Help with Understanding Utilization

[haulingthescoreup]

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@Anonymous wrote:

I'm assuming CU applies to unsecured personal lines of credit as well.

I have a LOC with wells fargo for 5,500 and pulled 5,000 from it last month for two weeks.  I paid it back and just checked my credit today and its showing on my credit report that I have a balance of 5k.  I know there is a lag time for credit agencies to update their information.

My question is: Should I keep my CU under 70% which is no more than 3,850? Or is it ok to pull the full the full amount from time-to-time? 

I use my LOC to do day trade and need the extra leverage at times.

Thanks.

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Hi, welcome to the forums!

First of all, just to avoid endless confusion, "CU" is used around here to mean credit union, not credit utilization, which is what I assume you mean. The slang here is "util", short for "revolving credit utilization."

Yes, you're correct, util includes unsecured lines of credit, as long as their CL is under some figure that we don't know for sure, probably $40-50K. (Same for CC's, by the way.)

Many of us have found that if we have a lot of open revolving credit, maybe 6 or more cards or so, we can get away with having high util on one card. But if we only have 2 or 3 or 4, we might get killed when one reports high util.

Even so, util is a very temporary figure. If you're not getting ready to apply for credit, it's OK if your scores drop temporarily due to high util, if you're able to quickly reduce it if needed. One possible danger, although not necessarily so, is that your other lenders will get alarmed at seeing this high balance on this one account and take AA (adverse action), worrying that you're in some sort of financial trouble. I don't know that that necessarily happens (it never did to me), but you should be aware that people here occasionally worry about it.