How do I handle Utilization ..I'm troubled.

[Anonymous]

Hey guys. Kinda stressed. I've been gaining momentum on my credit score journey and improving soundly. I've bee keeping around 17% monthly on one card and the others 0$ balances. But it looks like the card this money due to emergency will have a 87% balance. My other one still will have a 0 balance.

How do I handle this? I know my credit will suffer this month. I guess I just need to vent a bit. Thanks.

[DaveInAZ]

I've learned the hard way that anything over 50% utiliztion on any one account really dings your score. It's only temporary until you get the balance down, but can't you spread out any of your emergency spend on your other card? Yes, having only one card reporting a balance is best for ypour score, but having another one or two report a balance is better than going over 50% on one.

[simplynoir]

I agree with DaveInAZ. If you can you should spread that balance around your cards to reduce the impact of your utilization off one card to several instead.

[Pway]

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@Anonymous wrote:
Hey guys. Kinda stressed. I've been gaining momentum on my credit score journey and improving soundly. I've bee keeping around 17% monthly on one card and the others 0$ balances. But it looks like the card this money due to emergency will have a 87% balance. My other one still will have a 0 balance.

How do I handle this? I know my credit will suffer this month. I guess I just need to vent a bit. Thanks.

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Continue to do what you are doing and move forward.  Remebmber that util has no memory and changes from month to month.  I used to worry about util as well, but unless I am looking for credit or applying for a loan then I worry about it.  Other than that, I am sure you will be fine.  

As long as you are making a dent in the balance each month you should be fine.  Life happens and we adjust.

[creativeZero7]

Totally understandable and feel free to vent about it. I've got one card that I just had to put some emergency spend through that put me at my highest uti on a single card ever. I think about $6.7k of a $7.5k SL.

Lately I've had things pop up like car expenses so I'll pay $1k off my balance one month and then end up charging half of it again and onward. I make progress for 1-3 months and then something pops up again. I tell myself just tap my savings and pay it way down at once but I hate being in a position of no true emergency cash. I am paying so much in interest every month carrying such a balance but it is what it is. I need the line at the moment. Soon enough I'll get the line paid down but at the moment I'm in a holding pattern until I can generate more income. Beauty of self employment! Sometimes you really have to just hunker down and ride it out.

Like it's been said, utilization does ding your score, but the key is to just chop away at that balance asap. It's month to month and will go away as your situation improves. Just stay focused and do your best to pay down that balance best you can!

[impactplayer]

I personally wouldn't worry about it. Just keep truckin'. My wife and I regularly take advantage of balance transfer offers and to maximize that, you have to just about max the cards out. I have maxed 1-2 cards out for 12-15 months before while the balance transfer offer is in effect and have no negative consequences to speak of. Of course, your score drops and you would not be an ideal candidate to apply for any new form of credit while reporting nearly maxed out card(s), but otherwise, you should be fine. 

[Anonymous]

Omg guys thanks for the advice. Talk to my wife about this. We agreed that we will be able to pay about 75% of what I owe. Thanks. I love the forums.

[creativeZero7]

No problem and happy to help give some support!

One thing that has helped me was that my wife added me as an AU on her Amex last year and she never carries a balance. We use that account for grocery shopping and joint expenses so it made sense to add me. That account is shown as an authorized account on my report. I also have a business card that is basically a hidden line on my personal report. Nonetheless, my overall utilization, although high on this one card currently, is about 31%. So that does help in the big picture of credit but there are still dollars that need to be paid back. That is the focus!

[Anonymous]

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@simplynoir wrote:
I agree with DaveInAZ. If you can you should spread that balance around your cards to reduce the impact of your utilization off one card to several instead.

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I think there is way too much worry about utilization here!    I would be much more concerned with minimizing interest, so spreading around (unless they have similar APR) isn't worthwhile IMO.   Util goes away, spent interest doesn't!   (Well, it does, but not in a good way!)

[Anonymous]

More important than utilization is something that was glanced over here: you had an emergency that needs money, and you didn't have a savings account to cover it.

This means, as of the moment you make the decision to rely on credit to pay for the emergency, you have to instantly switch to poverty mode.  Call your cable TV provider and put your cable bill on vacation mode -- you'll get no channels but your bill will drop temporarily.  Do the same with Netflix, HULU, Amazon Prime, your internet provider, etc.  Chop it all, today.

Next, you will limit your driving to only work, groceries, school -- the necessities.  No extra driving for any reason.

Spending gets cut to zero.  No new clothes or games or going out to restaurants or bars or movies until that emergency is paid off entirely.  No entertainment spending.

When an emergency happens, as they do, the difference between those who come out on top and those who fall behind is how they manage expenses until the emergency has fully passed.  As long as any debt lingers, the emergency is not over.  It's still in full force.

Good luck getting to that point, it takes courage and determination to put it all behind you, but as long as 1 penny remains unpaid, remember that the emergency is not over.  Halt all unnecessary spending today until you can say the emergency has been fully settled in every way.