Maxing out credit cards and credit score
Amazing what opening several credit card accounts and aggressively loading them up can do to the credit scores. As I wrote back in July in Credit score change for the worse, I opened 4 new credit cards and also received 2 denial of credit, resulting in 6 hard inquiries within 3-week time. In August, I got 2 more so 2 more hard inquiries. Almost immediately, I spent quite a few credit line dollars on all new card accounts, but as you see shortly I did not max out. Actually instead of calling this story Maxing Out Credit Cards And Credit Score, I should have said Loading Fresh Debt On Newly Opened Credit Cards and Credit Score.
The score picture is quite obvious, it dropped by over 100 points from July and I am convinced, maxing credit cards out is not that much of an issue. Because I did not max out but one credit card. I do have high utilization rates on a several other cards but nothing too drastic. Here are the credit cards I have with top 6 opened recently,
| Credit Card | Balance | Credit Limit | Utilization Rate |
| Chase Visa | $6,500 | $9,000 | 75% |
| Bank of America Visa | $9,500 | $15,500 | 63% |
| Bank of America MasterCard | $1,900 | $11,000 | 17% |
| Citibank MasterCard | $9,990 | $10,000 | 100% |
| Citibank MasterCard | $330 | $500 | 66% |
| Capital One MasterCard | $1,500 | $3,000 | 50% |
| Chase Visa | $0.00 | $25,000 | 0% |
| Chase Visa | $0.00 | $10,200 | 0% |
| Capital One MasterCard | $14,200 | $20,000 | 71% |
Hmmm, now that I am looking at this table, I may have to take it back. I mean, the utilization rate / I did not max out part. One credit card at 100 percent utilization, 2 credit cards with over 70 percent, 2 with over 60 percent and one at 50%. Not too good for my credit scores.
Now let's see what my cumulative utilisation rate is. OK, it is 42%, the ratio between sum of all balances to all credit limits and you can check it for yourself. Interesting stuff and it just proves how convoluted credit scoring algorithm really is. The main purpose of this exercise was to show that maxing credit cards out was not the case in my own case, but something else. In the end, I had to concur with the maxing out theory.
Mon Sep 27, 2010 04:09PM | Copyright: www.bad-credit-advisor.com | More in Credit Score Help | Comments (0)
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