Sunday, December 20th, 2009

Does the debt:credit ratio credit bureaus use use the max you put on the card or is it just a snapshot in time?

debt to credit ratio
mcz06c asked:


Let’s say I have a card with a 10,000 limit that currently does not have a balance but I had maxed it out to 10,000 in a one time event. When computing my debt/credit ratio, will it be 0 or 100%? Basically, is it instantaneous or historical highs used to determine debt/credit when computing a FICO score?

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2 Responses to “Does the debt:credit ratio credit bureaus use use the max you put on the card or is it just a snapshot in time?”

STEVEN F Says:
December 22nd, 2009 at 12:57 pm

Your debt to credit ratio is computed as of the most recent balance reported on the account. The maximum balance is part of the FICO formula, but a relatively minor part.

Credit Expert Says:
December 24th, 2009 at 4:09 am

Your debt to credit line ratio is calculated by dividing all of your credit card debt by the sum of the credit lines extended to you across your credit card accounts. For example, if you had 2 credit cards, and each one had a credit line of $100 and a balance of $50 then your debt-to-available-credit line ratio would be ($50+$50) / ($100+$100) = 50 percent.

The debt to credit line ratio is calculated each time a billing cycle for any of the credit cards you have closes. If you maxed out your card and paid down your balance before the billing cycle ended, then the high balance won’t be taken into account at all. If the balance still stands at the close of the billing cycle, it will be used to calculate your new debt to credit line ratio, but it might not make much difference depending on how much available credit you have across all of your credit cards.

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