10-27-2004, 03:07 PM
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vip member
Join Date: Jan 2003
Posts: 17,798
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Quote:
Originally posted by psyko514
it's like that for any amount.
a card with a $0 balance can easily have a $20K balance in minutes.
when you apply for credit somewhere, they look at your total debt ratio. say you've got $25K worth of credit, but a $0 balance. if i, as a creditor, base your total debt ratio around your $0 balance, i could easily approve you for credit and give you say another $10K.
but who's the say that the second i approve you, you're not gonna go out and load up all your cards, putting yourself in a position where you can't pay back the credit i extended to you?
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I understand this concept completely, I am not "slow"
Quote:
a $10K credit card is seen as a $10K debt, however, when you do a total debt ratio, only the minimum payment on a $10K debt is taken into consideration.
for example, when i'm doing a TDR, i calculate 5% of all your available credit. i add your monthly mortgage/rent, car and loan payments to that. if your monthly income is higher than that, i can extend you credit (providing you've got good history, stable job, etc).
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If a $10k credit card is seen as a $10k debt... why does my credit score rise with my limit? And no is doesnt rise due to other factors, its a huge jump directly correspoding with that one change in the facts. |
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