on my report..

Cap1,  200 bal, 300 CL, Util - 66%

Cap1, 200 Bal, 201 CL, Util - 99%

FPBank, 0 Bal, 300 CL, Util 0%

Jared, 0 Bal, 1500 CL, Util 0%

Total    400/2301 CL = 18%

Now to the question... I recently Applied for a newer account and was denied, based on the following factors:

"proportion of account balances to credit limit to high"

Which leads me to believe, not only should i be concerned of my TOTAL utilization rate all in whole, but also on an individual basis? Is this correct?

So even though it easier to use just 1 card at all times, if there is to be rolling balance at statement cut, I would be better spreading the amount over all 3 accounts? reducing this risk factor?

Any advice, much appreciated... thanks

[Anonymous]

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@backtogood wrote:

Over the last few months of obtaining and maintaining a few different credit cards.. I have noticed that with utilization rate you must take each card individually?

Example, Here are apx accounts and balances.. revolving curr on my report..

Cap1,  200 bal, 300 CL, Util - 66%

Cap1, 200 Bal, 201 CL, Util - 99%

FPBank, 0 Bal, 300 CL, Util 0%

Jared, 0 Bal, 1500 CL, Util 0%

Total    400/2301 CL = 18%

Now to the question... I recently Applied for a newer account and was denied, based on the following factors:

"proportion of account balances to credit limit to high"

Which leads me to believe, not only should i be concerned of my TOTAL utilization rate all in whole, but also on an individual basis? Is this correct?

So even though it easier to use just 1 card at all times, if there is to be rolling balance at statement cut, I would be better spreading the amount over all 3 accounts? reducing this risk factor?

Any advice, much appreciated... thanks

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Your sig has FH, did you forget them in your total?

[Sevenfeet]

It does matter for some lenders.  My total utilization right now is about 36% but most of that is on two cards (93% on one and 72% on another).  In the case of the 93% one (Penfed), it was intentional since I was using it for balance transfer.  The second (Freedom) is just the place my wife and I have been burying long term extra-budget debt since the interest rate is so low (but we still need to get the total amount down).

But I think it's a combination of having high utilization on some of your cards combined with the fact that your CLs on the cards are low to begin with.  If the cards had higher CLs, I think it wouldn't be as much a problem to some lenders...I've secured three new cards since putting all the money on Penfed.

[backtogood]

additionally yes, a finger hut account with 0 balance and 100 limit... though its not reporting to all CRA, only EQ so far.

[sarkell]

I try to never go over 70% utilization on a particular card now when apping best is on ly one card having a balance less than 9%. After this month I will 2 cards with balances both 0% I'm not apping for at least a year so not as important. But balances will be paid off before I get to 6 month point so I can do sp for cli.

[Anonymous]

As a rule, 90% is considered maxed out by lenders. I never charge above 80% unless I'm using it to purchase something on 0% APR. But on first statement, I pay a large amount to immediately to get the card under 90%.

If I accidentally charge above 90% (rare but has happened a couple of times) on my everyday cards, I PIF before the statement cuts so that it doesn't get reported.

You always want to leave extra cushion for that unexpected annual fee or emergency, and forgotten recurring charges especially recurring charges based on habits (for example: driving more on a toll way that is setup as a recurring charge for replenishing your account). Also it protects auto pay bills that are processed every 3 months or 6 months or a year. Keeping cards, that have recurring charges, below 80% ensures that you will not go over your limit if you forget about a charge that is going to occur before you pay.

So yes, it is very important to watch individual Util as I believe fico does ding your score for maxed out cards (>90%) as well as ding your score for high overall Util. Sometimes the points lost due to a maxed out card do not translate after being offset by reduced overall Util due to adding additional credit limit from a new account or paying down another established account. However, keep in mind points gained from the reduced overall Util due to a new account can be offset initially by points lost due to the inquiry and reduction in AAOA. To prevent these secondary scoring effects: pay down existing cards to reduce overall Util rather than add new accounts. Don't add new accounts just for the sake of reduced overall Util. Keep individual Util below 90%. Make sure there are other factors going into the decision when apping for new accounts.

[improvingmycredit]

Hello backtogood!
FICO takes into account both individual CC and overall utilization. Lenders follow suit. It is best to not carry any balances above 30% on any card and across all cards. It should be noted also that FICO penalizes for too many accounts reporting balances. I typically take a hit if I allow more then 2 report. Having a maxed out card- signifies to most lenders that one might be living above a persons means. In the grand scheme of things, unless you are seeking credit- best not to worry about where the balances are carried but more about APR and how best to pay them down. Hope this helps.