Available credit

For just about anything you want to get off your chest about credit cards.
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MemberSince99
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Available credit

Postby MemberSince99 » Tue Jan 01, 2013 10:05 pm

I was reading on the FICO forums and one poster said "I have 65k in available credit to me". And I got to thinking about that, I mean really thinking about it and what it means.

Of course over there they are absolutely fanatics that utilization must be EXACTLY 4% (3.9% doesn't show devotion to the cards, and 4.1% is a HUGE red flag to lenders....humor, sort of). But, in all seriousness, there IS a point that actually is a red flag and probably trouble. So say you have a card with a 10k limit for the sake of argument. And say you use it during the month to pay all your bills, and end up with 5k reporting. You pay it in full before the due date, but to hear them tell it, you are now a credit terrorist because you have 50% utilization. And honestly, that WILL lower your score a bit. But, and there is a but, but you had the money in the bank and you paid it off so what is the big deal?

I'd say in general, there isn't one. As long as you can and do pay it off, and aren't out to game your score (which makes you so NOT like the rest of us), and aren't going for a car or new credit or mortgage, it's NOT a big deal. But if you are doing any of those things, then it's smart to make sure that only a small amount hits your report for the best score and thus the best terms.
Also some lenders may be like the FICO folks and freak out if they see that and take AA on you as well. But honestly if they freaked over THAT, my feeling is, don't need em anyway, but you may feel different.

So, roundabout way to get to the point, lenders may give you a limit, but they sure don't actually want you USING that limit as that will freak them out. But they do want you using the card. But only 4% of the card can report each month or they freak out. So even if you have a 10k limit card, you had best only allow 400 dollars to hit it when it reports. That means effectively if you really think about it, your "practical" limit is 400 bucks, unless you like paying early AND they don't do a mid-cycle report like Discover of fond of doing and so on. And if you have a Cap One rebuilder card with a 300 limit, well ideally then that gives you 12 bucks. Don't spend it all in one place!

In short, the rules of the credit game are nuts, and will drive you nuts if you waste too much time and energy thinking about them, kinda like I just did.....

But the bottom line - just keep this stuff in mind. I'm not a fanatic like the FICO guys - I'm a different sort of fanatic - I pay in full as soon as the charges hit so I never see this become a problem. I rotate cards so I can let only one report a balance most of the time. But you know, you could go on and on about that and gaming that whole thing too and anyone who read this probably already died of boredom so enough for tonight!


Robrus1
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Postby Robrus1 » Wed Jan 02, 2013 8:24 am

I don't really understand this 4% utilization rule/guideline. I have never been a utilization nut, given I have never had cards maxed or anything, but I don't mind if one of my cards reports with 40-45% utilization. It has never hurt me in the past. I mean, I've done this quite a few times since applying for several new cards this year and I get instant approval on everything and my credit scores still look good, so I don't understand why some people think this is so paramount. If people are going to freak out about utilization, they should just use a charge card.
Amex Platinum
Amex BCP 21K
Amex SPG 5K
Barclaycard Arrival Plus WEMC 5K
Chase Sapphire Preferred 23.5K
Credit Union 10K
Discover IT 7.75K

Randiesel75
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Postby Randiesel75 » Wed Jan 02, 2013 8:35 am

Great post. As a member of myFICO I can attest to the fanatics on the utilization piece. Like Rob, I am somewhere around 40-50% utilization. It has never been something I have watched, but as I project to take out my first mortgage within 6-9 months, this is something on my radar.

I did just apply and was approved for a new CSP card. I am a bit pissed with myself for not doing this a few months earlier as now I have this hard pull on my report. I really hope this isn't the difference maker when the time comes for the mortgage loan. Oh well, we live and we learn.

FutureBillionaire
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Postby FutureBillionaire » Wed Jan 02, 2013 8:55 am

I keep my utilization at 10% to show that I use my cards and credit and use them responsibly. I want lenders to give me credit and not take away any of my limits.
Gas: Discover It, Penfed Platinum Rewards x2, Chase freedom, Citi TYP
Plane tickets: CSP
Groceries: AMEX BCP, Penfed Platinum Rewards,Citi TYP
Clothes: Express, Amex BCP, Discover IT
Amazon: Citi Forward, Cash +
Restaurants: Citi Forward, Chase Freedom, Discover IT, CSP
Hotels and other travel: Discover Escape, CSP
Movies: BofA travel rewards visa signature(fandango), Discover IT, Citi Forward, Freedom
Bars, clubs, tomfoolery: CSP, Citi Forward, Discover IT, Freedom
Balance transfers: Kroger 123 rewards
Bill Pay: Chase Ink Plus, Citi Forward
Everyday spending: Bofa Accelerated cash rewards amex, Discover Escape

Robrus1
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Postby Robrus1 » Wed Jan 02, 2013 9:16 am

To clarify, I never carry a balance, and my normal utilization is around 10-20% of available credit on one card, with all the others at a 0 balance, but occasionally, like during Christmas, if my main card reports with a 40 or 50% utilization, it doesn't concern me. Maybe it should, but it just seems silly that every 500 dollars I put on my csp I need to go pay it off to put another 500 on it. I'd have to pay it 4-5 times a month and that seems like a pain.
Amex Platinum
Amex BCP 21K
Amex SPG 5K
Barclaycard Arrival Plus WEMC 5K
Chase Sapphire Preferred 23.5K
Credit Union 10K
Discover IT 7.75K

Robrus1
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Postby Robrus1 » Wed Jan 02, 2013 9:30 am

Randiesel75 wrote:Great post. As a member of myFICO I can attest to the fanatics on the utilization piece. Like Rob, I am somewhere around 40-50% utilization. It has never been something I have watched, but as I project to take out my first mortgage within 6-9 months, this is something on my radar.

I did just apply and was approved for a new CSP card. I am a bit pissed with myself for not doing this a few months earlier as now I have this hard pull on my report. I really hope this isn't the difference maker when the time comes for the mortgage loan. Oh well, we live and we learn.


I wouldn't think this would be much of a factor in your mortgage loan.
Amex Platinum
Amex BCP 21K
Amex SPG 5K
Barclaycard Arrival Plus WEMC 5K
Chase Sapphire Preferred 23.5K
Credit Union 10K
Discover IT 7.75K

kcarter609
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Postby kcarter609 » Wed Jan 02, 2013 11:45 am

I let mine report with whatever. If I know that I'm going to apply for something at a specific time, I'll make sure they report with under 10%. Otherwise it doesn't matter as long as you pay in full.

Active Cards:
Chase Freedom 10+10 Visa Signature ($9k Limit - 8/2012)
Chase Sapphire Preferred ($10k Limit - 2/2013)
Chase Ink Plus ($7k Limit - 2/2013)
Discover IT ($9.5k Limit - 10/2012)
AMEX Zync (No Pre-set Limit - 1/2010)
AMEX Blue Cash Everyday ($20k Limit - 1/2013 - Backdate to 1/2010)

FutureBillionaire
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Postby FutureBillionaire » Wed Jan 02, 2013 12:18 pm

I don't think utilization is the biggest deal, per se. I think the issue is what is reported to credit bureaus. If your report shows multiple accounts with balance greater than 30% of the available credit, you will have some credit lines slashed.
Gas: Discover It, Penfed Platinum Rewards x2, Chase freedom, Citi TYP
Plane tickets: CSP
Groceries: AMEX BCP, Penfed Platinum Rewards,Citi TYP
Clothes: Express, Amex BCP, Discover IT
Amazon: Citi Forward, Cash +
Restaurants: Citi Forward, Chase Freedom, Discover IT, CSP
Hotels and other travel: Discover Escape, CSP
Movies: BofA travel rewards visa signature(fandango), Discover IT, Citi Forward, Freedom
Bars, clubs, tomfoolery: CSP, Citi Forward, Discover IT, Freedom
Balance transfers: Kroger 123 rewards
Bill Pay: Chase Ink Plus, Citi Forward
Everyday spending: Bofa Accelerated cash rewards amex, Discover Escape



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