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Why does Equifax tell me this?

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Stupid questions coming up....

 

I was looking over my Equifax report that I pulled a week or so ago. It says one of the things that is affecting my score is "The proportion of balances to credit limits on your bank or national revolving accounts is too high".

 

Now, I'm not overly concerned because I don't plan on applying for anything in the near future, but I'm wondering what exactly does that mean? Do they use ALL my CC's and the total balances? Or do they look at them individually?

 

Why do I ask? When I add all the credit limits that Equifax shows, and all the balances each one has reported, I don't think I'm even near 10% of my total available credit limit. (I hate math so I didn't even try to figure it out. If I'm way off, well, I'm sorry.)

 

I don't carry a balance, I generally pay in full a couple days after the statement cuts. But I'm wondering if they do it individually.

 

--My BMO MC reported about $1600 on a $17500 limit.

--Canadian Tire MC reported about $2400 on a $3000 limit (hey, I had to buy 2 sets of winter tires!).

--TD Visa reported a zero balance, with 15000 limit.

--CapOne reported a zero balance, with a 2500 limit.

--Amex hadn't hit the report yet. Best Buy/Chase hasn't hit either.

 

All of the above are reported as 'revolving'.

 

The only other thing on my report is an 'installment' auto loan. 16k still owed on a 21k loan. (I should really pay this one off, but I'm concentrating on my mortgage for the next few years. I don't want to leave myself short.)

 

Is it the auto loan that caused that "your balances are too high" notification from Equifax? The note from Equifax specifically says 'revolving' so I don't imagine that the auto loan was considered as it's listed as 'installment'.

 

Or do they look at the 2400/3000 Can Tire and think I'm pushing the limit so I must be a deadbeat and that is what triggered the note from Equifax? Or is 10% of all my CCs really considered too high?

 

Just wondering, that's all.

Edited by Stu.Padaso

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From what I've found on their site it seems to be a total average across all accounts. I could be very wrong, but that's how it seems to read. There was something on the FAQ page on the Equifax site which I cannot for the life of me find now, but it's there if you want to do some fishing.

 

And also I think that's a stock message. I rarely let more than 10% of my charges in a month actually print on a statement. Once I let 30% report since that seems to be the upper limit that FICO will allow without wigging out. It's on my Equifax report. lol

 

Also, your installment accounts do not count in debt/limit ratio calculating. It would be unfair of them to allow that to happen because you'd always be at 100% since your limit auto-lowers each time you make a payment to an installment acct. Also, the payment terms are entirely different. That's one of the ways that WFF catches people and drags their score down. They have a "line of credit" that reports as a revolving acct, but works like a term loan that is re-accessible upon completion of payment so it's always at 100% usage.

 

I think you're doing just fine with the 10% of all usage, but gawd find yourself a balance transfer promo, dude! lol Surely TD has something to offer you or BMO. I'm going to toss a link in here - mods pls remove if it violates rules in any way... http://www.redflagdeals.com/forums/mbna-0-...ead-2-a-813854/ The link shows the info/promo codes for MBNA 0% balance transfers on their mastercards. If those tires are going to hang around for a while that might be a good option. Then once that's done you could swap it over to the MBNA SmartCash card with the ridiculous gas/groceries cashback.

 

IMHO, Stu, you're doing fine!

 

And glad for the activity in the forum today. I was starting to worry we'd be all holding our breath until Rob gets his stuff back in the mail in about a month. lol

 

Q

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Oh, I never carry a balance from month to month. I always pay in full. It's just my purchases were a little heavy and the statements were cut before I could make some payments. So I don't really need a Balance Transfer option. I appreciate your suggestion and concern.

 

My high limit doesn't auto-lower on the auto loan, as you thought. The 'installment' auto loan (HSBC, btw) shows a 'high limit' of 21k and that's the original amount of the loan. That always stays the same every time I check my reports. It also shows the monthly payment amount, and then balance outstanding (16k, on my most recent report). The balance outstanding obviously declines as the months pass.

 

So I wonder if that's what it is. Is HSBC perhaps reporting it incorrectly?

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Nope it's not reporting incorrectly. Sorry I should have been clearer: it'll report showing that high limit which is the original borrowing amount, but for the purposes of the algorithm for scoring the limit is identical to your current balance owing. Installment accts have minimal effect on our scores anyway unless they're negative. They do fit the big picture that the bank look at though when deciding to extend further credit.

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