Checking account balance relative to credit limit?

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Cruz
Posts: 97
Joined: Sun Mar 30, 2014 7:16 pm

Checking account balance relative to credit limit?

Post by Cruz » Fri Jan 05, 2018 6:39 pm

I have a checking account with BofA as well as two credit cards with BofA as well. I keep enough money in my checking account to cover my credit card statements and emergency purchases but keep my emergency fund/savings in a Capital One account. Is there an amount of money I should be keeping in my checking account relative to my credit limit/purchases that would benefit my credit score, or does it not matter as long as I am paying off my statements?

jlcnuke
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Re: Checking account balance relative to credit limit?

Post by jlcnuke » Fri Jan 05, 2018 7:29 pm

Your checking account balance isn't affecting your credit scores as it's not a type of credit.

Cruz
Posts: 97
Joined: Sun Mar 30, 2014 7:16 pm

Re: Checking account balance relative to credit limit?

Post by Cruz » Fri Jan 05, 2018 7:44 pm

That's what I thought, but in a recent FICO credit report it said "Proportion of balances to credit limits on bank/national revolving or other revolving accounts is too high" and I want sure if this related to my accounts overall (including checking).

I try to keep credit card balances at 20-30% of credit limit.

runner3081
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Re: Checking account balance relative to credit limit?

Post by runner3081 » Fri Jan 05, 2018 8:36 pm

No, I don't have any preferred ratio of cash to credit balance. To me, the two are not related whatsoever.

runner3081
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Re: Checking account balance relative to credit limit?

Post by runner3081 » Fri Jan 05, 2018 8:37 pm

nsisson wrote:
Fri Jan 05, 2018 7:44 pm
That's what I thought, but in a recent FICO credit report it said "Proportion of balances to credit limits on bank/national revolving or other revolving accounts is too high"
Checking accounts are not revolving accounts.

You can have 1 million in the bank with a 520 score or owe 1 million and have an 820 score.

Katietsu
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Re: Checking account balance relative to credit limit?

Post by Katietsu » Fri Jan 05, 2018 8:47 pm

20-30% is not bad but is high enough to have a negative effect on your score. Consider raising your credit limit if that will not lead to increased spending. If you need to give your credit limit a boost, you can also make a payment before the billing date. Note that the credit utilization (%) on each card individually as well as the overall credit utilization all influence your score. So, make sure you do not charge too much to one card. There are several forums that are dedicated to discussions on credit scores.

Cruz
Posts: 97
Joined: Sun Mar 30, 2014 7:16 pm

Re: Checking account balance relative to credit limit?

Post by Cruz » Fri Jan 05, 2018 9:39 pm

Katietsu wrote:
Fri Jan 05, 2018 8:47 pm
20-30% is not bad but is high enough to have a negative effect on your score. Consider raising your credit limit if that will not lead to increased spending. If you need to give your credit limit a boost, you can also make a payment before the billing date. Note that the credit utilization (%) on each card individually as well as the overall credit utilization all influence your score. So, make sure you do not charge too much to one card. There are several forums that are dedicated to discussions on credit scores.
Thanks for the insight, raising my credit limit would not cause me to spend more. Wouldn't this cause a credit score check which may ding my score? I only buy what is within my means. I am aware of the sum vs individual, and try to charge accordingly.

denovo
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Re: Checking account balance relative to credit limit?

Post by denovo » Fri Jan 05, 2018 9:46 pm

nsisson wrote:
Fri Jan 05, 2018 7:44 pm
That's what I thought, but in a recent FICO credit report it said "Proportion of balances to credit limits on bank/national revolving or other revolving accounts is too high" and I want sure if this related to my accounts overall (including checking).

I try to keep credit card balances at 20-30% of credit limit.

This is comparing the balances on your credit cards reported every month relative to your limits. It has 0 to do with checking, savings, brokerage accounts, 401k's etc etc.
"Don't trust everything you read on the Internet"- Abraham Lincoln

gizmo
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Re: Checking account balance relative to credit limit?

Post by gizmo » Fri Jan 05, 2018 10:19 pm

denovo wrote:
Fri Jan 05, 2018 9:46 pm
nsisson wrote:
Fri Jan 05, 2018 7:44 pm
That's what I thought, but in a recent FICO credit report it said "Proportion of balances to credit limits on bank/national revolving or other revolving accounts is too high" and I want sure if this related to my accounts overall (including checking).

I try to keep credit card balances at 20-30% of credit limit.

This is comparing the balances on your credit cards reported every month relative to your limits. It has 0 to do with checking, savings, brokerage accounts, 401k's etc etc.

In addition, keep in mind that there may be a disparity between the day a statement is cut, the day you make a payment, and the day the card issuer reports your balance.

As such, you could utilize 100% of your credit while paying it off in full every month, but if the bank reports the credit utilization prior to applying said payment, you will have an adverse hit on your report.

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