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Thread: Percentage of available credit question

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    Default Percentage of available credit question

    I want to use my Care Credit account to finance a BA, but I'm unsure about whether that would be a good decision. I read somewhere that the percentage of credit you use affects your credit score, but I don't know the details, precisely. Skip to the bold if you don't care about the specifics of the math/billing dates.

    My Care Credit limit is $5,100. My BA would be $5095 total. I have already put down a $1k deposit to be financed through CC and have a $309 vet bill on the account as well. My first payment for both of those is 2/06. I have 12 months to pay off the $1k (~$84/month) with no interest, and 6 for the $309 ($51.50/month), and intend to pay ~$300 this month. I have to finance or outright pay the remainder of the surgeon's fees and the like on 2/21, then pay the hospital on 3/08.

    I have to pay the anesthesiologist in full outright, which is an estimated $560. So, if I put everything that I can on my CC account, and assuming $400 paid off of the $1,309 already on the account, I'll have $4444 of $5100 used, or 87% of my available credit on that account in use.

    I know that's not a great thing, but does it matter as much since this is a medical credit card and not a major one? Sorry if that's a dumb question.

    I can put an extra $1k or a bit more down, making it 67% or less of the available credit, but I'm in my last semester of school right now and don't really want to put much down if I don't have to. If it matters, my only other credit card is a department card I got when I was much younger, that I've used a handful of times and paid off within the first billing cycle each time. My only other debt is a small subsidized student loan that I will begin paying in June.

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    Default Re: Percentage of available credit question

    Credit utilization is definitely an element of your credit score. So to is making on time payments. I would lean toward lower utilization if possible. If that is not possible, then pay your bill on time every month and make more than the minimum payment.

    HTH
    Z

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    Default Re: Percentage of available credit question

    There are no dumb questions when it comes to credit report issues. It is complicated.

    I would suggest two things....

    1. Are you planning on making any other purchases in the next year? A car? or anything that might use your credit report like moving?
    If you arent then a dip in your credit shouldnt be too much of an issue for you. Put the thousand extra you could put down in savings.
    That way if you have any issues down the road you have a reserve to pull from.

    2. Have you called them to try to increase your credit limit now before the amount is added? It doesnt hurt to ask and it might give you some
    breathing room. They will pull your credit report to see if you qualify. If you havent had your credit report pulled recently it would worth it.

    Good for you for trying to be responsible with your credit now before any damage is done!
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Percentage of available credit question

    ^

    1. No big purchases planned for the next 1.5 years (after that, I'd like to get a new car in the $20-30k range, and I'd hopefully only be financing $5-10k for it), and I just renewed my apartment with a second 12-month lease. The only other thing I'm interested in doing in the next year is getting a basic credit card. I don't need it for anything, but I'm about to be 23, so I'm very interested in doing the most I can for my credit.

    2. I asked them to increase it be $1100 when I first considered doing my BA. I originally got the line of credit to have Lasik done, and when I applied with that, they estimated my need to be $4k and approved me for that. I didn't really considered the percentage issue when I first called, but I wish I had... I applied for it in September(ish?), and applied for the increase in December. Would it be advisable for me to call and see about another increase for breathing room, and, if so, should I have any percentage in mind?

    Thanks to both of you!

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    Default Re: Percentage of available credit question

    When is your BA?

    If you were given an increase in December it is generally best to wait six months at least.

    If you dont have any other large purchases coming soon it sounds like you should be ok.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Percentage of available credit question

    is your medical line of credit 0% interest for a period...say 12 months? If so, make sure that it is paid off in its entirety before the 12th month comes around or you will be hit with a humongous interest charge. Contact them and find out exactly when it would need to be paid in full as the 12 months interest free is from the time the charge hits your account...NOT 12 billing statements.

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    Default Re: Percentage of available credit question

    while the credit ratings agencies never publish the formulas used to calculate credit score, where 'credit utilization' is concerned I am led to believe that 33% outstanding balance versus credit limit is the 'top of the curve'. In other words, from the lender's point of view, this is the point where their rising 'interest payments' earnings curve crosses their falling 'default risk' potential losses curve.

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    Default Re: Percentage of available credit question

    is this over a period of time or just at the time of the credit pull? for example, if i had 85% credit utilization for a year making on time minimum payments and then paid everything off and a month later pulled my credit score, would it still be really bad or would it be good?

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    Default Re: Percentage of available credit question

    Quote Originally Posted by Vamp View Post
    When is your BA?

    If you were given an increase in December it is generally best to wait six months at least.

    If you dont have any other large purchases coming soon it sounds like you should be ok.
    It is 3/08, which is when I have to pay the hospital fees, and I have to pay the surgeon's fees on 2/21.

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    Default Re: Percentage of available credit question

    Quote Originally Posted by Raider View Post
    is your medical line of credit 0% interest for a period...say 12 months? If so, make sure that it is paid off in its entirety before the 12th month comes around or you will be hit with a humongous interest charge. Contact them and find out exactly when it would need to be paid in full as the 12 months interest free is from the time the charge hits your account...NOT 12 billing statements.
    They have the "due date" for 0% interest if paid in full listed on my online account, which I take screen shots of, just in case a discrepancy comes up. This is always a good reminder for this sort of question though--thank you!

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    Default Re: Percentage of available credit question

    Quote Originally Posted by Melonie View Post
    while the credit ratings agencies never publish the formulas used to calculate credit score, where 'credit utilization' is concerned I am led to believe that 33% outstanding balance versus credit limit is the 'top of the curve'. In other words, from the lender's point of view, this is the point where their rising 'interest payments' earnings curve crosses their falling 'default risk' potential losses curve.
    In this sort of formula, is my total credit limit all of my open accounts? So, for instance, my student loan, plus my department store card, plus my medical credit account? And if so, do my offered but not accepted student loans (I only took one subsidized loan but have had multiple offers through FAFSA) have any effect?

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    Default Re: Percentage of available credit question

    If we are going to get techincal....

    Credit reports ie Transunion, Equafax, and Experian only look at on time payment history and negative payment history of loans and lines of credit. Other entities ie tax, landlords, etc can petition to put items that are in collections on to the reports as well.

    FICO is what takes the percentage of available credit into consideration. This link actually goes into detail what is included in a FICO score. http://www.myfico.com/CreditEducatio...YourScore.aspx

    Most banks and credit unions use a combination of both scores to deterimine what they end up calling generically your "credit score"

    The percentage of available credit is calculated for every open line of credit. If all of your cards are maxed out it has a greater impact then if you have three credit cards and only one is maxed out.

    The most important thing to keep in mind is .... after a maxed out credit card is paid off it only takes two to three months for your score to completely rebound (if everything else on the report is positive).

    As I said before, you have done your homework and made all the right steps.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Percentage of available credit question

    Quote Originally Posted by Vamp View Post
    If we are going to get techincal....

    Credit reports ie Transunion, Equafax, and Experian only look at on time payment history and negative payment history of loans and lines of credit. Other entities ie tax, landlords, etc can petition to put items that are in collections on to the reports as well.

    FICO is what takes the percentage of available credit into consideration. This link actually goes into detail what is included in a FICO score. http://www.myfico.com/CreditEducatio...YourScore.aspx

    Most banks and credit unions use a combination of both scores to deterimine what they end up calling generically your "credit score"

    The percentage of available credit is calculated for every open line of credit. If all of your cards are maxed out it has a greater impact then if you have three credit cards and only one is maxed out.

    The most important thing to keep in mind is .... after a maxed out credit card is paid off it only takes two to three months for your score to completely rebound (if everything else on the report is positive).

    As I said before, you have done your homework and made all the right steps.
    Aha, thank you! Like I said, I'm really new to the details of credit, so this helps a lot. I should be able to pay it all back this summer, way ahead of the deadline, and ahead of when I may need to look into financing anything else. Guilt-free (and soon to be debt-free) boobies are the best kind.

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    Default Re: Percentage of available credit question

    Quote Originally Posted by tuesdaymarie View Post
    In this sort of formula, is my total credit limit all of my open accounts? So, for instance, my student loan, plus my department store card, plus my medical credit account? And if so, do my offered but not accepted student loans (I only took one subsidized loan but have had multiple offers through FAFSA) have any effect?
    Student loans are fixed loans. Meaning they are for a fixed period of time and you cant pull more money from them. Because they are not lines of credit the available credit wouldn't be an issue with these at all. These types of loans will improve your credit from positive on time payments though.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Default Re: Percentage of available credit question

    Quote Originally Posted by tuesdaymarie View Post
    Aha, thank you! Like I said, I'm really new to the details of credit, so this helps a lot. I should be able to pay it all back this summer, way ahead of the deadline, and ahead of when I may need to look into financing anything else. Guilt-free (and soon to be debt-free) boobies are the best kind.
    You are most welcome Anytime! Congrats on your new ta tas!
    Nature knows no indecencies; man invents them. ~ Mark Twain


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