Questions regarding Utiliization

[bobbycredit]

I've been studying this forum and I'm just starting my credit repair journey. I've been unable to fully understand these bits about utilization though:

1. Is utilization the total % across all cards? For example Card1 is maxed out 100% and Card2 isn't being utilized at all 0%, does overall utilization report as 50% here? Or is it bad to go over 10% on any given card at any given time?

2. I've heard that 0% utilization is bad, but then I've recently read to keep Card1 at 9% and Card2 at 0%. Does this mean to not use Card2 at all? Or does it mean to pay Card1 down to 9% and pay Card2 down to 0% every month? For those of us with small CL cards ($200 secured), it would be hard to utilize 9% and pay the minimum balance without paying it off in full. Which leads to my next question:

3. If you want to maintain a 9% utilization, is it wise to pay the bill in full, then immediately run out and charge 9% on the card before it reports?

Thank you for any replies!

[Joteism]

1. Utilization is indeed the total % across all cards. It is generally recommended that you show the 1-9% balance on one card, and keep all other cards at at zero.

You can use as much of your available credit limit, as long as you pay it in full (or leave that 1-9%) before your due date. So you can use the full $200 on your secured and pay it off right away and use the full balance again in the same billing period, but just make sure to pay it off before the due date.

2. You can use both cards as much as you like, but make sure to pay one if full before the due date and leave a balance on the second card. Example - If you use $150 on Card1 and $50 on Card2, you should pay Card2 in full and pay $114 on Card1 before the statement date (or due date, if you don't know when your statement cuts) for the 9% (assuming that both cards have a $200 limit). Just make sure to pay the $36 (9% of $400) statement balance before the due date.

3. I think I sort of answered it in question #2.

I feel like I could have explained that a lot better, but I just had a big lunch and I'm about to descend into a food coma.

[bobbycredit]

Thanks Jotelsm, that was a fine response!

[Anonymous]

I recently got a new roof.  We paid for it through Wells Fargo, who issued a credit card for the project.  Now I have a $35,000 credit line, but the job cost $33,000 to be paid over 7 years.  Will this affect my utilization and FICO.  If so, should I try to get a loan to pay it off?

[Anonymous]

I have one capital one secured card with a 200$ limit only.every month the payment due date is 7th. If I use 150$ every month...how much should I pay on or before the 7th.minimum due is 25$.

Should I keep a balance of 18$ (9 percent of 200)and pay 132$ ?is statement date and minimum due date the same..sorry..a little confused about utilization as well..have been paying the entire balance on the due date for last 6 months and score hasnt changed at all...

Thanks for the help

[taxi818]

ok. let me explain this so there is no confusion.

first thing first. so you know how important this is.

Payment history. 35 percent of entire credit score.

Utilization is 30 percent of entire credit score. you now you can gauze how important this is.

Its not just total utilization. but utilization on the indiviual cards as well as how many cards you are carrying balances on.

first. example.

You got 3 credit card.s.

break it down. 33 percent.  card 2 . 33 percent. card 3. 33 percent.

ok. now. 1000 each on each card . 3000 total limit.

always keep under 30 percent. but for best results on your score. you want it under 10 percent.

here we go.

3000 limit means total spend max on the 3 cards can be 900 dollars. which keep your score from falling. but not increasing.

if you got 500 on 1 card. the other two must be no more than 400 dollars.

for optimal score. pay all cards to zero balance.

and leave small balance on 1 card. even 10 dollars.

My fico will round that 10 bucks up to 1 percent.

this way . month after month you will get all points in that catagory .

but if you can pay in full . at least pay it down below 30 percent total. 2 cards zero. 1 card under 30 percent total.

last but not least. don't max out and card. and when i say max. over 80 percent. on any 1 card.

example. 3000 total limit.

1 card 500. other card. 1000. other card. 1500

don't go over 80 percent on any card. even if you don't use the other. 2.

so now you should understand if you read this correctly. its a game that can only be played 1 way. To Win.

Good Luck.

[joedtx]

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@Anonymous wrote:

I recently got a new roof.  We paid for it through Wells Fargo, who issued a credit card for the project.  Now I have a $35,000 credit line, but the job cost $33,000 to be paid over 7 years.  Will this affect my utilization and FICO.  If so, should I try to get a loan to pay it off?

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OMG...... $33k for a roof  that must be one AMAZING roof. It it Tile or Custom Cut Metal, i've never heard of anything more than 5k but to be honest size does matter so that might have alot to do with the price. Congrats on your new roof and your new credit line