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Seeking advice on how to improve credit when utilization is high

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Expansion
Regular Contributor

Re: Seeking advice on how to improve credit when utilization is high

Thank you for this tip!  I went into CreditKarma (and I ignored the terrifyingly low Vantage 3.0 scores as you told me Smiley Happy

 

I went ahead and checked all three reports.  They all specifically list a credit limit of $5500 for the Citi Diamond Preferred (and a 21% utilization).

 

So it sounds like I can take my sweet time paying this one off?  (since the APR is so low)?  Do I have this right?  

Message 21 of 163
K-in-Boston
Credit Mentor

Re: Seeking advice on how to improve credit when utilization is high

You have that right.  For scoring purposes this card is being treated the same as if it were open (front ends on credit monitoring, including here at myFICO will incorrectly exclude the original credit limit when showing total and available credit, and will incorrectly slightly inflate your overall revolving utilization as a result).  Leave it be, continue making low payments on it until all the rest of your debts are down around that low APR.  That should also prolong the amount of time the account will remain on your reports as it should be calculated from the last time it was updated (currently every month) rather than when it was closed.

 

Edit: And yes, VantageScore 3.0 scores will be terrifying compared to FICO 8 scores on clean scorecards with high utilization (even if aggregate is under control) and new accounts.  I've simultaneously had FICO 8s in the 830s and VantageScore 3.0s in the 690s.  Meanwhile many instances of posters here having very inflated VantageScore 3.0 scores compared to FICO 8 when there are derogs.

Message 22 of 163
chiefone4u
Established Contributor

Re: Seeking advice on how to improve credit when utilization is high

@Expansion you've received some great tips from @K-in-Boston and @tcbofade.

 

I don't have much to elaborate on with the advice they've given. Just some words of encouragement. 

 

No matter how bad it might look right now, you are in a lot better shape than some who have made it to the other side. At this point it's a slow grind to being debt free. (Available cash-flow and resolve determine how long that grind will be).

 

Keep working the problem, and don't be afraid to ask for help, when needed; or share your progress from time to time. As humans, we tend to need to hear we are on the correct path to confirm with ourselves what we already know... and sometimes in the credit game we could use a nudge to correct our course, and save us some time and energy. 

 

I really wish you the best. With the constructive advice given so far, I believe you have the information needed to succeed. 

 

(Thank you @FinStar for the vote of confidence).

Goodwill Saturation Technique
Starting Score: EQ:608, EX:617, TU:625
Current Score 3/11/2020: EQ:695, EX:703, TU:720
Goal Score: 740+
Take the myFICO Fitness Challenge
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Member of the Synchrony Bank giveth then Taketh away April 2020 Club! $86,900 in available credit gone without warning.
Newest Account July 8, 2020 -- Last HP October 24, 2020 -- Gardening Goal: August 2022 and reach 0/24
Message 23 of 163
Expansion
Regular Contributor

Re: Seeking advice on how to improve credit when utilization is high

Thank you @chiefone4u !  And thank you @K-in-Boston !  This is all really helpful.  

 

Another avenue to explore.  I've been getting small FinTech loans to move balances off of my card utilization and also lower APRs.

 

I had a LendingClub 36 month loan for $6,500 that completed in October at 15.24%. 

 

In November 2021 I got an Upstart loan for $8,000 at an APR around 15% which I used to consolidate CCs that were in the 20%s. 

 

This Friday I applied for a second LendingClub loan and the rate was 19.94%, even with the option to have the funds directly paid to the cards.   Such a high rate it wasn't really worth doing.   

 

Any thoughts on how long to wait before with them checking again?  Ways to get a better rate?

 

I was surprised that the rate was higher now, when my income and scores are higher and utilization is lower.   

Message 24 of 163
chiefone4u
Established Contributor

Re: Seeking advice on how to improve credit when utilization is high


@Expansion wrote:

Thank you @chiefone4u !  And thank you @K-in-Boston !  This is all really helpful.  

 

Another avenue to explore.  I've been getting small FinTech loans to move balances off of my card utilization and also lower APRs.

 

I had a LendingClub 36 month loan for $6,500 that completed in October at 15.24%. 

 

In November 2021 I got an Upstart loan for $8,000 at an APR around 15% which I used to consolidate CCs that were in the 20%s. 

 

This Friday I applied for a second LendingClub loan and the rate was 19.94%, even with the option to have the funds directly paid to the cards.   Such a high rate it wasn't really worth doing.   

 

Any thoughts on how long to wait before with them checking again?  Ways to get a better rate?

 

I was surprised that the rate was higher now, when my income and scores are higher and utilization is lower.   


While I don't know how long to wait, Lending clubs rates and available loan options are based on the current risk investor's are willing to take (I'm friends with an investor who currently has $150,000 tied up with lending club, she's backing away from the higher risk this type of investment comes with and doesn't plan on re-investing).

 

Current world events could potentially change how pulled funds lending moves forward... potential war changes our economy and changes risk dynamics. 

 

Local Credit unions are likely to be your best Ally (as previously mentioned).

Goodwill Saturation Technique
Starting Score: EQ:608, EX:617, TU:625
Current Score 3/11/2020: EQ:695, EX:703, TU:720
Goal Score: 740+
Take the myFICO Fitness Challenge
Discover IT $1000Cabelas Clasic $1000Coscto Anywhere Signature Visa -Citi- $7200ExxonMobil Smartcard -Citi- $2500Playstation Visa (Comenity) $1950QuickSilver One $2200Walmart $6000Wells Fargo Platinum Visa $3000
Member of the Synchrony Bank giveth then Taketh away April 2020 Club! $86,900 in available credit gone without warning.
Newest Account July 8, 2020 -- Last HP October 24, 2020 -- Gardening Goal: August 2022 and reach 0/24
Message 25 of 163
K-in-Boston
Credit Mentor

Re: Seeking advice on how to improve credit when utilization is high

Another factor for the APR being higher on the loan offered is that you also have a new loan reporting.  It's also important to watch out for funding fees on Lending Club, Prosper, etc. loans; a 19.94% APR for instance can be significantly more in practice if you only get $18k cash in hand for a $20k loan and astronomically higher if you end up paying the loan off early.  Those should be disclosed during the loan process by law so there are no gotchas, but important to look out for.  It would show something like 19.94% interest rate and 23.95% APR, but say it's a 36 month loan and you paid it off in 12 months, because of that funding fee you'd likely be paying in excess of 30%.

Message 26 of 163
Expansion
Regular Contributor

Re: Seeking advice on how to improve credit when utilization is high

@K-in-Boston yes, I've got my eye on that!  The 19.94% is for a loan with an "APR" of 15.49% and then the origination fees bump it up to 19.94%.  Thank you for looking out for me!

Message 27 of 163
Expansion
Regular Contributor

Re: Seeking advice on how to improve credit when utilization is high

@K-in-Boston  Also out of curiosity, the lifechanging offer you got from NASA FCU -- what was it?  does it still exist?  Is it something I should be aiming for?  

 

Thank you for all your insight and suggestions today.  It's really amazing.

Message 28 of 163
K-in-Boston
Credit Mentor

Re: Seeking advice on how to improve credit when utilization is high

NASA is tough call.  There was a point when they were handing out huge limits like candy shortly before I received a "7.99% APR for life" mailer from them (not a wonderful APR, but much better than the mid 20s most of my balances were at then).  I had never heard of them, and Google led me here.  I took the chance (very high util, but clean payment history, no new accounts in years, fairly high income) and they gave me a $15k limit.  When I activated the card, they also offered me a $15k loan at a reasonable rate.  That $30k allowed me to shift around balances on cards from BOA, Citi, and Discover that had BT offers but no room to do them.  After about a year, I had all of my balances between 0% and 4.99% and was able to actually start paying them down rather than just paying thousands in interest every month and keeping balances the same.

 

NASA's underwriting since then seems to have changed.  It might be a crapshoot.

Message 29 of 163
Expansion
Regular Contributor

Re: Seeking advice on how to improve credit when utilization is high

Good to know.  That's awesome that you got that offer and the loan too. 

 

They do have a card (Visa Platinum Advantage Rewards) with 6.9% apr for balance transfers the life of the card, which sounds pretty great.  (Like you said, not wonderful, but better than what I've got right now.) 

 

I know right now it's not the time for me to apply for any cards, but I did just join NASA FCU.  So maybe when it's time they'll send me an offer.

Message 30 of 163
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