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If everything else is equal (payment history, mix of credit, length of credit and utilization) would someone who has a number of high limit premium Credit Cards have a higher FICO score?
I read somewhere that this is true but now can't find the article that said this. If I remember correctly, it said that certain credit cards are known as premium cards, that require a certain FICO score and financial profile to get, and a positive history using these premium cards will give you a higher credit score.
When I say Premium Credit Card I am not talking about the American Express CHARGE CARD with no limit and a high annual fee, but instead a CREDIT CARD but one with a very high credit limit and tough requirements to get.
Assuming that you mean equal utilization in terms of dollar amount, then yes. A credit card with high limit will decrease your utilization ratio and will have a positive impact on your FICO.
If you mean the equal utilization in terms of ratio/percentage, then no.
Assuming that you mean equal utilization in terms of dollar amount, then yes. A credit card with high limit will decrease your utilization ratio and will have a positive impact on your FICO.
If you mean the equal utilization in terms of ratio/percentage, then no.
All things are equal (including utilization) in my example. The article I read- but can't put my finger on it now- said that people who have these premium cards require a higher FICO score to get them and through years of high dollar amount charging and payments they have proven themselves more likely to borrow money successfully vs someone who only charges $100 a year in small purchases with low limit garden variety credit cards.
Credit utilization % is part of the FICO score. So the more available credit you have on your cards, the better.
But it doesn't matter if you have a couple of cards with a very high limit or several with lower limits; all that matters is the amount of available credit.
Brands of Cards for the majors also DO NOT Matter....Having an Amex or Discover are not given any more significance than having a MC or V even though the former are looked at as more Premium Brand of Cards.
However, the majors (Amex, Discover, MC and Visa) do carry more weight in the "FICO-Sphere" then Specific-Retailer-Only Cards.
Brands of Cards for the majors also DO NOT Matter....Having an Amex or Discover are not given any more significance than having a MC or V even though the former are looked at as more Premium Brand of Cards.
I've never heard of a Discover Card being referred to as a more, "premium brand" of credit card. It has always seemed to be the "red-headed step-child" of credit cards.
I've never heard of a Discover Card being referred to as a more, "premium brand" of credit card. It has always seemed to be the "red-headed step-child" of credit cards.
If you guys are right this does not make any sense. Logically the credit card companies would like people who have charged up large amounts of goods and services and shown they can pay back huge bills. Anyone can charge $20 a month on a low limit credit card and pay that bill at the end of the month.
Credit utilization % is part of the FICO score. So the more available credit you have on your cards, the better.
Back when I was first buying my house and trying to get pre-approved for my first mortgage, the mortgage company advised me to get my high CC limits lowered. I had a decent history of on-time payments and a pretty high FICO score, but I had the (wrong) assumption that having lots of credit cards with high limits and low or zero balances would look good for me. At that point I had about 5 credit cards with limits that added up to about $150,000. But my balance was only like $3,000.
So at some point having a large amount of unused credit must hurt a person. It's frustrating when I get this conflicting information. What you are saying is the opposite and concurs with my previously-held belief. So now that I want my score to get higher, I should sign up for more credit cards with high limits and just not use them? My FICO score is currently 814, so I'm sure I'll get approved for a whole bunch of them. Would all that unutilized credit really help or hurt me? Right now I have zero CC balances and 2 credit cards with a total limit of 25,000. This is just there for emergencies.
The mortgage person at the time said that I'd be seen as a higher risk, because for all they knew I could go out tomorrow and charge up $150,000. I said that they could just see from my credit history that I would never do that, but they still did not approve me until I voluntarily closed or lowered the limits on those cards. Once I did that they said my score went up and I was a good risk, and I got approved.
Back when I was first buying my house and trying to get pre-approved for my first mortgage, the mortgage company advised me to get my high CC limits lowered. I had a decent history of on-time payments and a pretty high FICO score, but I had the (wrong) assumption that having lots of credit cards with high limits and low or zero balances would look good for me. At that point I had about 5 credit cards with limits that added up to about $150,000. But my balance was only like $3,000.
So at some point having a large amount of unused credit must hurt a person. It's frustrating when I get this conflicting information. What you are saying is the opposite and concurs with my previously-held belief. So now that I want my score to get higher, I should sign up for more credit cards with high limits and just not use them? My FICO score is currently 814, so I'm sure I'll get approved for a whole bunch of them. Would all that unutilized credit really help or hurt me? Right now I have zero CC balances and 2 credit cards with a total limit of 25,000. This is just there for emergencies.
The mortgage person at the time said that I'd be seen as a higher risk, because for all they knew I could go out tomorrow and charge up $150,000. I said that they could just see from my credit history that I would never do that, but they still did not approve me until I voluntarily closed or lowered the limits on those cards. Once I did that they said my score went up and I was a good risk, and I got approved.
Regardless of what they told you, I doubt your score went up. Some lenders don't like to see too much available credit for the reason you state and may subjectively choose not to lend money as a result, but I've never seen anything to suggest that too much available credit will lower your FICO.
That being said, nobody really knows what the FICO formula is. All you can do is the best you can do and hope it works out.
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