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Regular Contributor
BOSScredit
Posts: 141
Registered: ‎11-29-2013
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Please educate me on how to use my cards!

BoA Cash Rewards 1500

BoA Better Balance 2000

Chase Freedom 2500

AmEx TrueEarnings 2000

Discover IT 1000

 

These are my cards and their limits. So my total credit limit is $9000. Im just so confused on scoring. If I only show a balance on my BoA cash rewards card for lets say $750 does that mean my utilization is 50% (750/1500 BoA cash rewards limit) or 8.3% (750/9000 total credit limit). Do I have to show a balance on all my cards to have those cards be used in my utilization calculation? Or are all cards' limits used in my utilization regardless of showing a balance?

 

Additionally, am I hurting my score by not letting a balance report? I usually pay in full before the date is due. For example, I spent $2000 this month on my BoA cash rewards, after my first 1000$ I paid it off way before the statement was reported, and the second 1000$ I paid off a few days before the statement was reported. This is becuase in the prior month I let a balance of 1000$ report and my score dropped from 750 to 690 despite PIF.... Too confused here. Someone please provide guidance!

 

Now I'm starting to think this BoA better balance rewards was stupid because the card has to show a balance in order to get the 120$ per year...

 

I always PIF!

Community Leader
Valued Contributor
user5387
Posts: 1,794
Registered: ‎07-01-2010
0

Re: Please educate me on how to use my cards!

Utilization is both per card, and overall.

 

The typical advice is to let one card report a small balance (a few percent of the CL of that card), and all others a $0 balance.

 

There are lots of threads on this forum that discuss the ins and outs of this approach.

 

Moderator
guiness56
Posts: 22,406
Registered: ‎01-17-2008
0

Re: Please educate me on how to use my cards!


BOSScredit wrote:

BoA Cash Rewards 1500

BoA Better Balance 2000

Chase Freedom 2500

AmEx TrueEarnings 2000

Discover IT 1000

 

These are my cards and their limits. So my total credit limit is $9000. Im just so confused on scoring. If I only show a balance on my BoA cash rewards card for lets say $750 does that mean my utilization is 50% (750/1500 BoA cash rewards limit) or 8.3% (750/9000 total credit limit). Do I have to show a balance on all my cards to have those cards be used in my utilization calculation? Or are all cards' limits used in my utilization regardless of showing a balance?

 

Additionally, am I hurting my score by not letting a balance report? I usually pay in full before the date is due. For example, I spent $2000 this month on my BoA cash rewards, after my first 1000$ I paid it off way before the statement was reported, and the second 1000$ I paid off a few days before the statement was reported. This is becuase in the prior month I let a balance of 1000$ report and my score dropped from 750 to 690 despite PIF.... Too confused here. Someone please provide guidance!

 

Now I'm starting to think this BoA better balance rewards was stupid because the card has to show a balance in order to get the 120$ per year...

 

I always PIF!


You are correct.  Your utilization on that one card would be 50% and overall would be 8.3%.

 

No, you do not need to use the cards to be factored in. The CL are all factored in.  However, it may be wise to switch which cards you let a balance report on every month or so.  This way it will show the CCC you are using the credit they gave you.

 

Your score dropped that month because it was reported you used 1000/1500 which is 67% for the card and 11% overall.  Once it is/was paid down your score will go back up.

 

Let all but one card report 0 and the other at 9% or below for optimal FICO score.  Then PIF before the due date.

 

Don't let all report 0 or all report a balance, FICO dings for both of those.  How much, YMMV.


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