Credit Card Utilization

[Anonymous]

Hey,

I have read on various websites that it is recommended to use 30% or so of your available credit limit with credit cards. Is this accurate? Also, I am wondering if this is per month or just in regards to my overall credit card balance at one time.

For instance, would it be bad of me to utilize 30% or less per week if I paid the balance in full at the end of each week?

Thanks!

[Involver]

For maximum scoring you'll want to report a few dollars on one card.

[Chaselover]

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@Anonymous wrote:

Hey,

I have read on various websites that it is recommended to use 30% or so of your available credit limit with credit cards. Is this accurate? Also, I am wondering if this is per month or just in regards to my overall credit card balance at one time.

For instance, would it be bad of me to utilize 30% or less per week if I paid the balance in full at the end of each week?

Thanks!

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U dont need to keep it at 30%, for best results, try to keep at 8%. That util is to be kept when your creditor reports it to the CBs, usually the statement cut date.

[Anonymous]

Lots of websites talk about keeping it under 30%, but realistically as many of us on here can tell you, the best scoring is if you keep your utilization under 10%. 

Let the numbers underneath that percentage report at the end of the month or before your statement cuts on your CC. 

*Also another helpful tip: Only let one credit card report a balance. As an example: If you have four credit cards, make sure 3/4 of those are showing a $0 balance whenever the statement cuts. 

[NRB525]

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@Anonymous wrote:

Hey,

I have read on various websites that it is recommended to use 30% or so of your available credit limit with credit cards. Is this accurate? Also, I am wondering if this is per month or just in regards to my overall credit card balance at one time.

For instance, would it be bad of me to utilize 30% or less per week if I paid the balance in full at the end of each week?

Thanks!

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It all depends on what your objective is.

If you have low limits cards, and only a few from say Capital One, then using the card heavily if it is $300 or $500 limit, using it up to nearly the limit, and paying in full is highly recommended. Paying multiple times per month, if that is your normal spend pattern, is just fine, pay often.

This will have a short term impact on the exact FICO score that you show, but the utilization component in the FICO score is a snapshot: You can update it at will by making sure that the upcoming statement shows a fairly low balance, something below 30%, if you have a reason to need to optimize the FICO short term. Score will recover remarkably fast when you start managing the utilization amount.

Score will only "recover" to a level which is based on your current overall credit picture. For example, it won't "recover" to 800 with utilization optimization unless you are legitimately at 800 otherwise.

My opinion for how to best develop a relationship with a bank is just use the card heavily, never miss a payment by the payment due date, pay in full if possible, pay heavily always, and then over time, better things will come along.

Managing "all cards at zero except one at 1% - 10% utilization" is fine for short term score optimization, but not necessary for day-to-day activity. Letting cards report balances as they are charged, then PIF, is a good way to show good credit management.

[takeshi74]

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@Anonymous wrote:

I have read on various websites that it is recommended to use 30% or so of your available credit limit with credit cards. Is this accurate?

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It's a guideline.  It is also a suggested maximum as in "do not exceed 30%".  However, 30% is well above ideal revolving utilization.  Lower is better as long as you don't have all 0 balances reporting.  To optimize (i.e. when applying for new credit), allow only one balance to report at 10% or less.  This is because both revolving utilization and number of balances have scoring impacts.

Addtionally, the guideline is in reference to reported revolving utilziation.  Usage is an entirely separate matter.  You can use all you want and still have 30% or less report.  However, if you're going to micromanage you might as well go for 10% or less.

I don't bother with any of this but my spend and limits fall at 6% utilization without any intervention on my part.  Many of my cards report balances but my FICO 8's are right around and just over 800 and that's sufficent for me.  You may want to keep an eye on your scores and carefully test to see the impact of different levels of revolving utilization, keeping in mind that it's not the only factor that affects scores when doing your testing.  Generally speaking, you'll see bigger scoring improvements from bigger drops.  A percent or a few percent will probably yield little improvement.

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@Anonymous wrote:

Also, I am wondering if this is per month or just in regards to my overall credit card balance at one time.

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It is in reference to what's on your reports.  When creditors pull your reports they see your last reported balances and your credit limits.  Those numbers are used to determine your revolving utilization.  A creditor pulling your report does not have access to your credit accounts to see current balances -- unless that creditor holds one or more of your accounts and then that creditor will only have such info for those accounts.

A scoring model will only consider the data in a report.

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@Anonymous wrote:

For instance, would it be bad of me to utilize 30% or less per week if I paid the balance in full at the end of each week?

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It really doesn't matter how much you use or how often/when you pay as long as you're ensuring that the account reports utilization as desired.  Pay down the balance prior to the account's report date.  The balance on report date will be what ends up on your reports.  Make sure you're aware of each account's report date.  While most credit cards report on statement date there are some that report on other dates.

US Bank, for example, reports on the last business day of the month.

[cyclesport45]

Takeshi's information is spot on.  It might sound complicated, but it's just a bit of a number game, like having many rewards cards is. Your credit report drives your score.  Your lender's reporting (and they all report on their own schedule) drives your credit report.  You don't HAVE to carry ANY balances; carrying all seros is probably better for a score than carrying 30%.  To maximize score, carry a small balance (1%?  Even a buck will do) 

But don't miss the Big Picture;  score isn't as important as making sure you don't screw up and pay INTEREST.  Play the game, but do it well.  It shouldn't cost you anything.

[Anonymous]

My current situation is probably best classified as "rebuilding". I have a Capital One secured card that has a $300 limit on it.

From what I understand, I am gathering from all of the replies that I can essentially utilize it however I want as long as I make sure my utilization is below 10% when Capital One reports my account.

At the moment my credit scores are as follows:

Equifax: 531

TransUnion:484

Experian:538

This isn't entirely accurate being that my report still shows a delinquent account that I paid off months ago.

Would it likely be more helpful for me to increase my credit limit with the secured card, apply for more credit, adjust my utilzation, etc?