question about my credit score?
Question by Christopher Latham: question about my credit score?
I have a simple question about my credit score. I use USAA credit monitoring and I used the “estimate score” function. I get to change a few factors and it will tell me how it could change my score. one field says “what is the percentage of your available credit.” If i change it to 0-15% it says it could raise my score 19 points. mine is currently 59%. so basically, is it better to have more debt than credit? or the opposite? please provide as much detail as possible on how my credit to debt ratio affects my credit score, thank you.
Best answer:
Answer by Mike
The factor you’re tweaking is “Percentage of Available Credit” and is calculated as follows:
(Total Credit Used) divided by (Total Credit Available)
Anything that drives that ratio towards zero will increase your Credit Score. In your case, it shows that if your available credit on all your accounts stays the same and you can burn down enough debt to reduce your ratio from 59% to no more than 15%, you credit will improve by around 19 points.
To answer your question more directy: it’s better to have a ton of credit available and to use none of it!
What do you think? Answer below!
You need to keep the amount of revolving debt you have to below 30% of your credit limit.
As you can see from your estimator, lenders want to see that you are not using all the credit available to you. If you are up to your eyeballs in debt, lenders are less likely to lend you more so your score drops.
59% is pretty high. The rule of thumb is 30% or less of your entire credit line (add up the credit lines on all your cards and multiply by 0.3).