topic Re: Utilization ? in General Credit Topics

Utilization ?

bichonmom — Tue, 31 May 2011 20:50:04 GMT

I'm a little confused about utilization. From what I've read here, it's best to keep util under 9% and only have ONE CC report a balance each month. So, my question is, is that 9% of TOTAL CL for all your cards, or 9% of the CL of the CC reporting w/a balance?

I have 3 CCs:

$500 CL, $300 CL and $200 CL = $1000 Total CL

So, if I allow the $300 CC to report a balance, is it okay if it's 9% of the $1000, which wd be $90 (all other cards have 0 bal reporting)? Or, is it supposed to be only 9% of that $300 card, which would only be $27?

Thank you!

Re: Utilization ?

Anonymous — Tue, 31 May 2011 21:07:04 GMT

@bichonmom wrote:
I'm a little confused about utilization. From what I've read here, it's best to keep util under 9% and only have ONE CC report a balance each month. So, my question is, is that 9% of TOTAL CL for all your cards, or 9% of the CL of the CC reporting w/a balance?

I have 3 CCs:
$500 CL, $300 CL and $200 CL = $1000 Total CL

So, if I allow the $300 CC to report a balance, is it okay if it's 9% of the $1000, which wd be $90 (all other cards have 0 bal reporting)? Or, is it supposed to be only 9% of that $300 card, which would only be $27?

Thank you!

Keep the balance lowest possible ~ IMO, if I am in your shoes, MAX of $45 balance on your $500 CL card, but keep it lower than that if you can. And Keep the other two ccs balance ZERO. This will be 4.5% of total CL.

Re: Utilization ?

bichonmom — Tue, 31 May 2011 21:10:35 GMT

I'm curious why you're suggesting 4.5% util, when the general rule of thumb I've read on posts is <9%. Is it because my CLs in general are low? Or is there another reason you're recommending such a low util?

Thanks!

Re: Utilization ?

TRJ604 — Tue, 31 May 2011 21:13:59 GMT

bichonmom, util is scored both individually and overall. If you are not looking to boost your score rapidly for a specific purpose in the near future, I would just stick to paying on time & building your history. It is hard to follow those guidelines permantly with low CLs. Having said that, it is good practice. If you decide keep just one active, you should cycle between the cards you make primary to ensure they do not get closed due to inactivity. Some folks alternate every 3 months.

Re: Utilization ?

bichonmom — Tue, 31 May 2011 21:17:12 GMT

BTW, the $300 card wd need to be paid by 6/1 to avoid reporting with a bal. Since this will be the first statement I get, I was going to allow it to report with a balance. Right now, it's not even showing on my CRs. (I got it in April.)

I had calculated 9% of my total CL, and didn't allow the bal on that card to exceed that. Right now, it's 6.39% of my total Cl. I could pay it down to 4.5%, or just pay it off entirely, before it reports. But I had read to allow one card to report a bal, and since my other cards are reporting 0, this would be my one card w/balance this month. Next month, I could switch to the $500 card.

I'm wondering if it matters if we switch around which card reports at the end of each statement. Obviously it would be easier to just use the card w/the highest CL each month. If it alternates, does that help in any way? (FICO or w/each CC?)

Re: Utilization ?

MarineVietVet — Tue, 31 May 2011 21:27:39 GMT

@bichonmom wrote:
I'm a little confused about utilization. From what I've read here, it's best to keep util under 9% and only have ONE CC report a balance each month. So, my question is, is that 9% of TOTAL CL for all your cards, or 9% of the CL of the CC reporting w/a balance?

I have 3 CCs:
$500 CL, $300 CL and $200 CL = $1000 Total CL

So, if I allow the $300 CC to report a balance, is it okay if it's 9% of the $1000, which wd be $90 (all other cards have 0 bal reporting)? Or, is it supposed to be only 9% of that $300 card, which would only be $27?

Thank you!

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.

This appilies to whatever card you choose to let report a balance. For example if you choose to have the $300 CL report then yes the reported balance needs to be <$27. For the $500 CL it would be no more than $45 and for the $200 CL no more than $18.

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.

Did I answer any of your questions?

From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

Re: Utilization ?

Anonymous — Tue, 31 May 2011 21:33:35 GMT

@bichonmom wrote:
BTW, the $300 card wd need to be paid by 6/1 to avoid reporting with a bal. Since this will be the first statement I get, I was going to allow it to report with a balance. Right now, it's not even showing on my CRs. (I got it in April.)

I had calculated 9% of my total CL, and didn't allow the bal on that card to exceed that. Right now, it's 6.39% of my total Cl. I could pay it down to 4.5%, or just pay it off entirely, before it reports. But I had read to allow one card to report a bal, and since my other cards are reporting 0, this would be my one card w/balance this month. Next month, I could switch to the $500 card.

I'm wondering if it matters if we switch around which card reports at the end of each statement. Obviously it would be easier to just use the card w/the highest CL each month. If it alternates, does that help in any way? (FICO or w/each CC?)

Sorry for not explain well ... That's true. If you are going to switching your ccs to keep the balance to report ... You will need to work really HARD on that to keep it up! Concentrate to keep the individual util to less than 9% if you do so. Don't worry about total util for now. Yes, it is very hard with those CL. But you can do it!

What is your each cc's closing date?

Re: Utilization ?

Anonymous — Tue, 31 May 2011 21:36:35 GMT

MarineVietVet ... you are the best! "Semper Fi"

Re: Utilization ?

bichonmom — Tue, 31 May 2011 21:59:05 GMT

Thank you, Bunny and Marinevet.

I had misunderstood the util and thought it was <9% of total CL. <9% of individual CL with these LOW limits is crazy. It almost doesn't even pay to use them at all.

So with my $300 card at over 21%, it looks like I should pay it BEFORE the stmt cuts. Should I pay part now and let it report w/$27 bal, or wd I be better off just paying the entire $65. I'm just concerned that it will look suspicious to Cap One to make a pmt and leave a $27 bal -- like I couldn't afford to pay the entire $65 (even though the statement hasn't even cut yet).

There seem to be so many things to consider. I've made some major mistakes with my credit and just don't want to make any more.

By the way, I used to have 2 lop ear bunnies years ago. They were litter box trained and ran freely around my apt.

eta: the closing dates are the 24th and 4th (due dates 21st and 1st).

Re: Utilization ?

Anonymous — Tue, 31 May 2011 22:20:07 GMT

@bichonmom wrote:
Thank you, Bunny and Marinevet.

I had misunderstood the util and thought it was <9% of total CL. <9% of individual CL with these LOW limits is crazy. It almost doesn't even pay to use them at all.

So with my $300 card at over 21%, it looks like I should pay it BEFORE the stmt cuts. Should I pay part now and let it report w/$27 bal, or wd I be better off just paying the entire $65. I'm just concerned that it will look suspicious to Cap One to make a pmt and leave a $27 bal -- like I couldn't afford to pay the entire $65 (even though the statement hasn't even cut yet).

There seem to be so many things to consider. I've made some major mistakes with my credit and just don't want to make any more.

By the way, I used to have 2 lop ear bunnies years ago. They were litter box trained and ran freely around my apt.

eta: the closing dates are the 24th and 4th (due dates 21st and 1st).

You're welcome any time ~

If the other two ccs balance will report as zero ... then yes, do it!

Which one is close at 24th and which one is at 4th?

Re: Utilization ?

bichonmom — Tue, 31 May 2011 22:41:56 GMT

The $500 CL closes on the 24th and the $300 closes on the 4th.

I guess I'll go online and pay down the $300 card to $27 balance.

I'd really like to get a card with a decent CL to help with util and also to use during those couple of weeks when I can't use these 2 cards. (I figure about a week before pmt due date until after stmt date)

Re: Utilization ?

MarineVietVet — Tue, 31 May 2011 23:33:41 GMT

@bichonmom wrote:
Thank you, Bunny and Marinevet.

I had misunderstood the util and thought it was <9% of total CL. <9% of individual CL with these LOW limits is crazy. It almost doesn't even pay to use them at all.

So with my $300 card at over 21%, it looks like I should pay it BEFORE the stmt cuts. Should I pay part now and let it report w/$27 bal, or wd I be better off just paying the entire $65. I'm just concerned that it will look suspicious to Cap One to make a pmt and leave a $27 bal -- like I couldn't afford to pay the entire $65 (even though the statement hasn't even cut yet).

There seem to be so many things to consider. I've made some major mistakes with my credit and just don't want to make any more.

By the way, I used to have 2 lop ear bunnies years ago. They were litter box trained and ran freely around my apt.

eta: the closing dates are the 24th and 4th (due dates 21st and 1st).

Yes the key thing to remember is that the reported balance (for most cards) is what is used to calculate utilization for the month. You can pay anytime during the month as long as that utilization is where you want it to be before the statement posts. And it doesn't have to be exactly $27 that shows as a balance. $1 would work just as well. For me it's just easier to remember the <9% recommendation.

Cap 1 doesn't care how you make your payments. Just make them on time every time.

Re: Utilization ?

Anonymous — Tue, 31 May 2011 23:59:48 GMT

@bichonmom wrote:
The $500 CL closes on the 24th and the $300 closes on the 4th.

I guess I'll go online and pay down the $300 card to $27 balance.

That's good idea! As MarineVietvet said, you can pay down to less than $27 if you want to and you can. This is nothing but the game ... so, have fun! loll

Re: Utilization ?

bichonmom — Wed, 01 Jun 2011 03:31:22 GMT

Thank you, Bunny and Marine. The things I'm learning here are so different from everything I've ever learned about credit!

Re: Utilization ?

Anonymous — Wed, 01 Jun 2011 08:44:23 GMT

Yes it is ... this is a life learning. Best way to learn is from the actual ~ real ~ people, not from the text book.