Hello,
I am having trouble understanding a specific concept. I've been denied credit with a few financial institutions and one of the reasons mentioned as to why the denial was - "High Amount of Credit Usage".
I keep my credit utilization at about 10% or under.. I am under the understanding that I should aim to use no more than 30% utilization, preferably less than 20% but ideally 10% or less is best. I've managed to keep this in line and most times if I do use some credit cards I PIF. So am I just not suppose to use the credit cards in general even if I PIF??
I use my cards heavily because of the cash back rewards so I take advantage of that benefit, but usually, like I said, I PIF or leave no more than a 10% utilization.. I know another thing that has hurt my ability to get more credit, is the amount of accounts opened recently, but I've found myself almost forced to do it since I had too many high interest rate accounts after my BK discharge, which I ended up closing and exchanging/opening with new accounts with a much low interest rates.. I did this with three car loans which I have. I also closed my secured cc's and Merrick Bank CC because the interest rate was high.. so I only kept only kept the new credit accts with the better interest rate and better terms.. Isn't this what one is suppose to do?
Anyhow, I hope you can help me clarify my confusion and provide me some feedback. Thanks 
@sylviagarcia wrote:Hello,
I am having trouble understanding a specific concept. I've been denied credit with a few financial institutions and one of the reasons mentioned as to why the denial was - "High Amount of Credit Usage".
I keep my credit utilization at about 10% or under.. I am under the understanding that I should aim to use no more than 30% utilization, preferably less than 20% but ideally 10% or less is best. I've managed to keep this in line and most times if I do use some credit cards I PIF. So am I just not suppose to use the credit cards in general even if I PIF??
I use my cards heavily because of the cash back rewards so I take advantage of that benefit, but usually, like I said, I PIF or leave no more than a 10% utilization.. I know another thing that has hurt my ability to get more credit, is the amount of accounts opened recently, but I've found myself almost forced to do it since I had too many high interest rate accounts after my BK discharge, which I ended up closing and exchanging/opening with new accounts with a much low interest rates.. I did this with three car loans which I have. I also closed my secured cc's and Merrick Bank CC because the interest rate was high.. so I only kept only kept the new credit accts with the better interest rate and better terms.. Isn't this what one is suppose to do?
Anyhow, I hope you can help me clarify my confusion and provide me some feedback. Thanks
1. Credit card utilization is based on the balances which appear in the statement, and overall credit card utilization can be optimized by having all but one of the credit cards reporting at zero balance, while the one reporting reports a balance of 9% or less.
2. Installment loan utilization is an equally major factor. The thresholds are less clear, but it is clear that the lower your installment loan utilization the better. It is equally clear that (a) 9% or less is optimal, but (b) zero installment utilization causes a drop in FICO.
So if you had all credit cards but one reporting a zero balance, one credit card reporting a 9% or lower balance, and overall installment utlization at from 1 to 9%....your "credit usage" would be optimal.
It's odd that you would get that reason if you're under 10%. Are you sure you're judging what your percentage is based off of what the totals are for each card at the time each statement reports?
@RM21 wrote:
It's odd that you would get that reason if you're under 10%. Are you sure you're judging what your percentage is based off of what the totals are for each card at the time each statement reports?
I think it's possible that she's not basing it on the statement balance, and also that she might not be factoring in her car loans.
Thanks for the feedback.. actually I wasn't aware I had to factor in my auto loans.. 
I take the percentage off the balance on my statement cutoff dates.. but only for my credit card/revolving credit..
@sylviagarcia wrote:Hello,
I am having trouble understanding a specific concept. I've been denied credit with a few financial institutions and one of the reasons mentioned as to why the denial was - "High Amount of Credit Usage".
I keep my credit utilization at about 10% or under.. I am under the understanding that I should aim to use no more than 30% utilization, preferably less than 20% but ideally 10% or less is best. I've managed to keep this in line and most times if I do use some credit cards I PIF. So am I just not suppose to use the credit cards in general even if I PIF??
I use my cards heavily because of the cash back rewards so I take advantage of that benefit, but usually, like I said, I PIF or leave no more than a 10% utilization.. I know another thing that has hurt my ability to get more credit, is the amount of accounts opened recently, but I've found myself almost forced to do it since I had too many high interest rate accounts after my BK discharge, which I ended up closing and exchanging/opening with new accounts with a much low interest rates.. I did this with three car loans which I have. I also closed my secured cc's and Merrick Bank CC because the interest rate was high.. so I only kept the new credit accts with the better interest rate and better terms.. Isn't this what one is suppose to do?
Anyhow, I hope you can help me clarify my confusion and provide me some feedback. Thanks
Just to clarify things a bit more:
1) Open Installment loans are looked at in aggregate, not individually. The factor is (total of open balances on loans)/(total of approved loan amounts). If the auto loans are not substantially paid down, that could be a potential trigger for the "high amount of credit use" statement. If your car loans have recently been re-financed, they likely have remaining balances near the loan amount(s)
2) Opening a lot of new accounts (revolving and re-financed car loans) may trigger a high credit use reason statement regardless of utilization - particularly if all your older accounts are now closed.
3) The reason statement does not state high credit utilization so I don't think revolving account balances is your problem. Nonetheless, do try to keep aggregate utilization under 9% if possible and utilization on specific cards under 30%. Also, don't allow balances to report on all your cards - try to keep # cards reporting a positive balance at 50% or less if you have at least 3 cards.
Suggest allowing your new accounts to age a few months before applying for additional credit cards.