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Credit utilization between 1% and 30%
July 15, 2018
11:11 am
chrischarles
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Watching my Equifax, I have been able to acheieve a decent credit rating up from low 600s a couple of years ago.
Goal would be to get close to 800 in order to get the family a viable low-interest mortgage (mid-700s now).
I had a few questions that I'm hoping folks will be able to share their insight.

Question A)
I have recently been approved for a couple Credit Cards that now gives access to quite a bit of credit.
From the reading a bunch of online resources, the consensus is to use your available credit, MORE THAN 0% every month.

There seems to be different opinions, however, on how much credit you should use:
>>>Some people say it's ok to use just 1% of your available credit
>>>Some people say you should use up to 30% of your available credit
>>>Some people say to use no more than 25% of your available credit

Question B)
The next question then relates to, is credit utilization based on a card per card basis, or is the score based on my TOTAL available credit, across all cards?
Reason for this question, is while we have access to many cards, we would like to use our preferred card that gives us access to flight reward points, and use all the other cards very little, if AT ALL.

Question C)
Another question in this mix, then relates to maximum credit limit per card:
If the right answer is to use 30% of available credit, but we have let's say for example, 3 credit cards with $20,000 limit each, does this mean that we should be using the 3 cards:
$20,000 x 3 cards = $60,000
30% of $60,000 = $18,000

Referring to Question "A", and using the "30%" line item, does this mean it is preferable to the credit bureau to spend $18,000 per month to gain credit rating? (whether it is over 1 card or many is referred to in Question "B").
This then brings up 2 questions that is also online, but I could not find clear answers:
>>>If the $18,000 is too much (not reasonable) to spend on a per month basis, should we contact the credit cards to reduce the credit limits on a per card basis?
>>>Many online resources say that if you have high credit limits, you should keep them as it takes a while / is hard to acquire credit from financial institutions > but in this scenario (using example above), $18,000 per month is not achievable.

Sorry for this lengthy multi-part post, these questions seem to be all related, and I don't think I can make the right choices without all of these pieces in place.
Thank you in advance for all of your valuable insight and answers...

July 15, 2018
3:18 pm
Norman1
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chrischarles said
Watching my Equifax, I have been able to acheieve a decent credit rating up from low 600s a couple of years ago.
Goal would be to get close to 800 in order to get the family a viable low-interest mortgage (mid-700s now).
I had a few questions that I'm hoping folks will be able to share their insight.

First, make sure that you're looking at your FICO score that some lenders actually use. Those "educational" scores that Equifax and TransUnion give out for free are not used by any lender.

Second, it really doesn't matter once the FICO score exceeds 700 or 750. See my previous post and the Globe & Mail article mentioned. The article explores why she had a score of "only" 783 and her boyfriend had a higher credit score of 846.

July 15, 2018
3:46 pm
Loonie
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I am not disputing what Norman has said, but I find it fascinating, even strange, how difficult it is to get straight answers on such important topics.
In an era where the general wisdom is that too many people have too much debt, and there are worries about people being able to pay mortgages in future, it ought to be very easy to figure out where you're at.

I suggest you have a chat with your potential lenders, see what they say, and let us know. Ask them what you have to do to get their lowest rate, and tell them you're shopping around in advance. From what you've said, you should be a desirable customer and they should be interested in talking to you and making their financial institution attractive to you.
Remember too that income has a lot to do with it, and is a separate factor.

July 15, 2018
4:16 pm
julio
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To Chrischarles:
As my experience (going on 900) indicates:
A) no more then 30%
B) total available
C) less then 30% is better
Keep all credit limits as given.
High impact: recent number of hard credit enquiries (it will purge with time only), credit utilization less then 30% (you OK here),(e.g. if 6% that is excellent), on time ALL payments (utility bills,...), (only you know), length of time credit file is open (do not close oldest account on file EVER, even if, for you, it is obsolete and located who knows where).
If you don’t have enough “monthly payments”, get a loan for $500 ( you need furniture, don’t you?), start paying it of immediately, then pay off fully in 3 month.
The above is only as I see it. Good luck.

July 15, 2018
8:42 pm
Norman1
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Loonie said
I am not disputing what Norman has said, but I find it fascinating, even strange, how difficult it is to get straight answers on such important topics.
In an era where the general wisdom is that too many people have too much debt, and there are worries about people being able to pay mortgages in future, it ought to be very easy to figure out where you're at.

Yes, it ought to be.

When providing one's credit score, Equifax and TransUnion ought to be providing one with a FICO score, that some lenders actually use. Instead, I think they are taking advantage of people's lack of knowledge. They are providing some homegrown score, that they don't have to pay fees to Fair Isaac Corporation for, that no-one actually uses for lending decisions. sf-frown

I almost wasted $20 to see my "faux" score from Equifax. I guess it is perfectly legal if they put a footnote that the given score is for "educational" use only and hint that no-one actually uses that score.

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