credit utilization question?

[Anonymous]

in tracking your credit score, is utilization effected by percentage or dollar amount. I am asking because I only plan on keeping one of my credit cards which will bring the dollar amount down but I keep utilization around 10% once its done. 

[SouthJamaica]

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@Anonymous wrote:

in tracking your credit score, is utilization effected by percentage or dollar amount. I am asking because I only plan on keeping one of my credit cards which will bring the dollar amount down but I keep utilization around 10% once its done. 

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Utilization is computed as of the statement date, and is the percentage of the credit limit represented by the statement balance. So a card with a $1000 limit, which has a statement balance of $100, has 10% utilization.

FICO takes into account overall utilization (the total of all your statement balances reported in the cycle divided by your total credit limits of open credit card accounts) and per-card utilization as well.

To optimize your score it is probably best to have multiple cards with zero balances with one card reporting a balance below 10%. E.g., 3 cards, 2 reporting at zero, 1 reporting at 9%.

If you just have one card I am not sure if your score is higher if you report a zero balance or if you report a small balance.

[Anonymous]

If utilization is a focus of yours, I'd stongly advise against having only 1 credit card as whatever the utilization is on that one card is then also your total utilization.  If you had 1 or 2 other cards with 0 balances it would allow you to use the 1 card you plan on keeping more liberally without having to worry as much about utilization.

Of course, it depends on the credit limit of that one card.  If you have one card with a $30k limit and you typically never carry a balance of $3k+ on it then by all means the one card could suffice... but if it's a card with a $2k limit you're limiting yourself to an under-$200 balance if you want to maintain a < 10% utilization which would certainly pose a big challenge to many.