Question : How does going over my credit limit affect my credit score?
I recently went over my credit limit by $10 and noticed that the credit card account (Cap One) was reported as delinquent on my equifax credit report? How can this happen and what are the consequences to my credit rating/score? Thanks for your response.
- asked by Seaman
All Answers:
Answer #1
Being close to the max or overdrawing your creditcard account can have adverse affects on your FICOcredit score(s). This is because 30% of your FICOscore is based on debt utilization, or how much ofthe debt you are using. When you are using morethan 50% of your revolving debt that sets offflags and makes it look as though you are toodependent on the debt.The first step is to getbalance back under the limit. Then you need towork on getting the balance on the card under 50%.As a general rule your FICO score is best helpedwhen you are using no more than 10% of your creditlimit when the statement balance is reported tothe credit bureaus.
- answered by Jeremy Kitching
Answer #2
before you worry about your credit score you needto worry about your wallet.Since you went overyour limit, you MIGHT be in violation of the termsof your agreement with your credit card company.Soyou will be smacked with the over the limit fee(probably about $35.00)> and you might have to paya late fee if you paid the minimum amount. If youdid not pay the usual amount (plus the late fee)then you WILL be reported as late. If thishappens, look for your interest rate to go up sothe minimum payment that was 200 before your extraten bucks could turn into a new payment of 300buck with your over the limit fee, your late feesand your new interest rate. Now onto your credit.Credit scores are comprised of a few things butone of them is the limit on your card verusavailable credit.The ideal amount is 35 percent orless. Meaning you dont want to have more than 34percent of your credit limit being utlized. Ifyou go over that amount your credit starts todrop. since you have NO available credit on thiscard, your score will be negatively affected. NOtsure by how much since credit is a combination offactors, how much THIS will impact your scoredepends on what else you have going on with yourother trade lines. I so hope you make a decisionto cut up the credit cards. Use your stimuluspayment to pay down as much debt as you can. Bestof luck to you
- answered by karen g
Answer #3
It's always best that you stay 50% and below yourcredit limit. Anytime you go past that 50%, itserves as a negative factor to your credit file.Once creditors/lenders see this, it makes themthen think you're living beyond your means andyou're actually charging something in which youcannot afford. As for this being classified as adelinquent item, it will stay on your file for 7years from the time it went delinquent. No one cantell you exactly how many points your score willdrop. And here's a little hint: "No one knows forsure exactly how credit scoring works!"
- answered by Jamar B
| 
