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Understanding utilization

New Member

Understanding utilization

This is probably explained many times, but I can't see it.

 

I have been told to keep my util between 5 and 9%.

 

I have one credit card for $1000.

 

Does this mean:

 

a) I should never put more than $90 on the card?

b) I could do a $300 charge on it as long as I pay it off to below 9% before the bill cuts?   or

c) I could charge $300, but pay it to 9% by the due date?

 

Thanks!

 

 

Message 1 of 4
3 REPLIES
Valued Contributor

Re: Understanding utilization


caliguy1976 wrote:

This is probably explained many times, but I can't see it.

 

I have been told to keep my util between 5 and 9%.

 

I have one credit card for $1000.

 

Does this mean:

 

a) I should never put more than $90 on the card?

b) I could do a $300 charge on it as long as I pay it off to below 9% before the bill cuts?   or

c) I could charge $300, but pay it to 9% by the due date?

 

Thanks!

 

 


You would want to follow answer B.

 

Once your bill cuts make sure you pay the entire balance so no interest charges accrue.

 

Repeat the process month after month.

Good Luck
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Message 2 of 4
Valued Member

Re: Understanding utilization

Ok Lets clear a couple of things up first. What is your purpose? Are you trying to raise your score or are you trying to increase your credit limit? The best way to raise your credit limit is to pay off your entire bill each and every month! My wife went from a $500 credit limit to $2500 and got 2 other cards in just a year by following this method with no prior credit history. Now if you are trying to get your score up, there is a theory that you should carry a little balance. As far as that is concerned I'm not 100% sure of that because I paid off all my credit cards before buying my house and my score didn't drop a single point until I had a credit check by the bank. If that is what you are shooting for make sure that you have it to the level you want by the reporting date. Most of the time it is close to your due date of your bill but not always exactly that date. I found that one of my cards reports about 5 days before the bill cuts. Either way if you make a larger purchase on the card you can pay it down in the middle of the pay cycle and it won't report to your score. Good Luck! 


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Message 3 of 4
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Valued Contributor

Re: Understanding utilization

If you are trying to gain more points then yes report below 10% preferably 9% utilization across all cards. If possible then 0%. So use the card then pay it down before the statement cuts.

But if you are trying to get higher CLs then report a high balance one month then pay it off, but not to where it seems you maxed your card out because this will show lenders you are using your available credit limit.

When you apply for a credit card some lenders like CITI will not approve you if you have a zero balance reporting at time of app.

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Message 4 of 4