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Debt to credit ratio question

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Re: Debt to credit ratio question

Well that's why I wouldn't say higher limits do not matter across the board. Maybe 0 is 0 and there is no difference. But in other areas there are MAJOR key differences. As I said earlier, when done in reverse they matter a heck of a lot. But I have around 70k and yes, $1,000 here or there won't affect your score any because of the much higher limits. So in that case, higher limits DO give you some major advantages, like you just spoke of. Doesn't matter if SPK is 100% utilization because not done card by card. So 200k means you have $2,000 to play around with at the 1% ratio. $360 at 200k doesn't even make dent in your ratios and won't bother your score at all. Even with me at 70k, my balances can drop by $1500 or so and my score won't budge.
Message 11 of 14
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Re: Debt to credit ratio question

@Anonymous wrote:

Doesn't matter if SPK is 100% utilization because not done card by card. So 200k means you have $2,000 to play around with at the 1% ratio. $360 at 200k doesn't even make dent in your ratios and won't bother your score at all. Even with me at 70k, my balances can drop by $1500 or so and my score won't budge.

@Anonymous Plumber!  Just to remind other folks, in your post above, you are responding to Frogman who wrote:


"I have around 200k of total limits.  The limit on my SPG is only 1k.  It reported with something like 360 dollars on it and it did not affect my credit score.  I have around 1 percent total utilization."


Actually, you are not quite right (in the text highlighted in blue above).  FICO does care about one's utilization considered card by card.  That's called individual utilization and it can matter a lot.  The thing is, the penalties for individual util begin much higher than they do for total utilization.  For total util, there is no penalty until you cross over the 8.99% mark.  But for individual utilization, the penalties for most people do not occur until the person hits 49%.  There's been many case studies of zero penalty at (say) 44% -- though some profiles do apparently get a small penalty in the low 30s.  (Most profiles apparently are fine.)


But once you start getting higher than 49%, there typically is a scoring penalty.  And when a given card's util gets really high (92% say) the penalty is pretty sharp for all profiles, no exceptions.  That's why it's good practice to keep each card below 89% for sure (almost no exceptions to that for anyone, even if it is an awesome 0% deal) and in most cases below 69% (there will still be a scoring penalty at 67% but it won't be as high as it will be at say 70%).

Message 12 of 14
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Re: Debt to credit ratio question

My most recent ex-girlfriend's FICO8s were in the 820s or higher and she has only 2 credit cards both with limits of $2000 (she CLDs them if they get increased, lolol).  My current girlfriend's FICO8s are in the 820s with one bank card ($4000 limit) and one store card (Home Depot, $4000 limits) -- she also requests CLD if they get too high.


Credit limit has no effect ever on FICO score.  Percentages only.  As mentioned, higher limits let you float a bigger balance to maximize interest-free grace period, but getting a $50,000 limit card doesn't do you any good if you tend to max your cards out and pay the minimum each month.


One thing to note is that credit limits do track FICO score, not the other way around.  My rebuild for the past 9 months shows how well my aggregate limit tracked my FICO score changes:


credit limits vs fico vs time jan 5 2018.png


Of course, this will "top out" as my score plateaus this year, but still interesting to see the odd correlation.

Message 13 of 14
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Re: Debt to credit ratio question

Well there you go, I never realized that there was a penalty for any individual card!!! That's pretty shocking information! And excellent information to know Smiley Happy

Of course I was just making a general summation that he had absolutely nothing to worry about. And that he should not be looking for any kind of an increase or decrease for such a small amount in debt. And that still holds true. Assuming it doesn't go over the 89% mark LOL.

I will say that I do think that people get a bit obsessed and try to get to finite with the scoring system and myself I've never really had any issue manipulating it in any upward direction when the need came along.

Now I can say to a certainty that I'm awful glad other individuals DID take the time to become obsessed about it, because that information can be shared and passed along to others as just happened to me as I learned something new about the individual cards credit limits penalty.

However, that information applies to what models? All "standard" models. That's why I hate this whole scoring system to begin with. There are many custom proprietary models out there and there is no telling what those lenders did that was different from the standard.

Still, and I think this is important to say because of this, that trying to tweak it and play with it and shave it and other things ALWAYS revolves around the fact that you're unable to do the common sense simple stuff. All of this wonderful information really ONLY applies to those that are in between a rock and a hard place and don't have the finances to do what's needed and so they're trying to figure out how to shave points here and there while been sunk in debt and don't have the resources to just pay everything off.

My point is, that all of this tricky information and complex scoring systems are simply based upon the fact that people cannot write a check and pay off their debt. Because I think the one thing that does apply across the entire spectrum is to be debt free. That's the simple solution to raising your scores and getting too finite could simply be a waste of time when faced with 30 different standard scoring models as well as custom proprietary ones.

There's only a couple times in your life you really need to worry about your credit. The home mortgage, a car purchase, maybe a personal loan for college tuition and things like that.

I have personally known people that have spent a lot of time, way too much time (lifetimes) trying to get their score as high as possible. But if you weigh the effort put forth against how often it's actually needed, the trade-off is not equal.

But trust me I have my own issues and will never understand things. Current example is all of my scores on the Fico 8 are 694, 698 and 704. They were way down into the low 600's but I couldn't have cared less because I had already obtained all the credit that I needed for that chapter of my life. But now I'm getting ready to refinance my home so I'm off playing this ridiculous scoring game again to appease lenders. And over the last 45 days I've already taken scores that were 605, 603 and 612 into my current ones listed. And once the other balances update I should have them all in the low 700's.

But trust me it is a game. You are who you are and it's all about how much you choose to actually use the credit they have graciously extended you. And that's my biggest gripe with the system. I don't think that anybody should have negative points go against them simply because they choose to utilize the credit limit that was given to me to begin with! It's not there to be framed on the wall. It's there to be used and to take points away from you for using it, well, that's just insanity to me.

FICO 9 however? They are tanked! Highest score is 640!! SMH. This is why I say, sometimes it's just all a waste of time!

Personally I just absolutely despise this whole scoring system thing to begin with, despise having multiple bureaus that grade differently with the exact same credit, despise having multiple score models, I just think the whole thing, the whole theory, and the whole concept is SCREWED UP AND CRAZY!!!

It's a funny fickle world it is and god forbid you ever make an attempt to actually utilize your good score in your good credit because the second you do, the minute you take a great loan, or use your credit cards, your score drops faster than an anvil from the sky!

I mean in reality, 0% should NOT be 0% and your credit limit should have a major impact on your scores. Take the example of the poster who said his ex-girlfriend only had a couple cards with $2000 limit and had scores in the 800 range. No offense but thats absurd and falls under the theory once again that people who don't need credit are the ones with the highest scores.

The gentleman with the 200k limits and say myself with $70,000 in limits, it we max those cards out and then pay them all down and pay them all off to zero balances, that should be much more impressive and should signify that we are a much better credit risk than the person who has a 2k limit and paid it off.

But such is the world we live in Smiley Happy
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