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Hi All - So I have very good credit in the sense that the age of my accounts is pretty long and my payment history is very good. However, I am really struggling with utilization % and it's killing my credit score. I want to refinance my mortgage and some student loans, so my low-ish score of around 680 is a problem.
Here's the deal - I have a couple of credit cards and they all have either low or $0 balance (will soon all be $0) but the limits on them are all pretty modest. I am just not a big CC user so my so lower limits are totally fine for me. When we bought our home 2 years ago, in order to avoid a jumbo loan (rates were high for jumbo at that time), we did traditional mortgage up to the jumbo limit and then did a HELOC to cover the rest (we put down a very large down payment). So now we have a HELOC that is close to maxed out because it was only taken out to actually purchase our home. We pay on it monthly, but paying it down will take time. On all of my credit reports, the HELOC is seen as revolving credit and gets lumped together with the credit cards. Therefore, despite having low or $0 balances on my credit cards, my revolving utilization is still around 85%. I get that this is technically accurate, but it's making my credit score lower at 680. When I play with score simulators, I would be high 700s if my utilization was anything under 30%. We will get there, but it will take some time to pay down the HELOC.
So I'm in this sort of catch 22 where my credit score is low because of the HELOC, but I really need it to be higher to refinance. Any creative solutions here or do we just have to deal with lower scores until the HELOC is paid down? Thanks in advance!
Thanks AllZero - this is helpful and I might be able to play with this a little to get a bump. I would really love to get my score above 720 for refinancing, but I am not sure that will be possible with the darn HELOC where it is currently at.
@MBOhio2 wrote:I have a couple of credit cards and they all have either low or $0 balance (will soon all be $0) but the limits on them are all pretty modest.
This may not help move the needle much, but if it were me, I'd probably try for a few credit limit increases on your cards to pad the utilization. Just because you have a large CL doesn't mean you have to use all of it. Just keep doing your usual modest spend on it, but it might look better to a computer algorithm.
And, don't put all your cards at 0% - let a small balance report on at least one card. (Note: I have no idea how a HELOC would factor in to the AZEO treatment and a refi...someone with more experience will have to chime in.)
Best of luck!
<edited to add: AllZero, we're thinking alike on that one!>
@Anonymous wrote:
@MBOhio2 wrote:I have a couple of credit cards and they all have either low or $0 balance (will soon all be $0) but the limits on them are all pretty modest.
This may not help move the needle much, but if it were me, I'd probably try for a few credit limit increases on your cards to pad the utilization. Just because you have a large CL doesn't mean you have to use all of it. Just keep doing your usual modest spend on it, but it might look better to a computer algorithm.
And, don't put all your cards at 0% - let a small balance report on at least one card. (Note: I have no idea how a HELOC would factor in to the AZEO treatment and a refi...someone with more experience will have to chime in.)
Best of luck!
<edited to add: AllZero, we're thinking alike on that one!>
Great minds think alike.
@AllZero wrote:
Alternatively, get a credit card that is known to give high credit limit or CLI e.g. Lowes card to add to utility padding. However, best to check with your lender before incurring more credit and hard pull inquiry.
AllZero - This is something to think about and I will defintiely discuss with my lender before doing anything. Regarding Lowes, what do their CLs typically look like? Before I even consider, I am curious what kind of help it might give me. Thanks!