OT Just unbelievable

[ctfjr]

So my son has been bugging me to get the 'new' 2% cash back credit card that's been advertised. I have a 1-1/2% cash back card now. I finally break down when he emails me the link to an application.

Ok it takes all of a couple of minutes & I'm approved. Now there is an issue. Its my understanding that your credit score is affected by the amount of AVAILABLE credit you have. I really don't want to cancel my original card (Capitol One) because I also understand that that can negatively affect your credit rating. So, what to do?

Simple, I'll just call Capitol One & ask them to LOWER my credit limit on that card. Imagine my surprise when the service rep tells me I've been DECLINED in LOWERING my credit limit. I'll get a letter in the mail i 7-10 days explaining why I've been declined.

You can't make this stuff up!

 

[EricLA]

Your credit score is actually better if you have a higher limit and a lower current balance. For example, a credit limit of $10,000 with only $4,000 used (40%) is better than a credit limit of $4,000 with $4,000 used (100%).

Credit scoring models do not ding you for a high limit. They ding you for a high % of usage compared to your limit. Hope that makes sense. I know this because I'm a loan officer, work with clients in running credit every day, and have a credit repair company I send clients to if their scores are too low.

If you have credit cards with $0 balance but are open, do NOT close them out. The more credit you have with little or no usage, the higher your scores will be.

 

[ctfjr]

Thanks Eric

btw since I posted that (< hour ago) I received a call from capitol one. I had filled out a 'survey' they emailed me yesterday. You can imagine how I rated my experience. The woman was falling all over herself apologizing & made the change for me on the spot.
RE the amount of credit you have. . .
So you are saying it is a positive affect for your credit score to have a load of available credit (not used) ?

 

[Waquoit]

More available credit is a positive to your credit score. And don't cancel your old card. Especially if it is the oldest one you have.

 

[Zorro]

ctjr. I highly recomend a site called CreditKarma. It is free and gives you a very accurate estimate of your actual credit rating with the big three rating services. It also has some very useful tips on just how your credit rating is calculated and how to improve it, if you want to. Basiclly, what Eric says is correct; the more credit you have and the longer you have had it, the higher will be your score. It seems paradoxical, but cancelling a card or lowering your limit actually decreases your rating because it increases the percentage of your potential credit you are actually using, which is one of the factors used. Anyway, all this info and much more is available on CreditKarma.