Points don't add up or what am I doing wrong?

[Anonymous]

Hi everyone,

I had a credit increasement on Amex Blue Card from $3,000 to $9,000. I owed 989.75 on the card. I paid the entire card off having $9,000 available. However, Experian updated that $9,000 is available but it just bumped my Experian Fico 4 points. Is this right? I figured it would have given me at least 10 points or more.

[Anonymous]

A credit limit increase (CLI) will not in itself raise your FICO score by even one point.  That's because "size of credit limit" is not something FICO considers as part of its scoring models.

What FICO does consider is something called "revolving utilization" (most people just call it credit card utilization).  An increase to a credit limit can have an effect on CC util but even then that might not give you any scoring points.

In order for the folks here to help you out, they would need to know a list of all your cards, their balances, and their credit limits -- both before the CLI and after.  The list would look like this.

Card 1.  Balance = ____    Limit = ____

Card 2.  Balance = ____    Limit = ____

Card 3.  Balance = ____    Limit = ____

etc.

The balances and limits would be based on what was on your reports, not the most recent balance as of that day.

[Anonymous]

I was under the impression that it did. Ok... I at least thought it went toward your total credit utilazation which then could effect your FICO score. Am I totally wrong with this? 

What I hate about the scoring system is that my scores are looking much better since I paid down most of my credit cards. But in the process of  financing a new car toward the end of the month, but the loan officer advised me they use the AUTO8 which then drops my scrore down 20 plus points. Nuts!

[Anonymous]

Here is a better example...

Lets say that you have $50,000 in credit cards maxed out but you received credit increasements on all cards that total $50,000 additional which is a total of $50,000 added to your cards. This will not effect your credit score considering you are now 50/50 or 50% credit available ratio???

[MakingProgress]

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@Anonymous wrote:

I was under the impression that it did. Ok... I at least thought it went toward your total credit utilazation which then could effect your FICO score. Am I totally wrong with this? 

What I hate about the scoring system is that my scores are looking much better since I paid down most of my credit cards. But in the process of  financing a new car toward the end of the month, but the loan officer advised me they use the AUTO8 which then drops my scrore down 20 plus points. Nuts!

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A CLI will affect your Util, that is why CGID was asking about your CL and balance on each card.   His point is that the CLI itself does not generate points.   The CLI will only help your score if the additional credit brings your total util under one of the breakpoints for scoreing, i.e. gets you under 29.9  or 8.9%, etc.   

[Anonymous]

MP is right.  A CLI increases your total credit limit which in turn lowers your total utilization (if the balances remain the same).

That decrease in utilization might improve your score, but it might not.  If your total utilization went from 2.8% to 1.7% (for example) you'd get no scoring benefit.

You could have a huge increase in total credit limit (e.g. total CL of 4k increasing to 40k) but if your utilization stayed very low (e.g. going from 2% to 0.2%) you'd get no benefit.

[Anonymous]

I'll see what I can do to get the totals on all cards. I know this much for sure. I paid about $14,000 toward credit cards this month and had about $15,000 or so in increasements this month. I owe about $34,054.00 total in all cards and just about everything you see hasn't hit listed above with the exception of Amex from $3,000 to $9,000 with a zero balance on Amex.

Total Credit

$64,350.00

Credit Debt

$34,054.00

[FireMedic1]

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@Anonymous wrote:

I'll see what I can do to get the totals on all cards. I know this much for sure. I paid about $14,000 toward credit cards this month and had about $15,000 or so in increasements this month. I owe about $34,054.00 total in all cards and just about everything you see hasn't hit listed above with the exception of Amex from $3,000 to $9,000 with a zero balance on Amex.

Total Credit

$64,350.00

Credit Debt

$34,054.00

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I read the thread and then it came to this above (in blue) what you have in CL's and what you owe. Its just under 50% total aggregate util. So all the talk about 1 card really doesnt mean much at all. Or the 4 points. See CGID's post and fill in the blanks. Then the gang can explain whats happening.  And I guess you mean credit line increases when you say increasements. Your missing out on points that are a whole lot more than 4 points.

[DollyLama]

Would this be more of your scenario, before the credit limit increase of 15k, your total credit lines were around 49k-50k, and balance before the 14k to AMEX would have been around 48k debt and about 99% utilization? 

You pay down 14k and increase limits another 15k, your utilization crossed 2 thresholds (when fully reports, balances and credit limits updated), threshold of <88.9 (very high utilization, some points nothing major), <68.9% (still high utilization, should be more than 4 points, barring that their is no new credit in that time period, nor any credit inquiries dings). 

From what I see you are  currently about 54% utilization, but close to another threshold, which is getting it lower than 48.9% of total credit line, but the high score boost you are wanting will come more at the <28.9% threshold. 

[Anonymous]

Someone at a little over 50% aggregate utilization that is able to take their aggregate utilization down to an ideal place would likely stand to gain around 40 points, +/- (say) 10 or so.

Paying down debt will allow such a person to realize those points (or a larger percentage of them anyway) far quicker than CLI(s) will take them across thresholds to chip away at it.  Less debt is King to score improvement when considering utilization.  CLIs are really only a scoring band-aid; what really matters is debt and CLIs don't reduce debt even by one penny.