If I have higher than average debt load, but an income higher than average also, why is my credit rating dinged so hard for having $38K of debt? Just pulled reports from the big 3. One gave a score of 678. I have NO late pays or negative remarks anywhere. I have 9 open lines including a house, rental condo, 2 cars, Amex green, Amex Optima, Citi Visa, and a couple inactive '0' balance cards. The Visa and Optima have $37K used of $40K limit. I realize I should have the usage down around $20K, but is that extra $17K of revolving debt lowering my score that much? My d/i based on monthly payments is 22%. Thanks for any input and sorry for the long winded question.
Even though you may be living well within your means, credit scoring doesn't take into effect your income. FICO sees you as carrying a large amount of debt, hence your scores will suffer
This right here can make your score significantly lower. It is not a problem that you owe 37k. Heck, I owe more than that and my scores range between 729-746 depending on the CRA. The problem your utilization ratio which is 92.5% (37k/40k). You need to decrease the ratio. There are two ways to do that. Either less debt or higher limits. My limits are well over 200k, so my ratio is relatively low.
If is fine to have debt to income; but that does not figure into credit scoring. What figures in is balance to credit limit ratios per account specifically: Say you have a $10,000 card well if you have $8,000 balance - then: 8000 divided by 10000 = 80% utilization. Prime would be below 40% or lower the better. It is better to have serveral accounts with lower then 40% utilization then it is to have a few accounts all maxed out. So if you have extra cards right now; with zero balance - transfer some of your debt over to the other card. Distribute the excess of of these higher balance cards. So if you can in the above example balance transfer $4,000 over to another account this will make the difference.
Why is my credit rating dinged so hard for having $38K of debt? wondering ================ Because The credit scoring fraud has nothing to do with ability to pay. It is geared toward generating profit with lower scores generating the higher prices for insurance premiums and interest on loans. If your scores were higher as they should be based on ability they would not be overcharging you on these items as they now are. THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
1*Even though you may be living well within your means, credit scoring doesn't take into effect your income. 2*FICO sees you as carrying a large amount of debt, hence your scores will suffer bailey ********************* **** ** ** ** ** * 1*Because if it did it would generate higher scores and they couldn't justify bilking you on insurance and finance charges. 2*Actually you wallet does the suffering. THE END ** *** ** LB 59 """""""""```~~~```'"""""""""
