@Anonymous wrote:
Thank you! I pretty much have everything down pact, the only thing I'm confused about is the ulitlization percetage. I am planning to keep it BELOW 30% at all times, but I've heard the lower the better.. so can I use that 30% then make a payment before the statement posts to bring it down to around 5% or would it not make a difference?
Utilization - 101: This is based off of your credit report and the most recent information received by each credit bureau. FICO Scoring Models "Score" Utilization in two (2) ways.
#1 Overall Revolving Utilization - this is the total balance on all your "revolving accounts" i.e credit cards & store cards divided by the total credit lines on all your revolving accounts. General guidance is to keep this number below 30% at any time. If you are planning to apply for new credit (new loan, credit card, etc) you should get this below 10% with 5%-6% generally being ideal and maximizing your credit score.
#2 Per Account Utilization - very similar to overall utilization, but on a per account basis. Again under 30% as a general rule, once an account reports with over 30% utilization you typically see dip in your FICO scores. How much really depends on each individuals credit profile, the longer / older the profile the lower the impact. You see much greater negative impacts and dips when you have an account report 50% , 70%, 90% utilization.
Lenders like Capital One all have their own formulas and risk models they use internally. Capital One generally wants you to use the card (a lot) but not carry a balance. Best practice is to use the card for everything, making multiple payments every month to keep available credit open and to make sure that when the statement cuts the balance is below 10% utilized. For a $200 credit line that means $20. Play by their rules and, use the card, make lots of payments, and keep the statement balance under $20 and they will reward you with a credit line increase on the secured card and in 6 moths you'll probably be preapproved for a QuickSilver One MC or QuickSilver Visa with a much higher unsecured credit line.
