Credit Utilization Ratio

[Anonymous]

Hello-

I am struggling to figure all of this stuff out.  Bottom line is I pay my credit cards in full every month.  Problem being is I also use them.  With this scoring business, it looks like I am constantly carrying huge balances but it could not be further from the truth.

I was introduced to this credit utilization ratio idea so I decided to open a few store cards and NOT use them so I have lines of credit out there that are not being touched.  My question is will this help?  Will a few store lines of credit that I don't use help the ratio?  I guess time will tell but I thought it was a good idea.

I know you all will tell me about hard inquiries etc.. but honestly, I am so over worrying about inquiries.  It is so ridiculous we are castigated for applying for things.   

I just want to know if credit utilization ratios are based on all credit lines or just the majors?  I am sure it is some convoluted "weighted" business but any and all answers shedding light on this matter would be greatly appreciated!

Thanks in advance and happy holidays! 

[llecs]

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@Anonymous wrote:

Hello-

I am struggling to figure all of this stuff out.  Bottom line is I pay my credit cards in full every month.  Problem being is I also use them.  With this scoring business, it looks like I am constantly carrying huge balances but it could not be further from the truth.

I was introduced to this credit utilization ratio idea so I decided to open a few store cards and NOT use them so I have lines of credit out there that are not being touched.  My question is will this help?  Will a few store lines of credit that I don't use help the ratio?  I guess time will tell but I thought it was a good idea.

I know you all will tell me about hard inquiries etc.. but honestly, I am so over worrying about inquiries.  It is so ridiculous we are castigated for applying for things.   

I just want to know if credit utilization ratios are based on all credit lines or just the majors?  I am sure it is some convoluted "weighted" business but any and all answers shedding light on this matter would be greatly appreciated!

Thanks in advance and happy holidays! 

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Welcome!

Will the new cards help? It depends on what is reported on the others and whether or not these help your mix of credit. Everyone's credit varies, but it isn't uncommon to see a score drop when adding new accounts. I personally wouldn't add CCs for the sake of util because your balances are easily manageable. IMO, inquiry damage is overrated.

Revolving utilization includes most all CCs, including some HELOCs, LOCs, and even charged-off CCs. Depends on how these report.

Know that virtually all CCs report only once per month and they'll report within a few days of your statement date. The key is to game the system and to get the CC to report the balance you want it to report. In order to do so, make sure your payment is made by the due date, obviously, but also make another payment is received just prior to the statement date and make sure that payment covers the entire balance (if the goal is a $0 balance to report). Once that payment clears, then the statement should cut. Once it cuts, it should report $0 and that'll help your CC util listed on your CR.

[bettercreditguy1]

At the last check, I am running about 17% utilization as some major purchases were made. They will all be paid in full at statement date.  When I play with the Fico Estimator, utilization does not effect my score one way or the other. This tells me these things. 1, that the higher your available credit card limits, the less this is important and 2, At a point, ( according to the estimator), adding or obtaining a higher credit limit on a card does not factor either. My available credit card limits are over $ 50000.

I have five major credit cards,  comprising of AMEX Gold, Chase FREEDOM and AIRLINES, PENFED, and my Credit Union VISA personally and one joint bank card with my wife, a DISCOVER. I have no store cards. As always, YMMV, it does take time to get there.

[Anonymous]

Thank you.  You give very good advice especially on carrying a zero balance over the statement close date.  That is my next trick!   

I am very slowly learning! 

[Anonymous]

Yes, indeed it does take time!  Thank you for your response.  I should only hope one day to have your credit lines! 

[RobertEG]

I would not be overly concerned about your scored % util each month until such time as you actually plan to app for new credit or otherwise need your score for some other business transaction.  FICO scoring of % util is based only on the last reporting.  Keeping it low is important so that you can maximize it when needed and not raise unnecessary concerns with your creditors over high utils, but fine-tweaking each month is not that important to your scoring when needed.  Good to do for a new months to get a feel for the impact at various util levels, but not critical each month.