@MarineVietVet wrote:
@Anonymous wrote:
Absolutely! So, I don't really need a CC with a CL if I plan on keeping the utilization between 1-9%, right?
And if I'm right, how does having a higher CL help you?
That's true and I've lost track of how many cards you have right now. There is an approach that many use to tweak their scores. Everyone's situation is different and there is no one size fits all approach to this but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.
You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.
On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.
Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.
Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.People have different reasons for trying to obtain and keep high CL's. For a few it comes down to bragging rights. "Look what I've got". For others they know they have the resources to make a large purchase at some point.
For me I look at having my total CL's pretty high as a buffer against possible future AA (Adverse Action such as a account closure, CLD (Credit Limit Decrease, etc.). A few years ago BoA closed my LOC which happened to be my highest CL because they said I "had enough credit". Whatever that means.
Fortunately my other CL's were high enough and my balances low enough that losing this CL did not have a huge impact on my utilization and therefore my scores.
Wow, so a CC company can decide to close your LOC just because and adversely affect your score? That's a little scary but good to know for the future.
Well, I know I'm definitely not at the point where I can play around just to tweak my score for the fun of it (sigh, maybe one day). My first priority is qualifying for a mortgage loan (FHA) and then continuing to improve my credit from there.
I have 2 cards: one is a AmEx on which I'm an AU. I pay it off every month; so, it always shows a $0 balance. The second is a Capital One CC, which has been open since 2007. I haven't used it in several years (I don't even have a card) - I've just been paying the mininum every month (silly, I know) but this past week paid it down to a little less than 9% of the CL after reading about how utilization affects your score, My balance is $306 and the CL is $3500. I could pay it off but I know I need it to show a balance since my only other TL has a 0 balance. I could also go ahead and pay it down to the 1-3% utilization. Not sure if that would help more or not....
This is all making my head spin, eye twitch, and giving me insomnia (as my 14 month old is actually starting to sleep through most of the night. Lol). And as I sit here watching her play, I know it's all worth it if she can have a home, a secure future, and a financially secure and stable role model
@Anonymous wrote:
Wow, so a CC company can decide to close your LOC just because and adversely affect your score? That's a little scary but good to know for the future. Yes they can do many things such as a large CLD (Credit Line Decrease) or do what is called "balance chasing" where each month as you pay down your balance they will lower your CL to match that balance so that your utilization always stays high. I don't want you to think that these practices are widespread but they do happen and it's good to be aware of it.
Well, I know I'm definitely not at the point where I can play around just to tweak my score for the fun of it (sigh, maybe one day). My first priority is qualifying for a mortgage loan (FHA) and then continuing to improve my credit from there.
I have 2 cards: one is a AmEx on which I'm an AU. I pay it off every month; so, it always shows a $0 balance. The second is a Capital One CC, which has been open since 2007. I haven't used it in several years (I don't even have a card) - I've just been paying the mininum every month (silly, I know) but this past week paid it down to a little less than 9% of the CL after reading about how utilization affects your score, My balance is $306 and the CL is $3500. I could pay it off but I know I need it to show a balance since my only other TL has a 0 balance. I could also go ahead and pay it down to the 1-3% utilization. Not sure if that would help more or not.... Right now that utilization is right at 9% (306/3500). You can play around with the percentages for a few months and see what seems to work best for you. The current 9% might be your sweet spot; perhaps the 1-3% is better.
This is all making my head spin, eye twitch, and giving me insomnia (as my 14 month old is actually starting to sleep through most of the night. Lol). And as I sit here watching her play, I know it's all worth it if she can have a home, a secure future, and a financially secure and stable role model
@MarineVietVet wrote:
@Anonymous wrote:
Wow, so a CC company can decide to close your LOC just because and adversely affect your score? That's a little scary but good to know for the future. Yes they can do many things such as a large CLD (Credit Line Decrease) or do what is called "balance chasing" where each month as you pay down your balance they will lower your CL to match that balance so that your utilization always stays high. I don't want you to think that these practices are widespread but they do happen and it's good to be aware of it.
Interesting...I don't understand how that would benefit a CC company. As daunting as this process has been, I'm actually enjoying learning about the whole credit business. It's been empowering especially when I've felt overwhelmed and a little hopeless about it at times.
Well, I know I'm definitely not at the point where I can play around just to tweak my score for the fun of it (sigh, maybe one day). My first priority is qualifying for a mortgage loan (FHA) and then continuing to improve my credit from there.
I have 2 cards: one is a AmEx on which I'm an AU. I pay it off every month; so, it always shows a $0 balance. The second is a Capital One CC, which has been open since 2007. I haven't used it in several years (I don't even have a card) - I've just been paying the mininum every month (silly, I know) but this past week paid it down to a little less than 9% of the CL after reading about how utilization affects your score, My balance is $306 and the CL is $3500. I could pay it off but I know I need it to show a balance since my only other TL has a 0 balance. I could also go ahead and pay it down to the 1-3% utilization. Not sure if that would help more or not.... Right now that utilization is right at 9% (306/3500). You can play around with the percentages for a few months and see what seems to work best for you. The current 9% might be your sweet spot; perhaps the 1-3% is better.
Well, today is the due date for my Capital One CC payment. So, if I'm going to try out the 1-3% then tonight is it. Though once I bring it down, there won't be any going back up since I don't have a card! I think I might post a thread to see what others' experiences have been with re: to what percentage range of utilization has worked best for them.
This is all making my head spin, eye twitch, and giving me insomnia (as my 14 month old is actually starting to sleep through most of the night. Lol). And as I sit here watching her play, I know it's all worth it if she can have a home, a secure future, and a financially secure and stable role model
Thanks again for all of your help and your willingness to take the time to educate me on these matters.