If you are new to the world of Tradelines, it is important that you get yourself up to date with all of the facts before you move on to buying tradelines for your credit. Even if you are already familiar with the concept of tradelines and what they can do for you, you want to make sure that you can select the best possible tradelines that are for sale.
In both cases, it is important that you have an understanding of utilization ratios.
When you start looking to buy tradelines, there are a few factors to consider. One is the age of the tradeline, and the other is the credit limit of the tradeline. Let’s dive in and find out how the second factor plays in.
What Are Credit Limits and Utilization Ratios?
Let’s first start by separating these two to help get a better understanding of them.
If you look at free credit score simulators or calculators out there, you’ll likely see that they are pretty limited in the number of variables that they provide for calculation. When you start preparing to purchase a new tradeline for yourself, these calculators typically only let you enter your new credit limit before they generate a new estimate for your credit score.
This is because these credit score simulators and calculators make the assumption that you are opening up a brand new credit card using the limit that you have provided. Typically, these calculators won’t take into account the actual age that would hit your credit account thanks to the seasoned tradeline, but instead, they look solely at the overall utilization ratio.
If you start to choose utilization ratios that are anywhere from 30%-40% or higher, they might actually pull your credit score down. When it comes to utilization, the majority of credit score professionals recommend that a person stays below 20%.
If there was one takeaway, it would be to remember that the higher the utilization ratio, the more your overall credit score will suffer. This is even true if the primary account holders are able to pay everything on time.
Of course, it doesn’t stop here. Let’s say someone has six established credit cards on their account with a two maxed out, one at 75% utilization, one at 50% utilization, and two with zero balances. Though the two credit cards are below the 20% utilization rate, the other four might end up pulling the credit score down because they are well above the 20% rate.
Can I Lower My Utilization Ratio With a High-Limit Tradeline?
If we were to be theoretical, a high-limit tradeline could lower your overall utilization ratio, though it is not the sole factor you should be looking at. Remember, age is just as important. If you want to make sure that you are buying the right tradeline for your needs, make sure to contact us here at Personal Tradelines so that we can help you find the best tradeline for your situation.