12 Feb 2020

Can I Lower My Overall Utilization Ratio?

When it comes to the world of tradelines, there are two main factors that we like to tell people to focus on when it comes to buying. Those two factors include the


  1. Age of the tradeline
  2. The limit of the tradeline


It is very important to examine these factors closely to see if purchasing a specific tradeline makes sense in your situation. Today, we want to dig into whether or not high-limit tradelines can play a role in lowering a person’s overall utilization ratio.


How Does It Work?


Understanding Your Credit Utilization Ratio
Understanding Your Credit Utilization Ratio

If we look at this from a theoretical standpoint, the simple answer is “yes”, a tradeline with a higher limit can absolutely help to lower a person’s overall utilization ratio. Of course, just looking at this factor alone may not actually be the solution to your utilization ratio problem. This is true for those who have high utilization credit cards.


In fact, having high utilization credit cards is a negative factor when it comes to one’s credit score, and as you’ll learn, negative factors will always have an impact when it comes to your credit score.


Of course, it is also important to note that having a lower utilization ratio overall could have a positive impact and could still create progress for someone who has high utilization credit cards in the data of their credit score.


It is said that the secret credit score algorithm contains metrics defining the percentage of credit cards with high utilization compared to the total number of credit cards that that person owns.


Let’s say that you have two credit cards, one of which has a $5,000 limit in which you owe the full $5,000, and one with a $25,000 limit that you owe nothing on. In this case, you would have a 16.67% utilization ratio, which is relatively low. You would also have a percentage of 50% on your high utilization revolving accounts.


In this case, even though your overall utilization ratio is sitting within a range that seems ideal, the fact that you have high utilization cards could have a negative impact on your overall score.


What Can Tradelines Do?


Tradelines can play a role when it comes to overall utilization, as well as individual utilization. It is important to understand that adding tradelines with higher limits could have a positive impact on someone’s utilization ratio.

Of course, there are other reasons why one might add high limit accounts to their credit file, including the fact that it could increase their potential to get a certain type of loan. Plus, tradelines with high limits and little age tend to be much cheaper.


Buying tradelines doesn’t have to be complicated but understanding the right factors to look at is very important when you first begin the buying process. We here at Boost Credit 101 are here to answer any questions you might have about buying tradelines and what to look for! Make sure to get in contact with us.