Tuesday, August 02, 2005

Credit utilization can affect score in several ways


Would you like to hear from the horse's mouth?

Here's what Craig Watts, public-affairs manager for Fair Isaac, the company that created the FICO credit score has to say about what's factored into your credit score:

a.Your credit utilization for each active revolving account, such as credit cards and some home equity lines of credit.

b.Credit utilization for all active revolving accounts.

c.Credit utilization for each active installment account you have, such as a mortgage, auto or student loan.

d.Credit utilization across all active installment accounts

And what does this mean to you?

Say you have 5 credit cards with a limit of say $20000 each. You have not used 4 of them for the past six months or so and the balance on the 5th card is $18000 means you are utilising 90% of your limit for that card and it means a red flag on your credit score.

But it also takes a overall picture in view and that way your utilization is just 18% and it is good for your credit score.

So what can you do about this?

Make sure that you limit yoursel to just 30% of your total credit limit.

Andhave a great day,


Johncy Edward

Credit utilization can affect score in several ways


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