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Conflicting CC usage recommendations

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dbatl14
Contributor

Conflicting CC usage recommendations

I have been working hard to reestablish my credit as it went wonkers during the down turn in 2008.

 

I have been able to convert my secured BofA to an unsecured, have a Cap One Platinum MasterCard and recently got approved for the Quicksilver One with $1000 CL. I also have a secured Wells Fargo and Fidelty Bank.

 

The general rule that is always talked about is you should not use more that 30% of your CL, but then keep utilization below 10%, however I also read on this board where several users were trying to get higher CLI's but where told that they do not use enough of the CL to qualify for a higher CLI.

 

All of these scenarios are very confusing. So if  I want to get higher CLI's I need to use more than 30% but yet the scoring goes down if you use more than 10%. What is the sweet spot.

 

Do I need to sacrice a Fico drop in order to carry a higher balance so that I can get a much higher CLI then pay off?

My Wallet: Amex Everyday: $7000 | Amex PRG: NPSL | AMEX Business Reward: NPSL | Amex Hilton Aspire: $9300 | Amex Delta Gold: $15000 | Amex Business Plat: NPSL | BofA Cash Rewards: $22000 | Travel Rewards: $15000 | NASA FCU Advantage: $17,500 | DCU Platinum: $5000 | Barclaycard Rewards: $3500 | Capital One QS: $8500 | Capital One Platinum: $2250 | Capital One Spark: $7500 | Fidelity Bank: $3400 | Nordstrom: $16500 | Macys: $10000 | Walmart: $3300 | Amazon: $6000 | Target: $14500 | | Chevron/Texaco: $3000 | Discover IT: $4700 | Apple Card: $2450 | Citi Double Cash: $4000
Message 1 of 12
11 REPLIES 11
C24Webb
Regular Contributor

Re: Conflicting CC usage recommendations

For scoring purposes, keep all cards at 0% except for one card that REPORTS a balance of 1-9% of the credit limit. 

 

For your relationship with an individual creditor/to improve future CLI opportunities, you can and should USE 30% or more of your credit limit to show that you have sufficient experience with the limit... but do not let that high of a percentage report. That individual creditor knows how you've used your limit without it being reported to the credit bureaus.

 

There is a huge difference between USING and what you let REPORT.  Does this help/make sense?

 

Card/Limit/Opened — Discover it: $27,600 2/14 | Chase Sapphire Preferred: $10,500 7/14 | Banana Republic Visa: $10,000 7/14 | USAA Cash Rewards Visa Signature: $9,000 6/11 | Chase Freedom: $2,000 3/12
History — AAoA: 42 months | Oldest account: 119 months (including AU) | Inquiries: 1 EX 0 EQ 0 TU | Score: 765 (Discover TU) 750 (USAA CreditCheck Monitoring EX FAKO)
Message 2 of 12
Chris679
Established Contributor

Re: Conflicting CC usage recommendations

Best thing you can do is use the cards any way you want but only let one card report a 1-9% balance. This is for optimal scoring so when they SP you will be in good shape. They can see what you spend on the card whether or not the balance reports so I don't buy that is going to help. For every person that gets a CLI one way there are two others that swear you should do it the other way. Keep your report looking clean and the CLI will happen because they want your business.

Message 3 of 12
Anonymous
Not applicable

Re: Conflicting CC usage recommendations

In my personal trials with utilization, it's best if you have all cards reporting at 1% rather than just one. 

Message 4 of 12
Ghoshida
Valued Contributor

Re: Conflicting CC usage recommendations


@dbatl14 wrote:

I have been working hard to reestablish my credit as it went wonkers during the down turn in 2008.

 

I have been able to convert my secured BofA to an unsecured, have a Cap One Platinum MasterCard and recently got approved for the Quicksilver One with $1000 CL. I also have a secured Wells Fargo and Fidelty Bank.

 

The general rule that is always talked about is you should not use more that 30% of your CL, but then keep utilization below 10%, however I also read on this board where several users were trying to get higher CLI's but where told that they do not use enough of the CL to qualify for a higher CLI.

 

All of these scenarios are very confusing. So if  I want to get higher CLI's I need to use more than 30% but yet the scoring goes down if you use more than 10%. What is the sweet spot.

 

Do I need to sacrice a Fico drop in order to carry a higher balance so that I can get a much higher CLI then pay off?


Use as much as you can. 

Let us take your QuickSilver for example. It is $1,000 limit. There are 3 key numbers:

 

1) For getting CLI, show usage. Buy $500, $1000, even $1500 worth of stuff in a month (if you need it that is. Don't buy just to buy). How do you buy $1500 on a $1000 card? Simple, buy <$1000, pay it all off, then use it again to buy another $500 worth of stuff. 

 

2) For excellent Fico scores, pay off all the balances on your other credit cards, and do not have more than $100 balance on the QuickSilver. Let that report. So, say you purchased $600 worth of stuff. Pay down $500 before the statement is generated. This 10% is an algorithm technicality; otherwise the algorithm thinks you didn't use the card at all.

 

3) To avoid bad Fico score, do not let the Quicksilver report more than $300 balance. 30% is a guideline to avoid bad scores, not enough to get good / great scores.

 

Now, even after this, the Capital One computer may not be smart enough to give you a CLI. But then you can call their Executive Office and explain that you use it a lot, they can see that you use the card a lot, and to make you happy (and spend more) they will give you a CLI.

Message 5 of 12
HiLine
Blogger

Re: Conflicting CC usage recommendations

In reality, utilization rarely matters.

 

Utilization does not have memory. You can care about utilization when you are about to apply for credit; otherwise, it is easy to turn it around in a month. The only thing you need to keep your eyes on is always paying off the balance before the due date. 

 

And in order to increase credit limits, you should focus your spending on one card for a while in the manner that Ghoshida described. It is very important to have decent credit limits, not necessarily for credit score purposes but for future credit applications.

Message 6 of 12
vanillabean
Valued Contributor

Re: Conflicting CC usage recommendations

People are all over the map on this. A small balance on one card works nicely. And stay within your means!

 

Message 7 of 12
dbatl14
Contributor

Re: Conflicting CC usage recommendations

Thanks everybody for the insight.

 

This is what I have been doing for some time.

 

I always made several payments through out the month. I always charged no more than 30% on my card then I make a payment to pay it back down. I played with several scenarios in the reporting. I would always have a 0 balance reporting, then I would switch it up and report a balance of 30% and then pay it off to report 0 the next month and my score would go higher.

 

I think me making multiple payments throughout the month helped to get the other cards. My BofA secured I started with $500 after 18 months I got it to unsecure, get $1000 increase and it become a Cash Rewards 1-2-3. (I asked for $1500 but they countered with the $1000), I then applied for the Quicksilver which was a nice surprise for $1000 and I have the Cap One Platinum MC $750. Since I got the 1-2-3 and Quicksilver I have been using both. BofA mainly for Groceries and Gas, whereas everything else Quicksilver for the 1.5% Cashback but i would let the balance get to about $200 then make a payment. I still have 2 secured Wells Fargo of $300 and Fidelity of $800 but stopped using them because there is no reward to use them. So they have a 0 balance. Not sure if I should use it or not.

 

So from what I gather in order to get good CLI's from the banks is to use the cards heavily but pay everything before the reporting or closing date, so it reports 0 for FICO?

 

Does it look bad if I let say would charge $950 on my $1000 CL but then pay it off before the closing date? Would I be considered a high risk or would they view it as that I don't have enough credit for my spending?

My Wallet: Amex Everyday: $7000 | Amex PRG: NPSL | AMEX Business Reward: NPSL | Amex Hilton Aspire: $9300 | Amex Delta Gold: $15000 | Amex Business Plat: NPSL | BofA Cash Rewards: $22000 | Travel Rewards: $15000 | NASA FCU Advantage: $17,500 | DCU Platinum: $5000 | Barclaycard Rewards: $3500 | Capital One QS: $8500 | Capital One Platinum: $2250 | Capital One Spark: $7500 | Fidelity Bank: $3400 | Nordstrom: $16500 | Macys: $10000 | Walmart: $3300 | Amazon: $6000 | Target: $14500 | | Chevron/Texaco: $3000 | Discover IT: $4700 | Apple Card: $2450 | Citi Double Cash: $4000
Message 8 of 12
Themanwhocan
Senior Contributor

Re: Conflicting CC usage recommendations

I explain it here:

 

http://ficoforums.myfico.com/t5/Credit-Cards/How-do-I-play-the-1-9-Utilization-Game-Please-Help/m-p/...





TU-8: 804 EX-8: 805 EQ-8: 788 EX-98: 767 EQ-04: 752    
TU-9 Bankcard: 837 EQ-9: 823 EX-9 Bankcard: 837
Total $443,800
Message 9 of 12
NRB525
Super Contributor

Re: Conflicting CC usage recommendations

 


@Themanwhocan wrote:

I explain it here:

 

http://ficoforums.myfico.com/t5/Credit-Cards/How-do-I-play-the-1-9-Utilization-Game-Please-Help/m-p/...


lol - Simple as that Smiley Happy That is a good summary, though and a good link. It is a balancing act.

 

OP, my suggestion is that you now have a good sized foot in the door with a few good lenders, and you should build a relationship with them, and not worry too much about the FICO score directly right now. Three stories from my direct experience:

 

USBank card - Good sized credit line, I built up a balance and was paying enough to keep the balance fairly stable. Got a call from the bank, looking for me to pay it down to show I wasn't going to be a bad risk. So I paid it down with big lumps for a few months, kept it reasonable balance, eventually paid it off. Lesson: The lenders don't want you to just coast a balance, it makes them nervous.

 

AMEX Delta: Original limit $2,000. I've never paid interest, always paid it off, but it has been quite active some months. One month, very deliberately ran it up with multiple charges to within $50 of the limit, then paid the balance due from that statement by the due date. They bumped my limit to $3k without me asking. I continue to pay it off, but haven't run it up like that. Lesson: The bank likes you to use the card and pay it off, and they will then be more comfortable with balance increases. With $1k CL you can probably do this (I know I would and will with the other two eventually). Alternatively, run it near the limit, stop using it, pay it in three months. Pay a little interest, pay down to zero before using it again at a more reasonable spend rate. Or cycle it up and back down to zero. It shows you can pay it down to zero.

 

Third: on many occasions, I've taken balance transfers for low interest rates, paid those over time, and get balance transfer offers now regularly from the cards who have low balances and miss me, which means I'm often moving money from one expiring BT to a new one, putting the first card to zero. Lesson: The bank will be more likely to give you a balance transfer offer if you take balance transfer offers. They like the idea you pay the BT fee and then might mess up at the end of the reduced interest rate period and leave a balance to pay interest on. And in my opinion, there's nothing wrong with paying a little interest to the bank now and then. Others find it repulsive. I look at it from the lender's perspective: They give you a loan so they can make money. It's just part of the game.

 

Let me be clear: the above is just my opinion. Others have very good reasons for PIF each month, and for not paying interest, and I respect that, not least because they have much higher FICO than mine to prove it.

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812
Jan 2019 $7.6k on $360k EQ 832 TU 839 EX 831
March 2021 $33k on $312k EQ 796 TU 798 EX 801
May 2021 Paid all Installments and Mortgages, one new Mortgage EQ 761 TY 774 EX 777
April 2022 EQ=811 TU=807 EX=805 - TU VS 3.0 765
Message 10 of 12
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