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credit limit increase to lower credit-utilization ratio?


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Hi there,

 

How are you. So, I’m trying to raise my credit score in order to qualify to re-finance my mortgage on my home.  My current FICO score is 670.  Any immediate tips on how to do so?  I’m trying to take action on one item at a time.  Here’s what had in mind - my Bank of America credit card balance is $3,800 and my credit line on the card is $4,500.  Should I request a credit limit increase in order to lower my credit utilization ratio on that card?  If so, how much of a credit limit increase should I request? Will this strategy bump up my FICO at all?  If it does, should I use the same strategy with my other credit cards?  And lastly (sorry for so many questions), should I only use this strategy on card balances that are very close to the credit limits? (i.e., balance is $8,000 and credit limit is $10,000)?  Any advice would be greatly appreciated.  Take care and thank you, James

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4 hours ago, JamesPeters said:

my Bank of America credit card balance is $3,800 and my credit line on the card is $4,500.  Should I request a credit limit increase in order to lower my credit utilization ratio on that card? 

You've got the concept right.  A higher limit would help your utilization, which would have a favorable FICO impact.  

 

The problem here is that you're already at nearly 85% utilization (and seem to have additional cards with high utilization), which dramatically reduces the likelihood that you'll get a CLI

 

If you could shift your revolving debt to installment (through a personal loan, for example), that could help your scores a lot.

 

Here is a good thread on the FICO scores used for mortgages.  IME, these scores are much more sensitive to the number of cards with balances, as well as new accounts.

 

 

Edited by cv91915
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  • 10 months later...

Hello,

 

I am pretty much in the same situation as the original poster; my Experian FICO is 673 right now, and I'm trying to increase it in the short term. My utilization is very high right now (73% overall) and I would like to decrease it artificially by increasing the credit limits, but can't get approved for an increase due to my low score, and other derogatories (my most recent was a missed payment to Capital One auto loan of over 30 days, which dropped my score by 40 points). I have also considered getting a consolidation loan to pay off my two cards with the highest balances and utilization, but can't qualify for a decent one for the same reasons. I have gotten pre-approved offers for consolidation loans, but when I "check my rate" I get denied, or they try to sell me on a debt management plan instead of a debt consolidation loan; some of them sound too good to be true, so I'm even scared to respond and get roped into something that will not benefit me in the long run. I have a good income, but I can't pay down enough on my credit cards to bring the utilization down soon enough. I don't want to waste hard pulls getting denied; are there any companies that truly offer consolidation loans/credit card refinance with decent terms, to help people like me? I think a consolidation loan is what I need right now. I just want my credit score to be in a comfortable place over 700. Thank you for your help. I just bumped into this website, and I see the wealth of information it offers. 

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9 hours ago, ODETTE said:

Hello,

 

I am pretty much in the same situation as the original poster; my Experian FICO is 673 right now, and I'm trying to increase it in the short term. My utilization is very high right now (73% overall) and I would like to decrease it artificially by increasing the credit limits, but can't get approved for an increase due to my low score, and other derogatories (my most recent was a missed payment to Capital One auto loan of over 30 days, which dropped my score by 40 points). I have also considered getting a consolidation loan to pay off my two cards with the highest balances and utilization, but can't qualify for a decent one for the same reasons. I have gotten pre-approved offers for consolidation loans, but when I "check my rate" I get denied, or they try to sell me on a debt management plan instead of a debt consolidation loan; some of them sound too good to be true, so I'm even scared to respond and get roped into something that will not benefit me in the long run. I have a good income, but I can't pay down enough on my credit cards to bring the utilization down soon enough. I don't want to waste hard pulls getting denied; are there any companies that truly offer consolidation loans/credit card refinance with decent terms, to help people like me? I think a consolidation loan is what I need right now. I just want my credit score to be in a comfortable place over 700. Thank you for your help. I just bumped into this website, and I see the wealth of information it offers. 

What score model is your 'Experian FICO' calculated from?  What is the purchase you are trying to increase a score to accomplish?  Trying to raise an apple when you need a banana if a fruitless endeavor.  It is the same as those who want to look at FICO8 scores when thinking about a mortgage and don't realize that mortgage models look at things other than FICO8 or FICO9 puts more emphasis upon...

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3 hours ago, centex said:

What score model is your 'Experian FICO' calculated from?  What is the purchase you are trying to increase a score to accomplish?  Trying to raise an apple when you need a banana if a fruitless endeavor.  It is the same as those who want to look at FICO8 scores when thinking about a mortgage and don't realize that mortgage models look at things other than FICO8 or FICO9 puts more emphasis upon...

Hi Centex. That is my FICO8. I don't have a particular purchase to make; not buying a house or car or any other major purchase in the near future; I just want my credit score in a good place for whenever I do need something major. Right now I feel like I am too close to the possibility of my score sliding down more because of my utilization. I can't pay down debt as quickly as I would like, and it's hard to get approved for a consolidation loan with a reputable creditor. I just want to improve my score in general. Thank you for your response.

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3 hours ago, ODETTE said:

Hi Centex. That is my FICO8. I don't have a particular purchase to make; not buying a house or car or any other major purchase in the near future; I just want my credit score in a good place for whenever I do need something major. Right now I feel like I am too close to the possibility of my score sliding down more because of my utilization. I can't pay down debt as quickly as I would like, and it's hard to get approved for a consolidation loan with a reputable creditor. I just want to improve my score in general. Thank you for your response.

I'll be brutally honest...if you cannot get a consolidation loan with a 'reputable creditor,' then right now may not be the time to seek a CLI without carrying a high risk of a CLD coming from the request.  In trying financial times, banks will view risky behavior, which includes seeking a CLI when already close to a limit, as signs of potential bust-out behavior and will take steps to protect their interest. 

 

I would focus on shoveling as much as possible each month to the accounts with the highest APR.  It does not take much to show results.  Remember that minimum payments are basically designed to cover the interest plus one percent of the outstanding balance.  Even as little as $50-100 per month can clear a balance within a few years (if not sooner). 

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Hello,
 
I am pretty much in the same situation as the original poster; my Experian FICO is 673 right now, and I'm trying to increase it in the short term. My utilization is very high right now (73% overall) and I would like to decrease it artificially by increasing the credit limits, but can't get approved for an increase due to my low score, and other derogatories (my most recent was a missed payment to Capital One auto loan of over 30 days, which dropped my score by 40 points). I have also considered getting a consolidation loan to pay off my two cards with the highest balances and utilization, but can't qualify for a decent one for the same reasons. I have gotten pre-approved offers for consolidation loans, but when I "check my rate" I get denied, or they try to sell me on a debt management plan instead of a debt consolidation loan; some of them sound too good to be true, so I'm even scared to respond and get roped into something that will not benefit me in the long run. I have a good income, but I can't pay down enough on my credit cards to bring the utilization down soon enough. I don't want to waste hard pulls getting denied; are there any companies that truly offer consolidation loans/credit card refinance with decent terms, to help people like me? I think a consolidation loan is what I need right now. I just want my credit score to be in a comfortable place over 700. Thank you for your help. I just bumped into this website, and I see the wealth of information it offers. 


Right now worrying about your credit score should be the least of your worries. Your credit score is NOT keeping you from a credit limit increase.

Unless you are looking to purchase a home, virtually no potential creditor takes your credit score into account in approving your credit application. They look at the data you provide on the credit application, the raw data on your credit reports and and internal data they already have on you. Your credit score only comes into play after approval and then it is used to set certain terms of your newly approved account such as, for example, APR and, in very rare case, credit limit.

What is killing you is not your credit score, but your recent derogatory entries on your credit reports. Even were your credit score in the 700s, you would still get denied.

Right now I would beg, borrow or steal -- well, ok, maybe not steal -- money to get your current credit card balances reduced as much as possible until you can finally get 0% utilization. In the meantime, look at what got you into that situation in the first place and make the necessary changes to ensure it never -- yes, never -- happens again. Otherwise all your efforts will be in vain.

While you are getting those balances down and under control, post details about those derogatory tradelines to see if someone cannot help you deal with those. Then you won't need to worry about your credit score. It will fix itself.


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Thank you PotO. I want to borrow (not beg or steal 😄) on a consolidation loan or line of credit to pay off the two cards with the highest balances an utilization. I received two pre-approved offers in the mail today, but I hate those, because they don't ever turn out to be truly pre-approved, or it ends up not being as they advertised. As much as I hate to resort to that, I think it's my best bet to bring down my utilization in the short term; coming up with the amount of money I would need to pay down my revolving debt enough would take a very long time. Trust me, I tell myself the same thing; I know what got me here, and I will never be in this predicament again; I just need to get out of it now and start over. Thanks again.

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Thank you PotO. I want to borrow (not beg or steal ) on a consolidation loan or line of credit to pay off the two cards with the highest balances an utilization. I received two pre-approved offers in the mail today, but I hate those, because they don't ever turn out to be truly pre-approved, or it ends up not being as they advertised. As much as I hate to resort to that, I think it's my best bet to bring down my utilization in the short term; coming up with the amount of money I would need to pay down my revolving debt enough would take a very long time. Trust me, I tell myself the same thing; I know what got me here, and I will never be in this predicament again; I just need to get out of it now and start over. Thanks again.

I've never looked for consolidation loans, but I do get offers in e-mail almost every day for Lending Tree and other such entities.

 

IMO, you are better off looking at a bank or a credit union where you already have established business. I do not imagine you will be given a decent APR, but it is likely better than the AP on your credit card. If however, it is not, then forget the loan.

 

Another thing people do is find a new credit card with a balance transfer offer. With very high utilization, however, you may likely face big challenges getting approved for new credit. Even if you can, without solving the underlying issues which resulted in this problem in the first place, you would just be burying yourself in a bigger pile.

 

You may just find that your only option is to just keep the status quo and pay as much as you can on your current accounts, probably starting with those with the highest APR. Once things are paid off, you can start enjoying your credit life and never get into the same mess again.

 

It may help if you can list your card issuer / balance / credit limit. Maybe we can see something there that would help.

 

 

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Hi PotO,

 

Yes, at the moment I'm just standing fast; as you said, I don't want to do anything that will cause any more problems in the future. At this point, I'm just going to try to pay down as I can, and just build on that. It may take a while, but I have to stop digging the whole.

 

Thank you.

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