High utilization question

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6 posts
rockhound
 
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High utilization question

Postby rockhound » Thu Jul 24, 2014 11:45 am

Hi all,

Over the past few years while I was in college I've collected a decent amount of debit on my credit card. It is currently at about 90% utilization and has been that way for some time now. I know I really got myself in a bad situation but I'm not dwelling on the past(lesson learned for sure). I'm about to start a new job and that first pay check will pay it off completely :cool: .

A few question I have:
1.) If I pay this off completely how will this change my credit score?
2.) How will prolonged high utilization effect my chances of getting approved for future credit cards or charge card

I'm asking question #2 because I would like to get a charge card in the near future. The new job will require me to travel a lot and it would be nice to get some points from my spending. I haven't pulled my REAL credit score but my creditkarma score is 702. I know these are fake credit scores but it gave me a little idea of where I am.

Thanks!!


Omarperez48
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Postby Omarperez48 » Thu Jul 24, 2014 1:43 pm

rockhound wrote:Hi all,

Over the past few years while I was in college I've collected a decent amount of debit on my credit card. It is currently at about 90% utilization and has been that way for some time now. I know I really got myself in a bad situation but I'm not dwelling on the past(lesson learned for sure). I'm about to start a new job and that first pay check will pay it off completely :cool: .

A few question I have:
1.) If I pay this off completely how will this change my credit score?
2.) How will prolonged high utilization effect my chances of getting approved for future credit cards or charge card

I'm asking question #2 because I would like to get a charge card in the near future. The new job will require me to travel a lot and it would be nice to get some points from my spending. I haven't pulled my REAL credit score but my creditkarma score is 702. I know these are fake credit scores but it gave me a little idea of where I am.

Thanks!!


I work in finance and get to look at credit all day long, and let me tell you that if your cards are maxed out it only shows that it is or it has been maxed out in the past, it doesn't show how long or how many times.
Let's say your credit limit is $1k it'll be display as : Limit $1k Highest $1200 Balance $100 and payments either as C for completed, 0 for no balance or numbers from 1-6 each one is a month the payment has been late. As far as how much it'll help you I was a 612 score with 80% utilization one month then I paid them down to nearly 8% and jumped to 685 next month.

Hope this helps.
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supercoolman
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Postby supercoolman » Fri Jul 25, 2014 12:22 am

Omarperez48 wrote:I work in finance and get to look at credit all day long, and let me tell you that if your cards are maxed out it only shows that it is or it has been maxed out in the past, it doesn't show how long or how many times.
Let's say your credit limit is $1k it'll be display as : Limit $1k Highest $1200 Balance $100 and payments either as C for completed, 0 for no balance or numbers from 1-6 each one is a month the payment has been late. As far as how much it'll help you I was a 612 score with 80% utilization one month then I paid them down to nearly 8% and jumped to 685 next month.

Hope this helps.


credit report does show how many months you maxed out a CC, but I believe utilization is only calculated using the latest reported data

rockhound
 
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Postby rockhound » Fri Jul 25, 2014 8:28 am

Thank you all for the information. I would like to get my official credit report after I pay off the card. Who should I use to get my credit report and scores? I saw on experian's website you could get all 3 for $40 but I wasn't sure if there was a better deal out there.

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PlyrStar93
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Postby PlyrStar93 » Fri Jul 25, 2014 10:17 am

You may use http://www.annualcreditreport.com for your free report, you can get free report from Equifax, TransUnion and Experian once a year (so 3 reports in a year, but only 1 per bureau). Each standalone report directly from credit bureau is $11.50 but you can check your state law to see if there is other discount.

Discover and Barclays provide free TransUnion FICO (no report) every month if you have card(s) with them. Otherwise you most likely have to buy from MyFICO. If it's me I would only get reports without scores. Equifax has a product that provide its report with FICO, basically the same thing on MyFICO and same price.

For your $39.95 3-in-1 report, both Equifax and Experian offer such thing, and if there is score on that it's only for your educational use and lenders do not use that. I will go for the free ones first anyways.
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takeshi
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Postby takeshi » Fri Jul 25, 2014 6:12 pm

rockhound wrote:If I pay this off completely how will this change my credit score

We can't tell you what your score will be but you're getting dinged not only for high utilization but for having a maxed card as well. You'll definitely see an improvement from dropping it. Hopefully you can get it dropped before any adverse action is taken since it has been high "for some time".

rockhound wrote:How will prolonged high utilization effect my chances of getting approved for future credit cards or charge card

Having high utilization is already affecting your odds of approval. Even if you are approved high utilization will increase your APR's and reduce the amount of credit that creditors are willing to extend. It won't be an issue once you get it dropped.

rockhound wrote:Who should I use to get my credit report and scores?

Scores are kinda pointless IMO. Creditors generally only use FICO's but unless you can purchase a score using the same CRA & model as the creditor you're applying to then the score you get and the score the creditor uses will differ. Focus on the data in your reports. Scores are based on the data in your reports so good reports will lead to good scores.

You can get reports from whereever you want. If you haven't used your annual report then get them from AnnualCreditReport. If you're just getting reports the CRA's offer the reports in the neighborhood of ~$10 each but you have to do some digging to find the link to purchase just the report without their FAKO scores and other stuff they're trying to upsell.

rockhound wrote:I haven't pulled my REAL credit score but my creditkarma score is 702. I know these are fake credit scores but it gave me a little idea of where I am.

"Real" and "fake" are irrelevant. All scores are "real" -- it's just that creditors generally don't use non-FICO scores. However, don't assume that the score you buy from myFICO is the same score that a creditor will use in its decision making.



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