How high balances/utilization affect credit score

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6 posts
itsmeandrew
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How high balances/utilization affect credit score

Postby itsmeandrew » Sun Mar 23, 2014 3:48 pm

The past two years I haven't been exactly smart with my money. I've spent more than I should have because I had a few cards with a 0% intro period. I just paid them all off with my tax return and am wondering how/if they will affect my score or how lenders view it. Two cards were up to 95% utilization for at least a few months.

I guess to put it simply, now that I've paid them off, once they report will it show my highest balance and will that affect my score or how lenders view me?
Capital One Platinum $500 (2/2010) CLOSED (1/2013)
Wells Fargo College Cash Back $1.2K (8/2011) CLOSED 3/2015
Chase Freedom (Signature) $10K (4/2012)
AmEx Zync NPSL (4/2012)
Samuels Financing $2.9K CLOSED 4/2015
Discover IT $3.95K (7/2012)
Chase Marriott Premier (Signature) $5K (9/2012)
Chase Slate $2.5K (12/2012)
Citi Simplicity $4K (3/2013)
AmEX BCE $9.5K (5/2014)
Chase Amazon $4.5K (5/2014)
Barclaycard Apple Financing $2K (6/2014)
Capital One VentureOne (Signature) $5K (1/2015)


TU (Discover): 760


MemberSince99
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Postby MemberSince99 » Sun Mar 23, 2014 4:55 pm

This won't exactly be breaking news, but obviously very positively in both cases. But that's obvious isn't it?


If you want some idea in terms of scores there are FICO score simulators out there I suggest you Google for one and plug in the data and play away. I don't know your scores or your utilization, and my best guess as to the numbers is worth exactly what you'd pay me for it, if I even cared to guess (which I don't).


Good job on paying them down.

haikuginger
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Postby haikuginger » Sun Mar 23, 2014 6:24 pm

itsmeandrew wrote:I guess to put it simply, now that I've paid them off, once they report will it show my highest balance and will that affect my score or how lenders view me?


Your reports will still show your highest balance over a period of time, but past balances aren't factored into your credit score at all. Unlike some aspects of your score, your utilization ratio doesn't have a "memory"; past values don't affect your current score.

It is possible that some lenders might look at that, but there's no way of knowing that, unless they decline you for that reason. In that case, they'd need to inform you of the details of your credit report that caused them to decline you. I don't think that's generally practiced, though; if banks actually looked at past utilization ratios, it'd be difficult to ever get anything other than a $300 starter card.

Good job on paying your balances off. I don't doubt that the next time you go to apply for a card, you won't be disappointed with the terms you get.

itsmeandrew
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Joined: Mon Apr 09, 2012 10:53 pm
Location: Utah

Postby itsmeandrew » Sun Mar 23, 2014 10:22 pm

Thank you both for your insight! My wife and I are starting to look into buying a home and being a first time home buyer, I feel like I worry a ton and want to make sure I do all I can to get the best rate and save money. It's good to know that it shouldn't affect me just from having a high balance previously.
Capital One Platinum $500 (2/2010) CLOSED (1/2013)
Wells Fargo College Cash Back $1.2K (8/2011) CLOSED 3/2015
Chase Freedom (Signature) $10K (4/2012)
AmEx Zync NPSL (4/2012)
Samuels Financing $2.9K CLOSED 4/2015
Discover IT $3.95K (7/2012)
Chase Marriott Premier (Signature) $5K (9/2012)
Chase Slate $2.5K (12/2012)
Citi Simplicity $4K (3/2013)
AmEX BCE $9.5K (5/2014)
Chase Amazon $4.5K (5/2014)
Barclaycard Apple Financing $2K (6/2014)
Capital One VentureOne (Signature) $5K (1/2015)


TU (Discover): 760

MemberSince99
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Posts: 4913
Joined: Sun May 20, 2012 4:35 pm
Location: WI

Postby MemberSince99 » Mon Mar 24, 2014 6:38 am

Nope that won't hurt you a bit. Score is dynamic. No one is going to care what it was last month or last year, they will only care what it is when you apply for your mortgage (or get your pre-approval or pre-qualification or whatever the case may be).

thom02099
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Postby thom02099 » Mon Mar 24, 2014 6:50 am

Depending on how much you paid off and the resulting change in your utilization, your score could change significantly. As a point of reference, I recently paid off some balances and my utilization went from around 13% to 5%. I gained in the area of 40+ points, and with my TU score, got above 800 for the first time in a while. As with everything credit related, YMMV. But I'd be surprised if you didn't get a sweet score increase, all other factors being equal.
Retired, and in the process of retiring cards!
EQ = 846 EX=828 TU = 836 as of 02/2016



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