I see several threads where people worry about score drops when they have a one-off month of above average spending. Do you really need to keep your utilization low, month after month, or do you only need to keep it low if you are applying for new credit?
Let's say I am at 9% utilization and then I jump to 80% utilization. If I stay at 80% for several months, and then drop back to 9%, all else being equal, won't I see the same score as I had previously. Is there any memory to my credit score or file? Is a creditor able to tell that I was previously at 80%?
Is the worry that if your utilization spikes, one of your creditors may take adverse action, such as lowering your credit limit so that afterward you are in a position where it is harder to keep your utilization low?
Are there any other concerns? For example, even if my report doesn't have any memory, do individual creditors internal files show that I was high for several months?Because in the absence of some memory to the report, it seems that some of the worrying about score, just for score's sake, are unwarranted. I have a couple cards that were closed that I am nearly finished paying off. As for my open cards, I now PIF every month, but I don't bother making payments before the statement cuts in order to manipulate utilization. I am, however, hoping to apply for a mortgage late next year. My plan was to start controlling utilization so it stays below 10% a few months before I plan to apply for the mortgage. But should I be controlling it all year. From now until the end of the year, will I see greater score improvement if I keep it low, or does the score only depend on what it is at the time the report is pulled?
Thanks in advance.
Starting Score: ~500 (12/01/2008)
Understood. 80% was meant only as an example. Although for me, that wouldn't be hard because I only have one open credit card right now and one charge card. The limit for the CC is only $2500. I mainly run things through the Amex charge card, which as I understand isn't considered for utilization (for the most part anyway, maybe there were some situations where it is considered). In any event it isn't relevant for my specific situation. My utilization is around 20% right now. It would simply be a matter of mking a payment before statement cuts for me to bring it below 10%. But I haven't bothered doing that because I'm not looking for new credit. I just wanted to make sure that when I needed to try to maximize my score, at least as far as utilization is concerned, I simply needed to start making the extra payment (or spending less on the credit card) to bring the utilization down. And that I wouldn't get any benefit for successively keeping it below 10%, i.e, no extra points for 6 months below 10% or 12 months below 10%, etc.
And I do understand that there is a lag time for reporting to update.
Thank you very much for the prompt responses.
