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  1. #1
    Registered User Junior Member
    Posts
    45

    Tips to improve credit utilization

    Does anyone have some tips to improve my credit utilization ratio, besides just using my cards less and paying down balances? I'm doing that type of stuff already.

    Thanks!


  2. Tips to improve credit utilization
  3. #2
    Registered User Senior Member
    Posts
    195
    I'm not sure where you are at in your management of your credit utilization. But I think your ultimate goal should be to get your overall utilization ratio down to 30%, and have no more than 50% utilized on any one card.

    Now, I know that a lot of people trying to improve their debt and credit situations tend to max out balance transfer cards to get breathing room. And I would definitely try to get any 0% APR balances down to more ideal thresholds after paying down/off that high interest rate debt.

    FYI, one trick I used was to ask for credit line increases after showing improved responsibility. That really helped improve my credit utilization.

  4. #3
    Registered User Pro Member
    Posts
    556
    You might even want to consider opening a new card, in addition to adding to your current credit lines and paying down existing balances. Working multiple combinations will do the most to improve your utilization ratio.

    Of course, for your long term financial health, I recommend paying down your balances as much as possible, from highest rate to lowest.

  5. #4
    Registered User Senior Member
    Posts
    171
    Quote Originally Posted by creditwatcher View Post
    I'm not sure where you are at in your management of your credit utilization. But I think your ultimate goal should be to get your overall utilization ratio down to 30%, and have no more than 50% utilized on any one card.

    Now, I know that a lot of people trying to improve their debt and credit situations tend to max out balance transfer cards to get breathing room. And I would definitely try to get any 0% APR balances down to more ideal thresholds after paying down/off that high interest rate debt.

    FYI, one trick I used was to ask for credit line increases after showing improved responsibility. That really helped improve my credit utilization.
    What if you have a mortgage and an auto loan? You would need a lot of credit cards with $0 balances to get down to 30% utilization.

  6. #5
    I think the tips provided are great for improving credit utilization. To recap:

    1. Pay down your debt, highest interest rate to lowest.
    2. Ask for credit line increases or add credit

    I also think the 30% rule is generally correct. Creditors like to see that your revolving credit utilization is no more than 30%, ideally with no more than 50% utilized on any one card.

    Even better, for those who seek stellar credit scores, limit utilization to 15%, and utilize no more than 30% of the credit line available on any one card.

    And I also want to reaffirm that having installment debt like auto loans and mortgages will show you using a higher rate of available credit. But the ratios listed above really apply to revolving debt like credit cards.

    Creditors will look also to your ratio of installment debt (like auto loans and mortgages) to your revolving debt. For this, my understanding is that creditors like to see a 2:1 ratio of installment debt to revolving debt.

  7. #6
    Registered User Junior Member
    Posts
    36
    Quote Originally Posted by CreditDave View Post
    I think the tips provided are great for improving credit utilization. To recap:

    1. Pay down your debt, highest interest rate to lowest.
    2. Ask for credit line increases or add credit

    I also think the 30% rule is generally correct. Creditors like to see that your revolving credit utilization is no more than 30%, ideally with no more than 50% utilized on any one card.

    Even better, for those who seek stellar credit scores, limit utilization to 15%, and utilize no more than 30% of the credit line available on any one card.

    And I also want to reaffirm that having installment debt like auto loans and mortgages will show you using a higher rate of available credit. But the ratios listed above really apply to revolving debt like credit cards.

    Creditors will look also to your ratio of installment debt (like auto loans and mortgages) to your revolving debt. For this, my understanding is that creditors like to see a 2:1 ratio of installment debt to revolving debt.
    This is the kind of stuff that keeps me coming back here! Great tips.

  8. #7
    Registered User Junior Member
    Location
    LA
    Posts
    25
    I agree with Maria. You might want to open a new card and ask for credit line increase on your current cards as well. You should try to keep your utilization at no more than 20-30%.

  9. #8
    Registered User Junior Member
    Posts
    45
    Thanks for the ideas.

    I've done a couple of things people suggested. I got a couple of small credit limit increases. I opened a new card - though only got $1,500 as a limit. And I've been charging less.

    I'll let you know how these changes work out.

  10. #9
    Registered User Senior Member
    Posts
    195
    Quote Originally Posted by MtnMama View Post
    Thanks for the ideas.

    I've done a couple of things people suggested. I got a couple of small credit limit increases. I opened a new card - though only got $1,500 as a limit. And I've been charging less.

    I'll let you know how these changes work out.
    Good luck!

  11. #10
    Registered User New Member
    Posts
    1

    Pay down and diversify

    When it comes to high credit scores, the less important factors comprising the FICO Credit Score will matter more to you. So, let's break it down:

    35% payment history - sounds like you have it covered
    30% amounts owed - pay down to 10% of available balance and keep it there.
    15% length of credit history - not much you can do but don't close old accounts.
    10% new credit - don't apply for stuff excessively
    10% types of credit in use- here's where it gets hairy - the more different producs you have, it's considered you are more savvy as a consumer.

    For example, if your credit limit is currently $5,000, but you usually charge $2,500 to your card every month, you're regularly hitting a 50% credit utilization ratio. But if you raise your credit limit to $10,000, you can spend the same amount every month and only get as high as a 25% balance-to-limit ratio

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