Credit Card Utilization / Multiple Payments A Month

[mrjohnsonsgoals2]

Hey again, everyone (I apologize if this is a bit repetitive)!

So, as I prepare to get my first credit card (Chase Freedom with a $1,000 credit limit) next week, I've been doing some reading as to how I should actually spend the thing when I get here. I think the advice I got stating that I should "use it for everything I use cash for" is awesome, but it was at that point I looked into the rules about credit card utilization.

Now, most places (and a few threads on here) say you should utilize no more than 30% of your total balance. I also read somewhere that if you end up utilizing more than that, you can pay off a part of that balance to get it down below the recommended utilization and look better to credit agencies and the bank, or so forth.

So, I'm basically wondering if both are true: Should I keep my utilization under 30% at all times? Can I really sort of nudge the utilization percentage in my way if I see that its gone over 30% ($300) in my case by paying a part of my balance early to get it down? Honestly, I'd pay it down to 1% if it's advisable of me to do so - I don't plan on carrying a balance every month, and I'm not too into the idea of paying the balance as soon as there is one (and I hear that you shouldn't do that, either).

Now to figure out if I should get more than one card since I already have 3 inquiries (no baddies or outstanding payments however) in the past six months, 2 last week. Maybe I should get a store card?

Thanks!

[enharu]

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@mrjohnsonsgoals2 wrote:

Hey again, everyone (I apologize if this is a bit repetitive)!

So, as I prepare to get my first credit card (Chase Freedom with a $1,000 credit limit) next week, I've been doing some reading as to how I should actually spend the thing when I get here. I think the advice I got stating that I should "use it for everything I use cash for" is awesome, but it was at that point I looked into the rules about credit card utilization.

Now, most places (and a few threads on here) say you should utilize no more than 30% of your total balance. I also read somewhere that if you end up utilizing more than that, you can pay off a part of that balance to get it down below the recommended utilization and look better to credit agencies and the bank, or so forth.

So, I'm basically wondering if both are true: Should I keep my utilization under 30% at all times? Can I really sort of nudge the utilization percentage in my way if I see that its gone over 30% ($300) in my case by paying a part of my balance early to get it down? Honestly, I'd pay it down to 1% if it's advisable of me to do so - I don't plan on carrying a balance every month, and I'm not too into the idea of paying the balance as soon as there is one (and I hear that you shouldn't do that, either).

Now to figure out if I should get more than one card since I already have 3 inquiries (no baddies or outstanding payments however) in the past six months, 2 last week. Maybe I should get a store card?

Thanks!

---

1. No need to keep your utilization at 30% at all times. Just keep it low if you plan to apply for any loans or credit. Otherwise, don't bother.

2. Yes if you want to keep your utilization low, just pay it down before statement cuts.

3. There's no need to pay your balance whenever you have one. People who do that are just trying too hard for no good reason. 

4. Up to you. Get whatever card that interests you. Just avoid cards that have like 5k minimum CL for now.

[notfancy]

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@mrjohnsonsgoals2 wrote:

Hey again, everyone (I apologize if this is a bit repetitive)!

So, as I prepare to get my first credit card (Chase Freedom with a $1,000 credit limit) next week, I've been doing some reading as to how I should actually spend the thing when I get here. I think the advice I got stating that I should "use it for everything I use cash for" is awesome, but it was at that point I looked into the rules about credit card utilization.

Now, most places (and a few threads on here) say you should utilize no more than 30% of your total balance. I also read somewhere that if you end up utilizing more than that, you can pay off a part of that balance to get it down below the recommended utilization and look better to credit agencies and the bank, or so forth.

So, I'm basically wondering if both are true: Should I keep my utilization under 30% at all times? Can I really sort of nudge the utilization percentage in my way if I see that its gone over 30% ($300) in my case by paying a part of my balance early to get it down? Honestly, I'd pay it down to 1% if it's advisable of me to do so - I don't plan on carrying a balance every month, and I'm not too into the idea of paying the balance as soon as there is one (and I hear that you shouldn't do that, either).

Now to figure out if I should get more than one card since I already have 3 inquiries (no baddies or outstanding payments however) in the past six months, 2 last week. Maybe I should get a store card?

Thanks!

---

You can use 100% of the limit as long as you pay it down before the statement cuts. The reason for paying it off or down before the statement cuts is to prevent a high balance from appearing on your credit report, thus lowering your score and spooking your creditors.  If you plan to apply for more cards or any thing else, you'll want your card reporting a balance of less than 10%. If you're not looking to apply for any thing, you can carry a balance, but again it's best to not have UTL hitting the 80-90% mark as that is considered "maxed"

If you already have inquiries and I know you had one denial due to short credit history, I'd suggest waiting at least 6 months to generate a little positive history and to get used to managing a card account in a way that keeps your scores as high as you can with out driving you crazy. (again worry about your score only if you plan on applying for any thing, other wise it doesn't matter too much unless it takes a huge nosedive.)

I pay on multiple cards multiple times a month and have had no issues. I do that for my scores because I want an auto loan soon, but also for my own piece of mind. I'm simply not comfortable carrying high balances or a debt amount more than 15% though I can carry as much as 30% with out sweating too much. If you look in the garden club thread you'll see I currently have 2 cards reporting VERY high UTL and some of those I just paid down or off.

I don't know if it's the balances reporting, or some erroneous derogatory information that reported, but my Walmart credit score took a dive of more than 40 points. That is easy enough to do with carrying multiple balances on multiple cards as well. (though in this case I really think it's just that one account that has caused me nothing but trouble for many years with my credit score!)

Credit is subjective. Do what ever you're most comfortable with, and what will not put you in any sort of a bind. Another reason to keep your balances low is interest. Why pay it if you don't have to. If you have a card that gives you cash back or other perks, why essentially lose free money to interest? If you pay your balance down low before the statement say to 8%, that will report, and it will be positive for your credit history and report. It shows usage, and responsible usage. Showing 0 on all accounts is actually bad for your score... BUT if you pay it down to that 8% example, let it report, then pay off that final balance before the due date, you'll have helped your  credit scores, AND avoided paying any interest. To me, that's a win win situation for you.

[ztnjpv]

OP,

You can use the heck out your card. It's the REPORTED balance that matters. Period.

When I got my first card, it had a $500 limit. I was making $700-1000 in purchases per month on it and reporting a ZERO balance. Then I started leaving a few bucks on reported balance. 

I say use it all you want and pay it off as you go. Just let the statement close with $10-50 every month. 

[DavidZeng]

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@mrjohnsonsgoals2 wrote:

Hey again, everyone (I apologize if this is a bit repetitive)!

So, as I prepare to get my first credit card (Chase Freedom with a $1,000 credit limit) next week, I've been doing some reading as to how I should actually spend the thing when I get here. I think the advice I got stating that I should "use it for everything I use cash for" is awesome, but it was at that point I looked into the rules about credit card utilization.

Now, most places (and a few threads on here) say you should utilize no more than 30% of your total balance. I also read somewhere that if you end up utilizing more than that, you can pay off a part of that balance to get it down below the recommended utilization and look better to credit agencies and the bank, or so forth.

So, I'm basically wondering if both are true: Should I keep my utilization under 30% at all times? Can I really sort of nudge the utilization percentage in my way if I see that its gone over 30% ($300) in my case by paying a part of my balance early to get it down? Honestly, I'd pay it down to 1% if it's advisable of me to do so - I don't plan on carrying a balance every month, and I'm not too into the idea of paying the balance as soon as there is one (and I hear that you shouldn't do that, either).

Now to figure out if I should get more than one card since I already have 3 inquiries (no baddies or outstanding payments however) in the past six months, 2 last week. Maybe I should get a store card?

Thanks!

---

Hello OP, I was like you and asked these questions two months ago.

1. I think it is not necessary to worry about the utilization during the billing cycle, as long as you put it down to 10% before the statement cut, that's fine. I only have 600 limit on my freedom and I run about 2.4K for my first billing cycle. The highest balance was 513 dollars and 2.4K payment received on my EX report for Freedom that month.

But I don't think that is *bad*, many experienced guys here told me it could be seen as a *good sign*, since you use your card heavily and have the ability to pay in full. Actually when that info just reported first day on my EX, I applied for AMEX green and BCP, both instantly approved and BCP gave me $2000 limit. ( I only have less than 1 month US credit history at that time).

2. I asked about Store card back then, and those amazing guys once again told me that if you don't go to any specific store quite often, there is no need to apply for a store card for * credit MIX purpose*. You can get a $1000 installment loan just for credit MIX if you want. Because the TL quality(in Fico Score calculation model) is Mortgage> Installment loan> Credit card> store card. 

I hope those info can help you.

[mrjohnsonsgoals2]

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@notfancy wrote:

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@mrjohnsonsgoals2 wrote:

Hey again, everyone (I apologize if this is a bit repetitive)!

So, as I prepare to get my first credit card (Chase Freedom with a $1,000 credit limit) next week, I've been doing some reading as to how I should actually spend the thing when I get here. I think the advice I got stating that I should "use it for everything I use cash for" is awesome, but it was at that point I looked into the rules about credit card utilization.

Now, most places (and a few threads on here) say you should utilize no more than 30% of your total balance. I also read somewhere that if you end up utilizing more than that, you can pay off a part of that balance to get it down below the recommended utilization and look better to credit agencies and the bank, or so forth.

So, I'm basically wondering if both are true: Should I keep my utilization under 30% at all times? Can I really sort of nudge the utilization percentage in my way if I see that its gone over 30% ($300) in my case by paying a part of my balance early to get it down? Honestly, I'd pay it down to 1% if it's advisable of me to do so - I don't plan on carrying a balance every month, and I'm not too into the idea of paying the balance as soon as there is one (and I hear that you shouldn't do that, either).

Now to figure out if I should get more than one card since I already have 3 inquiries (no baddies or outstanding payments however) in the past six months, 2 last week. Maybe I should get a store card?

Thanks!

---

You can use 100% of the limit as long as you pay it down before the statement cuts. The reason for paying it off or down before the statement cuts is to prevent a high balance from appearing on your credit report, thus lowering your score and spooking your creditors.  If you plan to apply for more cards or any thing else, you'll want your card reporting a balance of less than 10%. If you're not looking to apply for any thing, you can carry a balance, but again it's best to not have UTL hitting the 80-90% mark as that is considered "maxed"

If you already have inquiries and I know you had one denial due to short credit history, I'd suggest waiting at least 6 months to generate a little positive history and to get used to managing a card account in a way that keeps your scores as high as you can with out driving you crazy. (again worry about your score only if you plan on applying for any thing, other wise it doesn't matter too much unless it takes a huge nosedive.)

I pay on multiple cards multiple times a month and have had no issues. I do that for my scores because I want an auto loan soon, but also for my own piece of mind. I'm simply not comfortable carrying high balances or a debt amount more than 15% though I can carry as much as 30% with out sweating too much. If you look in the garden club thread you'll see I currently have 2 cards reporting VERY high UTL and some of those I just paid down or off.

I don't know if it's the balances reporting, or some erroneous derogatory information that reported, but my Walmart credit score took a dive of more than 40 points. That is easy enough to do with carrying multiple balances on multiple cards as well. (though in this case I really think it's just that one account that has caused me nothing but trouble for many years with my credit score!)

Credit is subjective. Do what ever you're most comfortable with, and what will not put you in any sort of a bind. Another reason to keep your balances low is interest. Why pay it if you don't have to. If you have a card that gives you cash back or other perks, why essentially lose free money to interest? If you pay your balance down low before the statement say to 8%, that will report, and it will be positive for your credit history and report. It shows usage, and responsible usage. Showing 0 on all accounts is actually bad for your score... BUT if you pay it down to that 8% example, let it report, then pay off that final balance before the due date, you'll have helped your  credit scores, AND avoided paying any interest. To me, that's a win win situation for you.

---

I think I'm starting to get it! So I can basically spend that entire balance (not that I would purposely try and do that for the sake of it), and then pay it down to have the card reporting a balance of that less than 10%. A statement usually cuts at the beginning of the month, right? I've heard beginning and end of the month, twice a month, etc. So from what I'm figuring from the example in your last paragraph, if the month starts, I spend $400 in the first week (40%), and then pay off $300 (30%) the second week, then let the statement come around and read 10% and then pay that off, that's how I would benefit, right?

As far as the second paragraph, that means six months to generate history before applying to my next credit card, right? I've been a bit back and forth in getting a Chase Amazon Rewards card, but with the two pulls from First Hawaiian Bank (rejected) and Chase (accepted) last week, I don't know if I want to try yet another one. And yeah, my primary focus is applying - I want to have a really good score in the next year or so as I decide to hopefully graduate to a higher paying job and move out on my own.

I also hope your score gets better and that gets cleared up! You sound responsible, and that sounds ridiculous.

[mrjohnsonsgoals2]

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@DavidZeng wrote:

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@mrjohnsonsgoals2 wrote:

Hey again, everyone (I apologize if this is a bit repetitive)!

So, as I prepare to get my first credit card (Chase Freedom with a $1,000 credit limit) next week, I've been doing some reading as to how I should actually spend the thing when I get here. I think the advice I got stating that I should "use it for everything I use cash for" is awesome, but it was at that point I looked into the rules about credit card utilization.

Now, most places (and a few threads on here) say you should utilize no more than 30% of your total balance. I also read somewhere that if you end up utilizing more than that, you can pay off a part of that balance to get it down below the recommended utilization and look better to credit agencies and the bank, or so forth.

So, I'm basically wondering if both are true: Should I keep my utilization under 30% at all times? Can I really sort of nudge the utilization percentage in my way if I see that its gone over 30% ($300) in my case by paying a part of my balance early to get it down? Honestly, I'd pay it down to 1% if it's advisable of me to do so - I don't plan on carrying a balance every month, and I'm not too into the idea of paying the balance as soon as there is one (and I hear that you shouldn't do that, either).

Now to figure out if I should get more than one card since I already have 3 inquiries (no baddies or outstanding payments however) in the past six months, 2 last week. Maybe I should get a store card?

Thanks!

---

Hello OP, I was like you and asked these questions two months ago.

1. I think it is not necessary to worry about the utilization during the billing cycle, as long as you put it down to 10% before the statement cut, that's fine. I only have 600 limit on my freedom and I run about 2.4K for my first billing cycle. The highest balance was 513 dollars and 2.4K payment received on my EX report for Freedom that month.

But I don't think that is *bad*, many experienced guys here told me it could be seen as a *good sign*, since you use your card heavily and have the ability to pay in full. Actually when that info just reported first day on my EX, I applied for AMEX green and BCP, both instantly approved and BCP gave me $2000 limit. ( I only have less than 1 month US credit history at that time).

2. I asked about Store card back then, and those amazing guys once again told me that if you don't go to any specific store quite often, there is no need to apply for a store card for * credit MIX purpose*. You can get a $1000 installment loan just for credit MIX if you want. Because the TL quality(in Fico Score calculation model) is Mortgage> Installment loan> Credit card> store card. 

I hope those info can help you.

---

Hey, thanks for chiming in! (Saw this right after I replied)

Lower than 10% seems to be the consensus! So, that sounds nice - let me get thias straight, you applied for AMEX green and BCP after your first statement that reported your first Freedom activity? It's a bit early for me to be thinking about AMEX, but I've wanted one because I see the awesome benefits for products and I tend to buy a lot of tech. My TU score is a current 638, with nothing in collections, just $14,000 in student loans to pay off (I've paid all on time and more than my minimum) and now one credit card.

Yeah, that's what I came to the conclusion with too. Would an installment loan be really helpful? I've gone by the notion that if you don't need the debt, don't do it...although, I am trying to build my credit as steady (and as fast) as possible, but I do realize that this entire process is going to take some really great patience.  

[DavidZeng]

Yes, I applied AMEX just on the same day Chase reported to EX, and that is the only TL reported back then.  

Some folks get $1000 installment loan from their local CU, and the purpose for this service is to MIX credit record. ( you may search that thread). I am toatly agree with you about " if you don't need the debt, don't do it" What I suggest is if you need some more TLs , you may think about installment loan or other credit cards like from Amex instead of store card, which is a really minor factor in FICO score.

Acutally I don't have any REAL FICO till now since all my TL are less than 3 months , but I think I will get a real FICO next week, since my SPG will be backated to Jan 2013 and treated as TL over 1 year. 

[notfancy]

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@mrjohnsonsgoals2 wrote:

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@notfancy wrote:

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@mrjohnsonsgoals2 wrote:

Hey again, everyone (I apologize if this is a bit repetitive)!

So, as I prepare to get my first credit card (Chase Freedom with a $1,000 credit limit) next week, I've been doing some reading as to how I should actually spend the thing when I get here. I think the advice I got stating that I should "use it for everything I use cash for" is awesome, but it was at that point I looked into the rules about credit card utilization.

Now, most places (and a few threads on here) say you should utilize no more than 30% of your total balance. I also read somewhere that if you end up utilizing more than that, you can pay off a part of that balance to get it down below the recommended utilization and look better to credit agencies and the bank, or so forth.

So, I'm basically wondering if both are true: Should I keep my utilization under 30% at all times? Can I really sort of nudge the utilization percentage in my way if I see that its gone over 30% ($300) in my case by paying a part of my balance early to get it down? Honestly, I'd pay it down to 1% if it's advisable of me to do so - I don't plan on carrying a balance every month, and I'm not too into the idea of paying the balance as soon as there is one (and I hear that you shouldn't do that, either).

Now to figure out if I should get more than one card since I already have 3 inquiries (no baddies or outstanding payments however) in the past six months, 2 last week. Maybe I should get a store card?

Thanks!

---

You can use 100% of the limit as long as you pay it down before the statement cuts. The reason for paying it off or down before the statement cuts is to prevent a high balance from appearing on your credit report, thus lowering your score and spooking your creditors.  If you plan to apply for more cards or any thing else, you'll want your card reporting a balance of less than 10%. If you're not looking to apply for any thing, you can carry a balance, but again it's best to not have UTL hitting the 80-90% mark as that is considered "maxed"

If you already have inquiries and I know you had one denial due to short credit history, I'd suggest waiting at least 6 months to generate a little positive history and to get used to managing a card account in a way that keeps your scores as high as you can with out driving you crazy. (again worry about your score only if you plan on applying for any thing, other wise it doesn't matter too much unless it takes a huge nosedive.)

I pay on multiple cards multiple times a month and have had no issues. I do that for my scores because I want an auto loan soon, but also for my own piece of mind. I'm simply not comfortable carrying high balances or a debt amount more than 15% though I can carry as much as 30% with out sweating too much. If you look in the garden club thread you'll see I currently have 2 cards reporting VERY high UTL and some of those I just paid down or off.

I don't know if it's the balances reporting, or some erroneous derogatory information that reported, but my Walmart credit score took a dive of more than 40 points. That is easy enough to do with carrying multiple balances on multiple cards as well. (though in this case I really think it's just that one account that has caused me nothing but trouble for many years with my credit score!)

Credit is subjective. Do what ever you're most comfortable with, and what will not put you in any sort of a bind. Another reason to keep your balances low is interest. Why pay it if you don't have to. If you have a card that gives you cash back or other perks, why essentially lose free money to interest? If you pay your balance down low before the statement say to 8%, that will report, and it will be positive for your credit history and report. It shows usage, and responsible usage. Showing 0 on all accounts is actually bad for your score... BUT if you pay it down to that 8% example, let it report, then pay off that final balance before the due date, you'll have helped your  credit scores, AND avoided paying any interest. To me, that's a win win situation for you.

---

I think I'm starting to get it! So I can basically spend that entire balance (not that I would purposely try and do that for the sake of it), and then pay it down to have the card reporting a balance of that less than 10%. A statement usually cuts at the beginning of the month, right? I've heard beginning and end of the month, twice a month, etc. So from what I'm figuring from the example in your last paragraph, if the month starts, I spend $400 in the first week (40%), and then pay off $300 (30%) the second week, then let the statement come around and read 10% and then pay that off, that's how I would benefit, right?

As far as the second paragraph, that means six months to generate history before applying to my next credit card, right? I've been a bit back and forth in getting a Chase Amazon Rewards card, but with the two pulls from First Hawaiian Bank (rejected) and Chase (accepted) last week, I don't know if I want to try yet another one. And yeah, my primary focus is applying - I want to have a really good score in the next year or so as I decide to hopefully graduate to a higher paying job and move out on my own.

I also hope your score gets better and that gets cleared up! You sound responsible, and that sounds ridiculous.

---

Hi again! Your first paragraph is a good summary. However, each person's statement date is different. You can call Chase and ask them when the statements on your account cut, and are generated, or you can go onto your account and look it up. I do not have a Chase account yet so I don't know where you would look. On my Capital One account though it tells you your statement dates and when they cut which is really nice. Basically look for your billing cycle. If it says something like Feb 7th-March 6th, your statement should cut on March 6th, so spend away and pay away, but make sure your balance is 90 dollars or less by March 5th or so and keep it clear til you get notified that your statement is read.

Yes, I would suggest that you wait 6 months. You have 3 inquiries and one account to show for it. Let your Chase account report favorable history and allow yourself time to play with it a bit to find what is comfortable to you debt wise. You might have more questions, things to work on, etc... so many things. Use that 6 months to get comfortable and secure. Ask your questions, and gain understanding. Credit is a complicated and confusing thing!!

Thank you for your kind words. It will get better. Time heals all wounds and I learned a lot on this forum already. I am responsible and it is ridiculous but I wasn't always responsible or knowledgeable. I'm learning how to be though. Every day.

[Chris679]

You can switch the billing date to whatever you want.  With most companies, you set the date the payment is due and then the statement will cut a few days after that.  Also, make sure to PIF each month because if you carry a balance over many cards will charge you interest based on the average daily balance.  This means you have no grace period and are paying interest from the moment you charge something.