Personal Finance

Credit utilization question

  • Last Updated:
  • Apr 14th, 2018 3:18 pm
[OP]
Deal Addict
User avatar
Jan 9, 2011
4779 posts
4664 upvotes
Vancouver

Credit utilization question

Is credit utilization for credit score purposes averaged out among all your open accounts, or is it per account? Example:

Scenario 1) Account A $10,000 limit, $0 balance, account B $20,000 limit, $8,000 balance.
Scenario 2) Account A $10,000 limit, $8,000 balance, account B $20,000 limit, $0 balance.

Is scenario 2 worse because of the 80% utilization on account A? Or do both scenarios average out to be equal?
18% = GTA residents as a proportion of Canada's total population
97% = chance that an RFDer lives in the GTA when he posts something location specific, without giving a location

Were you hit with surprise customs/import fees on an Amazon.ca purchase?
6 replies
Deal Addict
Apr 21, 2014
2026 posts
778 upvotes
Alberta
Kiraly wrote:
Apr 14th, 2018 12:42 pm
Is credit utilization for credit score purposes averaged out among all your open accounts, or is it per account? Example:

Scenario 1) Account A $10,000 limit, $0 balance, account B $20,000 limit, $8,000 balance.
Scenario 2) Account A $10,000 limit, $8,000 balance, account B $20,000 limit, $0 balance.

Is scenario 2 worse because of the 80% utilization on account A? Or do both scenarios average out to be equal?
It takes the total of your entire balance/entire credit limit. Do in either scenario your credit utilization will be 8k/30k.
Sr. Member
Mar 3, 2015
698 posts
94 upvotes
Scarborough, ON
8k is too much debt if your total credit limit on all accounts 50k.

Keeping Credit utilization above 5% means hard to qualify for limit increases down the road future.
[OP]
Deal Addict
User avatar
Jan 9, 2011
4779 posts
4664 upvotes
Vancouver
abc123yyz wrote:
Apr 14th, 2018 12:44 pm


It takes the total of your entire balance/entire credit limit. Do in either scenario your credit utilization will be 8k/30k.
Great, thanks.
18% = GTA residents as a proportion of Canada's total population
97% = chance that an RFDer lives in the GTA when he posts something location specific, without giving a location

Were you hit with surprise customs/import fees on an Amazon.ca purchase?
Deal Addict
Nov 25, 2014
1739 posts
941 upvotes
Newton Brook, ON
A number of online sources claim that both ratios are factored into credit score, but I have never been able to confirm that. It seems overall utilization is the driving factor. However regardless of the impact on credit score, individual lenders can and do look per account themselves and might consider scenario 2 worse, especially if the high ratio account is with that same lender.
You need someone with an umbrella not a fork
Sr. Member
May 16, 2017
600 posts
599 upvotes
supertronic wrote:
Apr 14th, 2018 1:47 pm
8k is too much debt if your total credit limit on all accounts 50k.

Keeping Credit utilization above 5% means hard to qualify for limit increases down the road future.
A generalization that is subject to a vast number of factors. My credit card utilization is frequently above 5% but I pay it off every month and have no issues with my regular churning and getting credit limits on cards of $20,000 and more. If you factor in my secured (i.e. home equity/mortgage) line-of-credit my utilization is around 40% - and, yes that appears under revolving accounts not real-estate accounts. Credit score typically above 800.

Ability to get credit-line increases on an existing account will be based as much on the assessed ability to pay as it is credit utilization and score.
Sr. Member
Nov 8, 2017
923 posts
447 upvotes
supertronic wrote:
Apr 14th, 2018 1:47 pm
8k is too much debt if your total credit limit on all accounts 50k.

Keeping Credit utilization above 5% means hard to qualify for limit increases down the road future.
I'm @ about 20% and I've gotten 13k increase on my CL's in the past 4 months.

Top