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eyeguy123

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Credit utilization score mixed signals
CK states a low utilization increases your credit score. My bank is telling me that having large amounts of available credit is viewed as possible debt which in their calculations reduce my ability to pay back a loan. Doing what CK say to increase my score makes me less likely to be able to get a loan. What are your experiences?

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I don't know where your banker

got their info, but as a general rule credit scores are based on how you use your credit over a period of time, not just on what available credit you have at the moment.  

I would ask your banker to show you where that info is coming from and weather that is a personal opinion or a bank policy.  Since credit scoring in general wants you to have high available credit and low usage. Thats not just a CK thing, its on all the financial sites that I use.   

My personal finance guy spells out these bullet points as what your financial goals should be for an excellent credit score. 

Total available credit of 1 to 1 1/2 times your annual income.  Total credit usage between 5%  and 15% max.  Minimum number of accounts in the 5-10 range with a mix of Credit card, personal and auto loans and hopefully a mortgage.  

Credit scrores are based on algorithiums that average your payments, you available credit etc over a period of time. Its the law of averages that gives the lenders an idea of how you will handle credit in the future. Of corse it is "possible debt"  but that is what scores are based on.  

 I have 193K of available credit carring debt of about 9K,  Thats $184,000. of potential debt. Yet, last month I qualified for a auto loan of $30K with a phone call to my credit union. 

Credit scores are based on how you use your credit over time.  If you have a short credit history and are young,  they may not trust that you will handle it well in the near future and maybe just need more time to build up that history.  Maybe you should shop around and find another banker.  I find that Credit Unions are best. they tend to be smaller and they try to build relationships with their members.  in General They will work with you to build your credit, its what they do.  

Good luck.  

Top Contributor
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Low credit utilization does help your scores. What your banker is referring to is "debt to income ratio" issues. The greater the lines of credit that you have the greater your debt to income ratio will be and this can prevent you from getting further credit. Low credit utilization and the amount of credit extended to you really are two different things even though they do relate to each other. My best advice is to read everything that you can about credit, that will provide you great benefit for the future.

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