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New and need help understanding utilization

Established Member

New and need help understanding utilization

I'm having trouble understanding credit utilization. I just got approved for a few new cards so I want to know how handle their balances.


So if one month your credit card reports your balance to be say 50%, and at the end of the next month it decreases to 0%, does your score instantly increase? Or is your score based on your utilization over time (so it accounts for all months prior)?


I usually paid my credit card off in full every month, but that means my utilization % was always around the same amount and didnt decrease over time. So I'm wondering if it's better if I pay my credit cards down slowly by paying the minimum instead (0% introductory APR) Smiley Happy


I also want to know, would it be better to have a small balance on all cards or can I just choose a couple of main cards and keep the others at a zero balance?


Thanks in advance!

TU: 767 (11/04/2013) | EQ: 714 (5/13/2013) | EX: 717 (11/09/13) |

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Valued Contributor

Re: New and need help understanding utilization

Welcome to the Forums!!


For maximum scoring purposes you should carry a small balance betweeen 1%-9% on only 1 card and have the other cards report a  $0 balance.

Your scoring will rise and fall according to your UTL %

As you stated, if one month you have 50% and the next 0% then yes you will see a bump in your score.

Message 2 of 3
Regular Contributor

Re: New and need help understanding utilization

Credit Util is computed by dividing your balance with your CL x 100. If you have a 1000 CL and your balance is 50, that will be 50/1000 = .05 x 100% = 2% Util.


I think it will be a best practice to maintain your util up to 9%. Paying your balance card to zero before the statement will increase your score. The balance on the statement is what goes to the CRA for reporting. That means, you can use and use your card as long as you pay it before the statement. Fico will not remember the past payments and I think paying it slowly will just lower your score a bit because your credit-to-debt ratio will increase. It is also good if you use your card once in a while just to have an activity. But the important factor is paying on time and keeping your util down.

Current MyFico Scores as of Dec 2013: Fico EQ: 768 | Fico EX: 775 | Fico TU: 744
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