credit card utilization

[adorkindisguise]

Hi all,

I've been reading a lot on the boards since early February. I am trying to re-establish my credit. Based on a lot that I've read here, secured cards are a good way to start. I opened secured cards with BOFA, WF and US Bank. I applied for a secured card at my credit union and was surprised when they approved me for a non-secured card with a decent credit limit. I just got the last card I was waiting for in the mail today. So, all the cards are in my possession now. Haven't charged anything yet.

My question is, what is the best way to benefit my scores while using the cards. One of the suggestions I have read here is use one card up to 9-10% utilization and not use the other cards. Are there any other ways which could hep improve my score? Or should I just start by doing the 9-10% utilization on just one card.

Thanks in advance and am really learning so much from all the advice here. Taking it one step at a time.

[guiness56]

Optimum FICO scoring is letting all but one report a 0 balance and the other at 9% or below.  YMMV and you can tinker around with the %.  You can also switch which cards you use so the lender will see you are using them.

Other ways to improve your score would be to have baddies removed from your CR.

Also, on time payments with the CCs and letting them age for about a year will really help.

[BackInTheSaddleAgain]

That's a great question. I believe the board concenseous is to do just that; 9% on one card and 0% on the rest. However, I believe there is also the opinion to spread the 9% out over maybe 2 or 3 cards. I think the problem is everyone's situation is a little unique and affected by utilization (and other factors) differently. So I guess a better question is: How long is a piece of string? I am currently experimenting on utiliztion myself, but haven't quite figured out the best formula. Try a few different formulas and see what the results are. You'll eventually figure it out.  

[Gunnar419]

And to clarify: the rule of having 9% on one card and zero on the others refers only to what's on the card on the day the statement cuts. It doesn't mean you shouldn't USE your other cards. You should use them to make the issuing banks happy with you. But if you pay the balances before the statements cut, you can still "play the FICO game" and get the zero reporting.

Remember, too, that the 9% rule is for people who really, really, really want to fine-tune their credit scores. In the real world, people have higher utilization and allow more cards to report without getting seriously hurt.

[adorkindisguise]

Thanks for the replies. I think, I'l do that. Use 9% utilization on one card then pay that off, then switch to using another card every month, then see where it takes me in 3 months or so. Hoping it will help my scores in a year. Thanks again.

Taking care of 3 baddies in my report as well.

[guiness56]

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@Gunnar419 wrote:

And to clarify: the rule of having 9% on one card and zero on the others refers only to what's on the card on the day the statement cuts. It doesn't mean you shouldn't USE your other cards. You should use them to make the issuing banks happy with you. But if you pay the balances before the statements cut, you can still "play the FICO game" and get the zero reporting.

Remember, too, that the 9% rule is for people who really, really, really want to fine-tune their credit scores. In the real world, people have higher utilization and allow more cards to report without getting seriously hurt.

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+1

Yes, it applies mostly to those rebuilding.

[Shogun]

Very good, but also, like in my case.  I let 0% report.  I don't want to pay interest for a couple of points.

[pakman92]

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@Shogun wrote:

Very good, but also, like in my case.  I let 0% report.  I don't want to pay interest for a couple of points.

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Letting some balance exist on statement date doe NOT mean that you are paying interest.  You have grace periods and in general no interest accumulates as long as you pay in full before the due date.

[adorkindisguise]

Does the amount of secured revolving amount i invested also help my FICO score? Would it also play a part in the amount of credit i can qualify for in the future? Thanks again. Sorry for all the questions. Just trying to make the right steps towards a better FICO score.

[guiness56]

The CL itself won't directly impact your FICO score.  It's impact will be in your utilization which is scored by FICO, so indirectly, yes, it will help.  It could.  But it is how you use it, not necessarily how much you have.