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Frequent Contributor
ficojoe
Posts: 308
Registered: ‎07-21-2012

Utilization across multiple cards with wide range of limits

I have the following revolving accounts:

NFCU Visa: $7,500 limit

NFCU Overdraft Line of Credit: $7,500 limit

Kay Jewlers: $1,000 limit

Capitol One Secured MC: $851 limit

Amazon store card: $400 limit

Walmart store card: $150 limit

 

Total revolving limit: $17,401

 

I understand 9% is an ideal utilization percentage, however, I have no desire to have nearly $1,600 charged every month. How will a lower total utilization affact me? Should I quit seeking new credit and credit limit increases since doing so will force even lower total utilization percents?

 

I doubt I will use the Overdraft Line of Credit much at all, save emergencies. Similarly, I have no desire to spend much money at Kay Jewlers. How will  having accounts with 0% utilization affect me?

 

On the other hand, the Amazon and Walmart cards with tiny limits are easy to use up the credit limits. I have been paying them down to 9% after every purchase, but does it really matter? Can I have 50% utilization on these small limit cards knowing that my total utilization is still only around 5%? How will I be affacted by having high utilization on the low limit accounts?

Established Contributor
migliogiorni
Posts: 657
Registered: ‎06-27-2012

Re: Utilization across multiple cards with wide range of limits

Utilization of 1 to 9 percent range only applies to fico scoring if you are seeking new credit.  Having 0 percent uti from what i've heard decreases your score as opposed to sticking to that 1 to 9 percent range on your revolving cl. 

 

BOA: 8.9k
CSP: 5k
Discover: 5k
Citi TY Preferd: 5k
Wally: 5k
JCP: 4.9k
citiForward: 4.7k
ChaseFreedom: 4.5k
DFS: 2k
Frequent Contributor
ficojoe
Posts: 308
Registered: ‎07-21-2012

Re: Utilization across multiple cards with wide range of limits


migliogiorni wrote:

Utilization of 1 to 9 percent range only applies to fico scoring if you are seeking new credit.  Having 0 percent uti from what i've heard decreases your score as opposed to sticking to that 1 to 9 percent range on your revolving cl. 

 


1 to 9 percent range on every revolving account or overall?

Established Contributor
migliogiorni
Posts: 657
Registered: ‎06-27-2012

Re: Utilization across multiple cards with wide range of limits

overall uti is 1 to 9%.  Ideally once card carries a balance and all other have a 0 balance when seeking credit.  When not seeking just PIF keep em all at 0 as long as you use the cards it's fine.

 

BOA: 8.9k
CSP: 5k
Discover: 5k
Citi TY Preferd: 5k
Wally: 5k
JCP: 4.9k
citiForward: 4.7k
ChaseFreedom: 4.5k
DFS: 2k
Established Contributor
migliogiorni
Posts: 657
Registered: ‎06-27-2012

Re: Utilization across multiple cards with wide range of limits

* 1 card carries balance all others don't, sorry bout that can't get my edit box to work.

 

BOA: 8.9k
CSP: 5k
Discover: 5k
Citi TY Preferd: 5k
Wally: 5k
JCP: 4.9k
citiForward: 4.7k
ChaseFreedom: 4.5k
DFS: 2k
Moderator Emeritus
MarineVietVet
Posts: 14,084
Registered: ‎07-14-2009

Re: Utilization across multiple cards with wide range of limits


ficojoe wrote:

I have the following revolving accounts:

NFCU Visa: $7,500 limit

NFCU Overdraft Line of Credit: $7,500 limit

Kay Jewlers: $1,000 limit

Capitol One Secured MC: $851 limit

Amazon store card: $400 limit

Walmart store card: $150 limit

 

Total revolving limit: $17,401

 

I understand 9% is an ideal utilization percentage, however, I have no desire to have nearly $1,600 charged every month. How will a lower total utilization affact me? Should I quit seeking new credit and credit limit increases since doing so will force even lower total utilization percents?

 

I doubt I will use the Overdraft Line of Credit much at all, save emergencies. Similarly, I have no desire to spend much money at Kay Jewlers. How will  having accounts with 0% utilization affect me?

 

On the other hand, the Amazon and Walmart cards with tiny limits are easy to use up the credit limits. I have been paying them down to 9% after every purchase, but does it really matter? Can I have 50% utilization on these small limit cards knowing that my total utilization is still only around 5%? How will I be affacted by having high utilization on the low limit accounts?


Everyone's situation is different and there is no one size fits all approach to this and therefore no "ideal" number but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.




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