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Credit Card Usage/Utilization Questions

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Anonymous
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Credit Card Usage/Utilization Questions

So our new cards are coming in and I am somewhat scared of those little bits of plastic.  I don't want to mess this up.  My questions are does utilization refer to the amount you use it or is that credit limit versus balance reported?  What is the best range to keep that in for the maximum score benefits.  Do I need to use each one every month and then PIF?  Or can some of them not be used?  Sigh, I need Credit Cards 101. Thanks in advance.  

Message 1 of 10
9 REPLIES 9
CH-7-Mission-Accomplished
Valued Contributor

Re: Credit Card Usage/Utilization Questions

Here is the rule:

 

Only one card reports a statement balance and that amont should be $5 to $10 or so.

 

You can use your cards all you want, just make sure that they are all paid to zero before the statement cut date except that one card reporting the $5 to $10 balance.

 

If you ever look at your credit reports (like on Credit Karma) and you see anything besides that one card showing that $5 - $10 balance, you are doing it wrong!

 

You should use your cards at least every three months to keep them from getting closed for nonuse.  Sometimes it takes a year or more for a lender to close for nonuse, but why chance it.

 

If these are unsecured cards and you hope to get credit limit increases, you want to use the heck out of the cards.  So pay off a few times a month or at least by the statement cut date.

 

To make lenders happy, use your cards as much as you can.

To keep FICO happy, one card reports a $5 - $10 balance.  Then pay that $5 to $10 by the due date.

 

Never, ever, ever pay any interest or you are doing it wrong.

Message 2 of 10
Anonymous
Not applicable

Re: Credit Card Usage/Utilization Questions


@CH-7-Mission-Accomplished wrote:

Here is the rule:

 

Only one card reports a statement balance and that amont should be $5 to $10 or so.

 

You can use your cards all you want, just make sure that they are all paid to zero before the statement cut date except that one card reporting the $5 to $10 balance.

 

If you ever look at your credit reports (like on Credit Karma) and you see anything besides that one card showing that $5 - $10 balance, you are doing it wrong!

 

You should use your cards at least every three months to keep them from getting closed for nonuse.  Sometimes it takes a year or more for a lender to close for nonuse, but why chance it.

 

If these are unsecured cards and you hope to get credit limit increases, you want to use the heck out of the cards.  So pay off a few times a month or at least by the statement cut date.

 

To make lenders happy, use your cards as much as you can.

To keep FICO happy, one card reports a $5 - $10 balance.  Then pay that $5 to $10 by the due date.

 

Never, ever, ever pay any interest or you are doing it wrong.


Thanks!  That's exactly what I need to know.  

Message 3 of 10
Anonymous
Not applicable

Re: Credit Card Usage/Utilization Questions


@Anonymous wrote:

So our new cards are coming in and I am somewhat scared of those little bits of plastic.  I don't want to mess this up.  My questions are does utilization refer to the amount you use it or is that credit limit versus balance reported?  What is the best range to keep that in for the maximum score benefits.  Do I need to use each one every month and then PIF?  Or can some of them not be used?  Sigh, I need Credit Cards 101. Thanks in advance.  


"Utilization" refers to the amount carried over at the end of the statement. It is Total Charges (usage), minus total payments made during the month.

Message 4 of 10
Anonymous
Not applicable

Re: Credit Card Usage/Utilization Questions


@Anonymous wrote:

@Anonymous wrote:

So our new cards are coming in and I am somewhat scared of those little bits of plastic.  I don't want to mess this up.  My questions are does utilization refer to the amount you use it or is that credit limit versus balance reported?  What is the best range to keep that in for the maximum score benefits.  Do I need to use each one every month and then PIF?  Or can some of them not be used?  Sigh, I need Credit Cards 101. Thanks in advance.  


"Utilization" refers to the amount carried over at the end of the statement. It is Total Charges (usage), minus total payments made during the month.


I got it.  I assume I call the CC issuer and find out when my statements cut so I can know when to pay?  Is that a certain day every month or does it change?

Message 5 of 10
Anonymous
Not applicable

Re: Credit Card Usage/Utilization Questions


@Anonymous wrote:

@Anonymous wrote:

So our new cards are coming in and I am somewhat scared of those little bits of plastic.  I don't want to mess this up.  My questions are does utilization refer to the amount you use it or is that credit limit versus balance reported?  What is the best range to keep that in for the maximum score benefits.  Do I need to use each one every month and then PIF?  Or can some of them not be used?  Sigh, I need Credit Cards 101. Thanks in advance.  


"Utilization" refers to the amount carried over at the end of the statement. It is Total Charges (usage), minus total payments made during the month.


OK, now that you are scared to death of "getting it wrong", RELAX and BREATHE. Don't get all uptight over getting it perfect, you do NOT have to maintain that ideal utilization at all times.

 

The world is NOT going to crumble if two cards happen to report a balance.

The bottom is NOT going to fall out of your scores for the next seven years if your card reports more than 30%

Trolls are NOT going to eat your children if you end up with an interest charge one month, or even two.

 

Just understand what it takes to have the best UTI% portion of your scores, so that you can prepare a month or two before hand for the next Auto Loan app, or Mortgage app, or Refi, by "peaking" your scores using UTI% optimizing techniques.

 

You do not need to use every card each month, but you shouldn't let a card sit idle for more than 6 months, unless you plan to let it close in the near future. If any of your cards have rewards, you want to use those as much as possible, for monthly living expenses in order to maximixe the return on them, then pay them down. I use my QS cards and my Barclays Reward card for virtually ALL of my spending, even my rent. Every 3-4 months I have $150-$200  to redeem.

Message 6 of 10
CH-7-Mission-Accomplished
Valued Contributor

Re: Credit Card Usage/Utilization Questions


@Anonymous wrote:

@Anonymous wrote:

@Anonymous wrote:

So our new cards are coming in and I am somewhat scared of those little bits of plastic.  I don't want to mess this up.  My questions are does utilization refer to the amount you use it or is that credit limit versus balance reported?  What is the best range to keep that in for the maximum score benefits.  Do I need to use each one every month and then PIF?  Or can some of them not be used?  Sigh, I need Credit Cards 101. Thanks in advance.  


"Utilization" refers to the amount carried over at the end of the statement. It is Total Charges (usage), minus total payments made during the month.


I got it.  I assume I call the CC issuer and find out when my statements cut so I can know when to pay?  Is that a certain day every month or does it change?


Since you want one card to report $5, make a small charge on one card and wait for the statement to cut.  Then you will know the statement cut date.

On the other cards, make a charge for whatever -- $20 at the grocery or whatever -- and then pay that charge in full so that card has a zero balance.  Then wait till the statement cycles.  It will post a zero balance.  Then you will know the statement cut date.

Once they start, the statement date remains constant unless they notify you of a change.

Make sure you log in to each of your accounts at least once a week to make sure you aren't missing something --- like an annual fee being charged the first month or whatever.

Message 7 of 10
Anonymous
Not applicable

Re: Credit Card Usage/Utilization Questions


@CH-7-Mission-Accomplished wrote:

@Anonymous wrote:

@Anonymous wrote:

@Anonymous wrote:

So our new cards are coming in and I am somewhat scared of those little bits of plastic.  I don't want to mess this up.  My questions are does utilization refer to the amount you use it or is that credit limit versus balance reported?  What is the best range to keep that in for the maximum score benefits.  Do I need to use each one every month and then PIF?  Or can some of them not be used?  Sigh, I need Credit Cards 101. Thanks in advance.  


"Utilization" refers to the amount carried over at the end of the statement. It is Total Charges (usage), minus total payments made during the month.


I got it.  I assume I call the CC issuer and find out when my statements cut so I can know when to pay?  Is that a certain day every month or does it change?


Since you want one card to report $5, make a small charge on one card and wait for the statement to cut.  Then you will know the statement cut date.

On the other cards, make a charge for whatever -- $20 at the grocery or whatever -- and then pay that charge in full so that card has a zero balance.  Then wait till the statement cycles.  It will post a zero balance.  Then you will know the statement cut date.

Once they start, the statement date remains constant unless they notify you of a change.

Make sure you log in to each of your accounts at least once a week to make sure you aren't missing something --- like an annual fee being charged the first month or whatever.


Got it!  Thanks for the help!

Message 8 of 10
CH-7-Mission-Accomplished
Valued Contributor

Re: Credit Card Usage/Utilization Questions


@Anonymous wrote:

@CH-7-Mission-Accomplished wrote:

@Anonymous wrote:

@Anonymous wrote:

@Anonymous wrote:

So our new cards are coming in and I am somewhat scared of those little bits of plastic.  I don't want to mess this up.  My questions are does utilization refer to the amount you use it or is that credit limit versus balance reported?  What is the best range to keep that in for the maximum score benefits.  Do I need to use each one every month and then PIF?  Or can some of them not be used?  Sigh, I need Credit Cards 101. Thanks in advance.  


"Utilization" refers to the amount carried over at the end of the statement. It is Total Charges (usage), minus total payments made during the month.


I got it.  I assume I call the CC issuer and find out when my statements cut so I can know when to pay?  Is that a certain day every month or does it change?


Since you want one card to report $5, make a small charge on one card and wait for the statement to cut.  Then you will know the statement cut date.

On the other cards, make a charge for whatever -- $20 at the grocery or whatever -- and then pay that charge in full so that card has a zero balance.  Then wait till the statement cycles.  It will post a zero balance.  Then you will know the statement cut date.

Once they start, the statement date remains constant unless they notify you of a change.

Make sure you log in to each of your accounts at least once a week to make sure you aren't missing something --- like an annual fee being charged the first month or whatever.


Got it!  Thanks for the help!


Before you get the first statement, you will have to "push" a payment from your bank's bill pay system.  Look up the billing address for the credit cards and then manually enter the account numbers from your cards onto your bank's bill pay system.  Be sure you log in to the credit card a couple of days later and make sure the payment posted correctly.  Most major credit cards have their addresses already stored in bank bill pay systems -- like Capital One, Chase, etc., etc.

Message 9 of 10
Anonymous
Not applicable

Re: Credit Card Usage/Utilization Questions


@Anonymous wrote:

@Anonymous wrote:

@Anonymous wrote:

So our new cards are coming in and I am somewhat scared of those little bits of plastic.  I don't want to mess this up.  My questions are does utilization refer to the amount you use it or is that credit limit versus balance reported?  What is the best range to keep that in for the maximum score benefits.  Do I need to use each one every month and then PIF?  Or can some of them not be used?  Sigh, I need Credit Cards 101. Thanks in advance.  


"Utilization" refers to the amount carried over at the end of the statement. It is Total Charges (usage), minus total payments made during the month.


I got it.  I assume I call the CC issuer and find out when my statements cut so I can know when to pay?  Is that a certain day every month or does it change?


Most cards close the same day every month, but different cards may have different days (did that make sense?). I believe there was a law passed around 2005 that requires them to have the payment due date the same day each month (it used to float due to a straight 30 day statement cycle), but the closing date can "float" - meaning it may shift by one day depending on whether its a 30 or 31 day month. Some lenders, such as Capital One, keep the closing date as well as the due date the same each month, but it may change if you move to a different zip code.

Message 10 of 10
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