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Credit utilization- which is better, "0" or less than "10%"?

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Anonymous
Not applicable

Credit utilization- which is better, "0" or less than "10%"?

Ok, I'm getting a little confused on the credit utilization %. Scenario #1: Some posts that I've read state that in order to get higher score increases, don't leave a "0" balance on any of your credit cards, just leave a small balance of no more than "10%". On each of them. But then, Scenario #2: I've also read posts that state it's best to leave a "0" balance on all of your cards except for just one of them, and then on that one, leave a balance of no more than "10%". So I'm not sure which scenario would be the best one to go with. Has anyone tried it both ways, and if so, which worked best for you?
Message 1 of 19
18 REPLIES 18
0REDSOX7
Valued Contributor

Re: Credit utilization- which is better, "0" or less than "10%"?

I think it depends on the number of cards in your credit profile.

Me, personally, have seen the biggest impact to my score with the second scenario.
BK Discharge 2/11/14

Currently in the garden.
Message 2 of 19
DaveSignal
Valued Contributor

Re: Credit utilization- which is better, "0" or less than "10%"?

There is more than one factor that falls into the utilization FICO scoring.  Of the scenarios you mentioned, you are considering two different factors, the percentage of utilized cards and the percantage of credit limit on those cards.  You can get the best scoring if you think about them separately.  So, to get the most points out of the percentage of utilized cards, you would need to have most of the cards at $0.  You can't have them all at $0, because then you are penalized for not using credit.  In order to not be penalized for no use, but still have a low percentage of utilized cards, your best chance for maxing this factor is to leave one card with a balance.

 

FICO also scores percentage of credit limit total and per card.  It has been shown that the best way to max this factor is to have less than 10% utilized.  In order to max this scoring factor, while taking into consideration the other factor about perctage of used cards, -and- avoiding the penalty for no used cards, the best strategy is to leave a less than 10% balance on one card only.

EX:694 TU:744 EQ:777
Amex ED $19.5k - BoA Travel Rewards $15k - CSP $5k - SDFCU EMV $15k - NFCU goRewards $20k - Barclays Arrival $6.5k
Message 3 of 19
ERoosky99
Regular Contributor

Re: Credit utilization- which is better, "0" or less than "10%"?


@DaveSignal wrote:

There is more than one factor that falls into the utilization FICO scoring.  Of the scenarios you mentioned, you are considering two different factors, the percentage of utilized cards and the percantage of credit limit on those cards.  You can get the best scoring if you think about them separately.  So, to get the most points out of the percentage of utilized cards, you would need to have most of the cards at $0.  You can't have them all at $0, because then you are penalized for not using credit.  In order to not be penalized for no use, but still have a low percentage of utilized cards, your best chance for maxing this factor is to leave one card with a balance.

 

FICO also scores percentage of credit limit total and per card.  It has been shown that the best way to max this factor is to have less than 10% utilized.  In order to max this scoring factor, while taking into consideration the other factor about perctage of used cards, -and- avoiding the penalty for no used cards, the best strategy is to leave a less than 10% balance on one card only.


+1  Just make sure not to keep a zero balance for TOO long and risk the chance of the account being closed due to inactivity.  Even if you have to periodically charge an item that's just a few bucks and pay it right off.

Current FICOs: (11-02-15) EQ- 623 (628) / EX- 643 / TU- 679
Starting FICOs: (May 2014) Low to mid 500s (all 3 bureaus)
GOAL: As HIGH as possible! All 3 FICOs above 680/700 will be NICE!!!
Total Credit Limits- $104,120
Message 4 of 19
Anonymous
Not applicable

Re: Credit utilization- which is better, "0" or less than "10%"?

What if you only have one card right now. Just started and only have one card. 

Message 5 of 19
Anonymous
Not applicable

Re: Credit utilization- which is better, "0" or less than "10%"?

Ok, great!! Thanks for all of your comments and advice- well appreciated!! I currently have 3 cards (1 secured for $200, 1 secured for $300, and the last 1 unsecured for $300). I'll be sure to keep two of them at "0" balance and one of them with less than "10%" balance. Thanks again!!
Message 6 of 19
DaveSignal
Valued Contributor

Re: Credit utilization- which is better, "0" or less than "10%"?


@Anonymous wrote:

What if you only have one card right now. Just started and only have one card. 


With only one revolving line of credit, you will never be able to get the best FICO score for all of the diferent criteria in utilization scoring.  If you are insistant on only one card, you should do the best you can and keep utilization low and at least get some points for a low percentage of used credit.  But, if you are trying to cover all bases for the best possible scoring, you should try to aquire two more cards.

EX:694 TU:744 EQ:777
Amex ED $19.5k - BoA Travel Rewards $15k - CSP $5k - SDFCU EMV $15k - NFCU goRewards $20k - Barclays Arrival $6.5k
Message 7 of 19
DaveSignal
Valued Contributor

Re: Credit utilization- which is better, "0" or less than "10%"?


@Anonymous wrote:
Ok, great!! Thanks for all of your comments and advice- well appreciated!! I currently have 3 cards (1 secured for $200, 1 secured for $300, and the last 1 unsecured for $300). I'll be sure to keep two of them at "0" balance and one of them with less than "10%" balance. Thanks again!!

Glad to help.  This is a great plan.  You don't really have to do it indefinately, but just make sure to report like that if you have a near future plan for applying for something new or requesting a cli.

EX:694 TU:744 EQ:777
Amex ED $19.5k - BoA Travel Rewards $15k - CSP $5k - SDFCU EMV $15k - NFCU goRewards $20k - Barclays Arrival $6.5k
Message 8 of 19
Anonymous
Not applicable

Re: Credit utilization- which is better, "0" or less than "10%"?

Ok, thanks again!! I'm so grateful for this forum, I've really improved my credit report/ scoring from such great advice!!
Message 9 of 19
Anonymous
Not applicable

Re: Credit utilization- which is better, "0" or less than "10%"?


@Anonymous wrote:
Ok, I'm getting a little confused on the credit utilization %. Scenario #1: Some posts that I've read state that in order to get higher score increases, don't leave a "0" balance on any of your credit cards, just leave a small balance of no more than "10%". On each of them. But then, Scenario #2: I've also read posts that state it's best to leave a "0" balance on all of your cards except for just one of them, and then on that one, leave a balance of no more than "10%". So I'm not sure which scenario would be the best one to go with. Has anyone tried it both ways, and if so, which worked best for you?

you could let each of your credit cards report like $10 dollars each so they can be active.... Smiley Wink

Message 10 of 19
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