Does anyone else watch Susie Orman? She’s always talking about your credit score and your FICO score. We’ve recently paid off two really high cc debts. So I’d like to get the lowest interest rate on the final credit card. BUT the other two were such high limits that I can’t get any new cards because my debt ratio is too high even though we don’t really owe that much. So I’d like advice on if changing the balance on the cards that are paid off to lower for example 12000 to 1000 would improve that FICO score. Does anyone know?
Your FICO score doesn’t dock you for high limit levels. 30% of your score is based on your debt to limit ratio. So if you’ve paid off two cards and have high limits, that should help your FICO. The other factors are 15% history (length of time you’ve had cards open – that’s why it’s best not to close your cards), 35% paying on time, and 10% new applications for credit. Basically, any new application for credit drops your score about 5 points – and that lasts for approx 6 months.
Scores are only calculated every 30 days, so I’d wait if you just paid those cards off. Then pull your own score, which sadly will differ from the one the bank pulls. A consumer score always shows higher than the score loan companies pull.
Is that what you were asking? 🙂
You can call the credit cards with the high limits of available credit and ask them to lower them.
If you had $1000 available and you asked that the limit be lowered to $500 and you had a $500 balance, you would be using 100% of your available credit (maxed out), vs. 50% of your available credit.
That could help, since you will not be showing a huge amount of credit available to possibly go out and run up more debts. I hear that is a concern of credit cards. That and they don’t want to lower your interest rates at all, so they make more money.
Yes that’s what I was asking. I have a discover card from college (long time ago) that I keep open for that reason. I don’t use it though. I have a Chase that we recently paid off. I have another card that I only use for small online purchases that I pay off each month. Then we have our disney card that we have a balance on. I am trying to get a low interest rate from someone but they say our debt ratio is too high. I know it isn’t anymore though. But thanks for the 30 day advice that’s probably what happened.
It probably hadn’t posted yet. I guess I’ll check our scores and try again to get no interest. Or something lower than the ten we’re paying now.