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Utilization confusion

Established Contributor

Utilization confusion

So, I know you're supposed to keep your utilization as low as possible, but is that across all revolving credit lines, or on individual credit lines?

 

For example, say you have 3 credit cards at $1000 each with a total combined limit of $3000.

 

Does (A) carrying a $333 balance on each of the three cards have the same result as (B) maxing out one card at $999?

 

Both (A) and (B) would be 33% utilization of total credit available, but (B) would be totally maxed out.

 

I'm asking just as a "just in case" - for "just in case" I have to use a card a lot any particular month.

 

Thanks!

 

 

Starting (July 2013): 557 EQ - 586 TU - 591 EX ** Current: (Jan 2017): 715 EQ - 750 TU - 730 EX ** Goal: 750+ on all
Message 1 of 5
4 REPLIES
Established Contributor

Re: Utilization confusion

IMO...Its a little bit of both. You total CL is definitely important. You want to try and stay below 10% when it comes to your overall UTL. But having ANY card thats maxed out, even if its below 10% overall, is still bad. For example, you DON'T want to have 1 credit card at 9k and 1 credit card at 1k and max out that 1 CC. That still affects you negatively.

 

..again, from MY experience. And the feedback i've received on this forum.

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Message 2 of 5
Valued Contributor

Re: Utilization confusion

yes and no For fico scoring  yes in that your utilization is a percentage of your usage on all cards however Fico takes into account when you have a cards with balances.

 

Even if you pay in full every month you will still show a balance. You must pay off the bill before the next statement cuts which is usally a few days after a payment is due.  I wouldnt want to max anycard for the reason you could get a FR and it could have adverse effects.  Pay a couple of times a month  if you must use your card that much to prevent this from happening.


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Message 3 of 5
Super Contributor

Re: Utilization confusion


skigirl916 wrote:

So, I know you're supposed to keep your utilization as low as possible, but is that across all revolving credit lines, or on individual credit lines?

 

For example, say you have 3 credit cards at $1000 each with a total combined limit of $3000.

 

Does (A) carrying a $333 balance on each of the three cards have the same result as (B) maxing out one card at $999?

 

Both (A) and (B) would be 33% utilization of total credit available, but (B) would be totally maxed out.

 

I'm asking just as a "just in case" - for "just in case" I have to use a card a lot any particular month.

 

Thanks!

 

 


OK you lost me sleepy but here Lol

3 cards $1000 each total limits $3000

total UTL for all 3 should not exceed 30%

10% 300

20% 600 

30% 900

Doesn't matter if its on 3 cards or 1

But its never ever good to max any cards out negative effect on scores

Before you app think...
Have you done your research of the CC?
Does it fit your spending?
Do you have a plan for the bonus w/o going into debt?
Can you afford the AF?
Do you know the cards benefits? Is it worth the HP?
Message 4 of 5
Contributor

Re: Utilization confusion


skigirl916 wrote:

So, I know you're supposed to keep your utilization as low as possible, but is that across all revolving credit lines, or on individual credit lines?

 

For example, say you have 3 credit cards at $1000 each with a total combined limit of $3000.

 

Does (A) carrying a $333 balance on each of the three cards have the same result as (B) maxing out one card at $999?

 

Both (A) and (B) would be 33% utilization of total credit available, but (B) would be totally maxed out.

 

I'm asking just as a "just in case" - for "just in case" I have to use a card a lot any particular month.

 

Thanks!

 

 


It is both. To maximize credit scoring, your overall utilization (i.e. total credit card debt / total credit card credit available) should remains below 10%, ideally below 7%.

 

You should also avoid allowing any one card to go over 10%. The formula gets really agressive about dinging you when any one card goes over 50%. In your scenario, you will get dinged under both options, but option B will ding you more.

 

Note that this refers to reported balances. If you charge up a storm, and then pay it off before the balance is reported to the bureaus, it won't affect your score. FICO only takes into account the balances which are reported to it.

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