One of my clients had a 720 credit score and needed 740 in order to qualify for the premium mortgage lending offering and reduce their rate by .25%. In order to bump their credit score up we paid down their $5,000 in credit card debt and asked for an increase in their credit limit of $10,000. These adjustments impacted their fico score variables enough to qualify them for the 740+ credit score rate. Overall saving them thousands of dollars over the life of their mortgage.
Credit utilization is an important part of a client's financial plan, especially when a major purchase is on the horizon. For example, we recently walked a client through their first home purchase. As part of the plan we spent three months leading up to the purchase to stop using credit and begin to pay down balances. When it came time to apply for the loan our client was given a much better rate, partially because their credit utilization was below 30%.
How Reducing Credit Utilisation Transformed a Client's Financial Future I worked with a client who was preparing for a significant mortgage application. Their credit utilisation was at 60%, impacting their credit score and interest rates. By strategically paying down high-interest credit card balances and redistributing some debt to a personal loan with a lower interest rate, we managed to reduce their credit utilisation to below 30%. This improvement in their credit score not only helped them qualify for a better mortgage rate but also saved them thousands of dollars in interest payments over the loan term. This adjustment was crucial in their financial planning, allowing them to secure a home within their budget and with favourable loan terms.
I remember working with a client with a high credit utilisation rate that affected their financial stability and growth. They had maxed out several credit lines to buy stock and manage operational expenses, lowering their creditworthiness and limiting their access to better financing alternatives. We started by carrying out an analysis of their cash flow statements and expenses to point out areas where there could be reduced costs. There was negotiation for improved terms of payment with suppliers. At the same time, inventory management was streamlined so as not to stock too much. Afterwards, we used the money obtained from that activity to make payments towards those debts whose interest rates were highest. Afterwards, we investigated how they earned income. We established marketing initiatives to heighten sales and organised promotions for clearing non-moving stock. The extra revenue enabled them to pay off more debt, hence reducing the amount of current credit usage.