CC use and utilization

[Anonymous]

I am in the process of repairing my credit.  I recently received my Capital One Secured card and have some questions about what the best course of action I should take.  First off, do I need to use the card at all, or will I get a bump to my score by just having an open account?  If I am to use it, I am confused by what utilization means.  I have seen that you should be under 30%, does this mean that you only use 30% of cl or that you should pay it down to at least under 30%?  Thanks for all of the help on here!

[MarineVietVet]

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@Anonymous wrote:

I am in the process of repairing my credit.  I recently received my Capital One Secured card and have some questions about what the best course of action I should take.  First off, do I need to use the card at all, or will I get a bump to my score by just having an open account?  If I am to use it, I am confused by what utilization means.  I have seen that you should be under 30%, does this mean that you only use 30% of cl or that you should pay it down to at least under 30%?  Thanks for all of the help on here!

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Welcome to the forums.

I'll give you my viewpoint and I'm sure others will contribute theirs. Use what you think will work best for your own situation.

Revolving utilization is 30% of your total score and so proper management of it is very important to achieve and also maintain good scores. Utilization is calculated by dividing total balances by total available credit. For most cards (including Cap 1) this utilization is figured each month by your statement balance. So you can and should use your card at least every few months to show activity but what's critical is what is reported.

Although there is no one size fits all approach to this the general consensus seems to be to only allow <9% of your CL (Credit Limit) to report each month. For example of you have a card with a CL of $1,000 you can charge as much as you want every month (not going overlimit of course) but make sure that your statement balance is no more than about $90. But this is just a rule of thumb. A balance of $1 would work just as well. And then pay off this reported balance before the due date to avoid paying any interest. You never have to carry a balance from month to month in an attempt to help your scores.

I know I'm probably leaving something out plus I'm not the best at explaining all this and it can seem confusing (it was to me for a long time    ) but just keep asking questions and you'll pick it up very quickly.

Edited to correct a typo.

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".

[Anonymous]

I guess my best course of action will then be to use the card to pay for my T-Mobile bill, and just pay it off each month.  It is such a small CL ($200) that it makes more sense to just pay one thing that is close to my limit, and use the Cap 1 card nothing else.  

I have already removed some bad tradelines with GW calls and I'm down to just two collection accounts one of which I will be paying and hopefully getting removed next week.  I started on this project last month and had scores of 0 with Trans, 601 with Ex, and 598 with EQ.  Those scores are what I believe are FAKO scores from freescore.com.  I am hoping to see a little bump from the new Cap 1 card and the baddies getting removed.

[SevenNEW]

Remember that you can pay your CC bill at any time through the web site. Especially since beginners' CL are so low, it's important to pay > 91% of the bill-- as MarineViet was suggesting -- before the statement is generated, and the rest before the due date. This way you will maximize the effect of your credit card on your score. If you have more than one CC, have one report < 9% and the others 0.