optimizing exposure, DTI, utilization ratios - what's the secret formula?

[stevenm]

I understand that to optimize one's credit score is to be aware of various ratios:

 

the number of credit cards I have

the total amount of credit available to me

the % of that credit I have utilized (debt to income ratio)

 

My income also plays a role but that's not something I can adjust as easily as the above (!)

 

I understand that other sources of debt (mortgage, car payment, etc) play into some of this.

 

SO, at a given income, is there a magic combination of ratios for the above that will make potential creditors the happiest?

 

Thanks,

Steve

 

 

[MarvBear]

FICO does not use your personal income as any measure to calculate any of their scores.

[shifter]

the % of that credit I have utilized (debt to income ratio)

util is not DTI. util is amount of debt to amount of total credit and has nothing to do with income. if you have 5k in debt and 10k in total credit, you're util is 50%. if you raise your total credit to 100k and do nothing with the debt, you now have 5% util.

 

DTI only comes into play on human reviews of applications. in that case, the lower debt and higher income the better. $0 debt is best. there is no formula for that.

[cv91915]

And UTI is a urinary tract infection, FYI.

[funkiehouse]

And UTI is a urinary tract infection, FYI.

 

Time for some cranberry juice!!

[stevenm]

OK so then "util is amount of debt to total credit"...is there a happy % for that? Too low a % and you could be looked at as at risk for getting in over your head if you suddenly decide to use it all. Too high and you could be considered already over your head (depending on your income (???))

[shifter]

yes 1% is ideal. 0% is bad, it has to be 1%.

[mariuszh]

OK so then "util is amount of debt to total credit"...is there a happy % for that? Too low a % and you could be looked at as at risk for getting in over your head if you suddenly decide to use it all. Too high and you could be considered already over your head (depending on your income (???))

 

All cards but one at 0%.

 

The one card with a balance - A few dollars to 1% of that card.

Edited December 19, 2013 by mariuszh

[cv91915]

OK so then "util is amount of debt to total credit"...is there a happy % for that? Too low a % and you could be looked at as at risk for getting in over your head if you suddenly decide to use it all. Too high and you could be considered already over your head (depending on your income (???))

 

Consistently low use of available credit is a strong predictor of future low use of available credit.

[stevenm]

CV, I am not sure if I am putting you on the spot or not here, but is that your personal opinion (it is certainly one way to look at it) or is it documented that that's "what a creditor thinks" when they see a history like that on a credit report?