topic Re: BEST credit utilization for different scores. in Credit Cards

BEST credit utilization for different scores.

Anonymous — Sat, 17 Mar 2012 19:25:18 GMT

What is the best utilization to have? Some say it's 1-9% and some other people say 30%.

My credit score is below 650. Any suggestion?

Thank you for your Time.

Re: BEST credit utilization for different scores.

MarineVietVet — Sat, 17 Mar 2012 19:26:20 GMT

@Anonymous wrote:
What is the best utilization to have? Some say it's 1-9% and some other people say 30%.
My credit score is below 650. Any suggestion?
Thank you for your Time.

Everyone's situation is different and there is no one size fits all approach to this but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

Just my personal outlook on things.

Re: BEST credit utilization for different scores.

LS2982 — Sat, 17 Mar 2012 19:32:03 GMT

@MarineVietVet wrote:
@Anonymous wrote:
What is the best utilization to have? Some say it's 1-9% and some other people say 30%.
My credit score is below 650. Any suggestion?
Thank you for your Time.

Everyone's situation is different and there is no one size fits all approach to this but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

Just my personal outlook on things.

Re: BEST credit utilization for different scores.

Anonymous — Sat, 17 Mar 2012 19:36:18 GMT

Hey Marine,

Thank for your reply. Well, as you can see my credit score is not the best. I want to increase my credit score to get somewhere near 720+. I got a two collections on each report and I am in the process of taking care of them. In 6-8 months, I am going to apply for Amex blue cash. I just want my credit score to increase, but having a hard time. I recently opened up 3 credit accounts, 1 au and 2 credit cards. I just want to make sure I will increase as much as I can with current accounts.

BTW, see this makes any sense. I hear people say leave balance to increase your credit score. SO let's say I have 100 credit lmit. In march, I will leave 10 dollars as balance. April another 10 and may another 10. SO by end of april, I will have 30 dollars balance. Which is 30% of my debt/credit limit. Do you think paying off that debt will increase my credit score by end of may?

Re: BEST credit utilization for different scores.

LS2982 — Sat, 17 Mar 2012 19:39:19 GMT

@Anonymous wrote:
Hey Marine,
Thank for your reply. Well, as you can see my credit score is not the best. I want to increase my credit score to get somewhere near 720+. I got a two collections on each report and I am in the process of taking care of them. In 6-8 months, I am going to apply for Amex blue cash. I just want my credit score to increase, but having a hard time. I recently opened up 3 credit accounts, 1 au and 2 credit cards. I just want to make sure I will increase as much as I can with current accounts.

BTW, see this makes any sense. I hear people say leave balance to increase your credit score. SO let's say I have 100 credit lmit. In march, I will leave 10 dollars as balance. April another 10 and may another 10. SO by end of april, I will have 30 dollars balance. Which is 30% of my debt/credit limit. Do you think paying off that debt will increase my credit score by end of may?

How many total cards do you have and what are their limits?

Re: BEST credit utilization for different scores.

MarineVietVet — Sat, 17 Mar 2012 19:55:13 GMT

@Anonymous wrote:
Hey Marine,
Thank for your reply. Well, as you can see my credit score is not the best. I want to increase my credit score to get somewhere near 720+. I got a two collections on each report and I am in the process of taking care of them. In 6-8 months, I am going to apply for Amex blue cash. I just want my credit score to increase, but having a hard time. I recently opened up 3 credit accounts, 1 au and 2 credit cards. I just want to make sure I will increase as much as I can with current accounts.

BTW, see this makes any sense. I hear people say leave balance to increase your credit score. SO let's say I have 100 credit lmit. In march, I will leave 10 dollars as balance. April another 10 and may another 10. SO by end of april, I will have 30 dollars balance. Which is 30% of my debt/credit limit. Do you think paying off that debt will increase my credit score by end of may?

You never have to carry a balance forward from month to month. That does nothing for your score but will make the credit card companies happy because you'll be paying interest.

Let's take your example of having just one credit card. The most important number to remember is the reported balance on your statement each month. That's because for most cards the reported balance is what is used each month to calculate utilization. You can charge as much as you want during the month but make sure you pay down the balance several days before the statement posts so that the desired utilization (Any amount under 9% seems to work for most folks but a reported balance of $1 works just as well) is what is reported on your statement.

Then pay the reported balance before the due date to avoid any interest charges.

Re: BEST credit utilization for different scores.

Anonymous — Sun, 18 Mar 2012 00:02:29 GMT

Thank you Marine.

Let me ask you another question then. Let's say over the three months, my balance has been let's say 30% of my credit limit. Will the balance impact my credit score as well? If so, negative? or positive?

Re: BEST credit utilization for different scores.

LS2982 — Sun, 18 Mar 2012 00:10:02 GMT

@Anonymous wrote:
Thank you Marine.
Let me ask you another question then. Let's say over the three months, my balance has been let's say 30% of my credit limit. Will the balance impact my credit score as well? If so, negative? or positive?

You'll take an impact the 1st time it reports, and it will not change until you pay it down or charge more and it keeps decreasing.

Re: BEST credit utilization for different scores.

MarineVietVet — Sun, 18 Mar 2012 00:10:55 GMT

@Anonymous wrote:
Thank you Marine.
Let me ask you another question then. Let's say over the three months, my balance has been let's say 30% of my credit limit. Will the balance impact my credit score as well? If so, negative? or positive?

Scoring has no memory. So whatever your utilization happens to be each month is what is looked at. If you utilization goes from 1% one month to say 15% the next month you'll likely see a slight decrease in your score because revolving utilization is 30% of your total score. If the next month you bring your utilization back down to 9% or less (this percentage will work differently for everyone) then you'll probably get a score bump if nothing else changes on your reports (new inquiries, new credit reporting, negatives being added or deleted, etc.).

Properly managing utilization is the easiest and fastest way to have at least some control on your score.

Re: BEST credit utilization for different scores.

squirrely2005 — Sun, 18 Mar 2012 07:09:11 GMT

It's been awhile since I've seen 0% and I'm not proud but when my util was like 35-40 or so, which is just a guess I don't remember, my score was about 650 and now that it's 75% my score about 610. So in my case paying everything off would probably raise my score to just under 700 or around there.

But that's just a guess and example for you about how it can effect your score.

Re: BEST credit utilization for different scores.

Anonymous — Sun, 18 Mar 2012 07:10:10 GMT

I had been running a balance sometime ago, and seem to recall getting my biggest score jump when i went under 15%. (My memory sucks though).

I would try not to ever allow my reporting balances to go above 10% now. Luckily i have gotten to be in the position where that is doable. Of course, life sometimes laughs at my feeble plans.

Right now i run about 2% and that has given me the ability to sleep at night.

Re: BEST credit utilization for different scores.

LS2982 — Sun, 18 Mar 2012 13:29:35 GMT

@Anonymous wrote:
I had been running a balance sometime ago, and seem to recall getting my biggest score jump when i went under 15%. (My memory sucks though).

I would try not to ever allow my reporting balances to go above 10% now. Luckily i have gotten to be in the position where that is doable. Of course, life sometimes laughs at my feeble plans.

Right now i run about 2% and that has given me the ability to sleep at night.

I'm the same way, I'll hold off on stuff I need just because of it!!

Re: BEST credit utilization for different scores.

Memo10 — Tue, 20 Mar 2012 07:30:53 GMT

I have a question. If i were to have 7 revolving accounts. Would it be better to have the majority of them report a balance of zero and mayber one or two cards reporting a 5%-9%? Or having all accounts reporting a 5%-9%? Or is utilization considered as the total percentage of all accounts combined?

Re: BEST credit utilization for different scores.

LS2982 — Tue, 20 Mar 2012 09:41:25 GMT

@Memo10 wrote:
I have a question. If i were to have 7 revolving accounts. Would it be better to have the majority of them report a balance of zero and mayber one or two cards reporting a 5%-9%? Or having all accounts reporting a 5%-9%? Or is utilization considered as the total percentage of all accounts combined?

Have all but 1 report $0 and the1 report 1-9% utilization.

Re: BEST credit utilization for different scores.

pizzadude — Tue, 20 Mar 2012 15:10:24 GMT

@LS2982 wrote:
@Memo10 wrote:
I have a question. If i were to have 7 revolving accounts. Would it be better to have the majority of them report a balance of zero and mayber one or two cards reporting a 5%-9%? Or having all accounts reporting a 5%-9%? Or is utilization considered as the total percentage of all accounts combined?
Have all but 1 report $0 and the1 report 1-9% utilization.

+1. I'd try one, sometimes it's two accounts. FICO utilization scores the percentage of accounts with balances so ideally you want this to be a low number.

Re: BEST credit utilization for different scores.

Anonymous — Fri, 27 Dec 2013 12:32:01 GMT

Dont listen to them,they don't know how the game works. Never have 0% credit

utilization; it will lower your scores significantly. Try it and see if you dont beleive me.

They'll dock you 15 points before you can say hachoo. If you want your credit to jump fast

and furiously, you need to pay 99% of your credit card bill before the due date, and pay the

last 1% only, and I mean only, when they ask you to, whenever your billing date is.

The credit people dont see the difference between an account that pays before billing who therefore

have 0% cred util. And a person who doesn't use their credit at all. Second, why the hell do you have

7 cards. Thats too many. I dont know how you can handle that debt, and why you need it. All you need

is 1 or 2, maybe 3 at most. I suggest you transfer your credit lines to your best cards, until you have only

2 or 3. You might lose points for closed accounts, but if you do what I said with the 1% cred util, you'll be back

up in no time.

Re: BEST credit utilization for different scores.

DaveSignal — Fri, 27 Dec 2013 13:27:10 GMT

@Anonymous wrote:
Dont listen to them,they don't know how the game works. Never have 0% credit
utilization

This thread is over 9 months old. And nobody said let 0% report on all cards. You should always try to pay your bill in full by the due date though, or you are carrying a balance and paying interest. This is not necessary. Your credit cards don't report on the due date, they report the statement balance. If you continue reading some of the credit scoring topics on these forums, you will learn a lot about the best ways to achieve higher FICO scores.

Re: BEST credit utilization for different scores.

takeshi74 — Fri, 27 Dec 2013 14:25:16 GMT

@Anonymous wrote:
If you want your credit to jump fast
and furiously, you need to pay 99% of your credit card bill before the due date, and pay the
last 1% only, and I mean only, when they ask you to, whenever your billing date is.

Paying by the due date does not reduce reported utilization. Paying prior to the statement close date does. There are some creditors that report at different points in time but the majority report at statement close. While utilization does play a significant role in one's credit the effect on reducing utilization can vary from person to person. Those with high utilization would see the most gain.

@Anonymous wrote:

The credit people dont see the difference between an account that pays before billing who therefore
have 0% cred util. And a person who doesn't use their credit at all.

That applies to those looking at one's credit report but the creditor that issues the card will definitely notice the difference.

@Anonymous wrote:
Second, why the hell do you have
7 cards. Thats too many.

Too many is subjective. It's not your place to dictate to others what is or isn't too many. What you think is too many applies only to yourself.

@Anonymous wrote:
I dont know how you can handle that debt, and why you need it.

Number of cards != debt. In any case, one's inability to understand how another can manage X cards doesn't mean that another cannot manage that many cards. Again, too many is subjective. X may be too many for one but it may not be for the next. It's also not your place to determine the needs of others. Your jurisdiction stops at the boundaries of your own needs.

@Anonymous wrote:
Dont listen to them,they don't know how the game works.

I'd recommend being very careful with such statements.