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How much would an increase in the total credit limit

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Question - A potential home buyer is wondering about her credit card accounts and the effect that they may have on her credit score which will be evaluated when she applies for a mortgage loan. At present, she has three accounts with credit limits and balances outstanding as follows:

She would like to transfer the balance in account #2 to account #3 in order to save the membership fee and because the interest charges for account #2 are higher than the others. If she does this account #2 would be closed.

Account Limit Outstanding Balance

(1) $5,000 $3,150

(2) 10,000 5,150

(3) 15,000 8,150

Required -

a. How much credit capacity is she currently using?

b. If she cancels account #2 and transfers the balance to account #3, what will be the capacity used now?

c. After the transfer, how much would an increase in the total credit limit have to be in account #3 to restore the total capacity used in all accounts prior to the transfer?

Reference no: EM133073349

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