Target Denial.... question

Okay, forgive me folks, I have been on decongestants and feel like I'm living in such a fog.

Got my denial letter from Target. One of the reasons that it states is:

Your credit bureau report indicates a high ratio of debt to available credit.

Can someone explain this to me. I'm sorry if I seem stupid, perhaps I'm reading it wrong, but I just don't get it.

Thanks in Advance for your help.

A high ratio of debt to available credit takes into account how close your balance is to your credit limit. For instance, say you have a Capital One acct with a limit of $500.00 and your balance is $400.00. In this instance, your balance is too close to your credit limit and you have a high ratio of debt to available credit.

Hope this helps.

lb

 

Hey, no apologies needed, that's a great question.

The debt-to-available-credit ratio is simply an indicator of how much of your credit lines are being used. So, for example, if you have a Providian VISA with a $1000 line of credit, and you've spent $600 of that (leaving $400 as "available" for further charging), then your debt-to-available-credit ratio is 60%. Many new creditors want to see you use less than half of your available credit before issuing new credit. Some creditors figure that collectively (as in, all of your debts divided by all of your lines of credit), while others want to see you using less than 50% of any open revolving loan (that is, they scan your credit report and don't want to see you heavily using any particular card more than 50%).

It seems like a paradox, but they're more likely to give you new credit if you look like you don't need it. Their thinking is that people who are heavier in debt are more likely to have problems repaying.

Hope this helps!

 

LOL, I think we both were composing our answers at the same time right down to ending with the same "hope this helps" comment. (Clearly, great minds think alike.) Oh well, maybe the redundancy will help somebody.

 

He he...don't worry. Sometimes my light doesn't come on at all...LOL