Utilization and card limits

[Anonymous]

Hi I was wondering how much of a factor total credit limit is when factoring utilization. I know nobody knows the formulas exactly, but I only have $1000 in revolving limit, and last time I pulled my FICO my utilization was 67%, which is really only $670. And it said one of the big factors affecting my score is heavy use of revolving account. I since paid it down to near 0, and am wondering if I should expect much of a gain when it reports to the CRAs. My FICO is 622 last I checked.

[Anonymous]

You should see nice bump. How many revolving credit lines do you have?

[Anonymous]

3 cards for small amounts each. Total limit $1000

[Anonymous]

Well do the 0 reporting on all cards but one and 1-9% on one card reporting. Pull your equifax fico once they all report. Depending on when you got cards and score, you might want to get better cards.

[MarineVietVet]

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@Anonymous wrote:

3 cards for small amounts each. Total limit $1000

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Hello and welcome.

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.

[Anonymous]

Cool thanks for the tip. I will try the method of 2 cards at 0 and one card with small amount. I plan on applying for an auto loan in 4-5 months so I want my score as high as possible. Also do you think I'm almost ready for better cards? I've had these for quite some time and they've helped to rebuild, but I realize theyre not going to ever grow.

[MarineVietVet]

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@Anonymous wrote:
Cool thanks for the tip. I will try the method of 2 cards at 0 and one card with small amount. I plan on applying for an auto loan in 4-5 months so I want my score as high as possible. Also do you think I'm almost ready for better cards? I've had these for quite some time and they've helped to rebuild, but I realize theyre not going to ever grow.

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I'll let others answer that. My newest card is 5 years old and I don't keep up on the latest trends as far as applying goes. I'm sure you'll get help with that.

Good luck to you.

ETA: You can start a new thread in the Credit Cards board and you'll receive lots of suggestions and advice.

[Revelate]

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@Anonymous wrote:
Cool thanks for the tip. I will try the method of 2 cards at 0 and one card with small amount. I plan on applying for an auto loan in 4-5 months so I want my score as high as possible. Also do you think I'm almost ready for better cards? I've had these for quite some time and they've helped to rebuild, but I realize theyre not going to ever grow.

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Not yet, 622 is still too low a score for anything but rebuilder cards with the exception of the most generous of lenders (some CU's will grant decent unsecured credit around this strata).

The higher your score, the more cards you have access to and the better limits you'll be able to receive going forward.  I think around the 650-660 range assuming solid income is about the right point to start thinking about cards like Amex Zync, Discover More, and a few other better cards than what you (or I) have access to currently... though admittedly in those cases you may still be a marginal approval depending what the rest of your financial life looks like... of course 680-700 would in all ways be better.  Those also won't be the end-all and be-all of the credit card world, but at least there's some upside on them which most rebuilder cards just don't have.

[Anonymous]

Thanks for the responses. I'm not really in any hurry to get new cards, I'm still faraway from where I want to be. In a few months I'll see where I stand, I'm hoping my score will be a bit higher then. My main concern is getting a car loan this fall, not credit cards

[AndySoCal]

Who are your cards with? IE Capital One Etc