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Should I Adjust My Credit Utilization?

New Contributor

Should I Adjust My Credit Utilization?

I've been trying to stay around 20-25% utilization of my overall credit line in order to get the best bump to my credit score each month. However, I recently opened a Lowes cards over the weekend in the amount of $1,200 (which did appear on my credit report a few days later as a new account and inquiry). This is for this store use only and cannot be used as a credit card anywhere else. So do I need to now start factoring in this additional $1,200 into my equation when calculating out what my 20-25% utilization of my overall credit line should be each month? Or do cards like this not factor into my credit scoring since they are not full-fledged credit cards and just store accounts?

 

Thanks!

Message 1 of 12
11 REPLIES
Established Contributor

Re: Should I Adjust My Credit Utilization?

Store cards figure into your overall utilization just like the majors. I'm curious why the 20%-25% is your goal. If you can manage it, under 10% will be another bump to your score.

2/5/18 EX 738 TU 751 EQ 737 9% Util All reports on ice! Gardening again!
NFCU CR ($25,000) | BofA CR ($19,800) | Discover ($12,300) | BofA BBR ($7,000) | Amazon ($6,000) | Citi Costco ($7,900) | Marvel ($8,000) | Chase Amazon ($6,000) | Paypal MC ($8,000) | Barclay Apple ($4,300) | AMEX BCE ($12,000) | AMEX ED ($1,000) | Cap QS ($3,400) | GM Buy Power ($2,000) | Citi DC ($2,700) | Wayfair ($9,400) | Victoria's ($4,000) | NFCU CLOC ($15,000) | Tiffany & Co ($1,000)
Message 2 of 12
Regular Contributor

Re: Should I Adjust My Credit Utilization?

Totally agree with Noxqs. UTIL really makes a difference if you have a thin file. If you have car loans, mortgages, credit cards, with long history...it wont make as much difference. But if you are like me...2 car loans, 3 CC's, 5 baddies...the util really affects my score. I found this out last Nov when I bought a TV on a 36mo 0% interest  SYNC devil card....$3,300 limit, $3,000 purchase. My util went up over 80%!!! My score dropped from 680 to 630 over night. I now have it up to 695 at a 12% util. Other things have happened here lately (bought a car...added 2 more cards...but before I did...my scores went like this with my revolving  util.

49%- 645

37%- 655

17% -690

Bought a new car, took my Installment UTIL up to 80%, 4 INQ (Including applying for 2 new cards) - scores dropped to 660's

Now, 2 baddies dropped, util down to 12%...score EQ - 662, EX - 680, TU - 699...EQ still has the baddies on it

 

So Im not sure with everything going on this month, how much the util helped (going down to 12%) but I feel confident if you want to maximize your hard work, you need to keep it as low as possible. Util is dynamic, and doesn't have memory, then it wont matter if you are not applying for anything right now. But when you are...it needs to be as low as possible. I keep all my cards PIF except for what I still owe on the devil card.

 

My new cards (BCE and CSP) have not shown up yet on my CR's, but adds 7k to my tcl, which will drop me down to 5%. i will also be down to one Baddie in Oct, and the last falls off in November! Oh Happy day! Smiley Very Happy

 

EQ - 741 TU-758 EX -731>
Message 3 of 12
New Contributor

Re: Should I Adjust My Credit Utilization?

Thanks for the info. I have two points I wanna follow up on:

 

1) I just found out today that my Experian score dropped -7 points just because I opened the Lowes card. That's frustrating because one of the areas on my report that it said needed improving was different types of credit lines. I'm not even late and they already penalized me. What gives?

 

2) I'm shooting for 20-ish% because I've never really been given a straight answer about utilization. I've spoken to credit counselors who suggest not using your cards enough will hurt the score. I've heard some folks preach the lower the utilization the better. Then my own research on Google said that around 30% or under is the sweet spot. I honestly don't know what my target utilization should be anymore honestly! Please help, as all I want to do is get the biggest bump for my score each month. I don't really need these cards at all otherwise.

 

Thanks!

Message 4 of 12
Established Contributor

Re: Should I Adjust My Credit Utilization?


Utah_grad2015 wrote:

Thanks for the info. I have two points I wanna follow up on:

 

1) I just found out today that my Experian score dropped -7 points just because I opened the Lowes card. That's frustrating because one of the areas on my report that it said needed improving was different types of credit lines. I'm not even late and they already penalized me. What gives?

 

2) I'm shooting for 20-ish% because I've never really been given a straight answer about utilization. I've spoken to credit counselors who suggest not using your cards enough will hurt the score. I've heard some folks preach the lower the utilization the better. Then my own research on Google said that around 30% or under is the sweet spot. I honestly don't know what my target utilization should be anymore honestly! Please help, as all I want to do is get the biggest bump for my score each month. I don't really need these cards at all otherwise.

 

Thanks!


1. The new account lowered your average age of accounts. Typically, you'll gain that back fairly quickly. When they say a credit mix, they don't mean several credit cards. They are referring to credit cards in addition to installment loans and such. Best practice is to only open accounts you need so you don't destroy your AAOA.

 

2. There are breakpoints in utilization for scoring. 30% is good practice, but only letting one card report under 9% is optimal. There are some great threads in the "Understanding FICO scoring" forum that can break it down even further for you. 

 

The best you can do is let accounts age and try to PIF as much as possible and have an awareness of what gets reported. Typically, your statement balance is what gets reported to the bureau each month. You spend a ton, but many of us pay it down before the statement cuts.

 

You might be stressing yourself out a bit too much. It's easy to obsess on each point loss and gain, but if you are responsible, you'll see those gains you are looking for. It's just a slow process sometimes. Now that my reports are clean and I have the cards I want, I'm stuck in that waiting game too of just letting things age and grow.

2/5/18 EX 738 TU 751 EQ 737 9% Util All reports on ice! Gardening again!
NFCU CR ($25,000) | BofA CR ($19,800) | Discover ($12,300) | BofA BBR ($7,000) | Amazon ($6,000) | Citi Costco ($7,900) | Marvel ($8,000) | Chase Amazon ($6,000) | Paypal MC ($8,000) | Barclay Apple ($4,300) | AMEX BCE ($12,000) | AMEX ED ($1,000) | Cap QS ($3,400) | GM Buy Power ($2,000) | Citi DC ($2,700) | Wayfair ($9,400) | Victoria's ($4,000) | NFCU CLOC ($15,000) | Tiffany & Co ($1,000)
Message 5 of 12
New Contributor

Re: Should I Adjust My Credit Utilization?

Yeah, I checked today and the two other bureaus also showed a 5-7 point drop just for opening the account (and one account dropped a couple points just by reporting a $223 balance for the bathroom sink I bought). So I guess those things are all going to cause negative bumps at first but positives ones overall in the long term.

 

I checked out some of those threads. While I couldn't find any specific numbers, there is one thing in my experience here on the forum that I'm starting to noticing is jumping out at me. The baseline (and most popular) theory seems to be a 10% utilization of credit for those looking to get the best score pump. Not 30%, not 20%, not even 5-9% but right around 10% seems to be most people's sweet spot. So I guess I'll just shoot for that since there seems to be no hard rule just yet that I can find. 

Message 6 of 12
Highlighted
Valued Contributor

Re: Should I Adjust My Credit Utilization?

There are too many labels around 10% as ideal 20% is good 30% is still safe 50 % a stagnant score and so on. Lower the better. I would rather carry temp high utilization on a store card over bank cards. but is not forever, instant they report a smaller balance your score comes right back.

Of course your util is to blame for the huge swings in a score but for instance if you take 3 months to pay off a balance not only will your score increase from that but all of your accounts are now 3 months stronger as well.
Open one, close three. Open one, close three.
Message 7 of 12
Valued Contributor

Re: Should I Adjust My Credit Utilization?

Ok..it's great that you are trying to even pay attention to this stuff

 

HOWEVER

 

I 'get' that we are conditioned in school and by society to find THE ANSWER

and too many young folks get thermselves all twisted in a knot searching for

the BEST

the BIGGEST

thew FASTEST

 

yada yada bing bing.....Chill out

 

THE BEST you can do is a relative term that will NEVER,  ever be ONE THING, the end for each and every

scenario...ppl PERFER to 'gime a bottom line' approach but this thing doesn't work like that

 

This is more like dating....to say 'do this' and 'ALL the ladies ...we fall in love with you and have your babies'

sounds great but in real life the ball moves

 

So yes there will be NO prefect answer, no bottom line just different 'spins' on generally accepted info

some ppl say red sauce others swear by green the next says no it HAS to be beef yet another says pork makes the difference

are they all wrong or all right?

'

30% is basically equal to a 'C' grade in school it's ACCEPTABLE better than a 'D' and it equal passing (31-50= 'D')

20% equals about a 'B' grade

10% = 'A' and so on

 

This stuff about balancing one of your accounts below 10% but above 1%...while maintaining a zero balance on all other cards

in ADVANCED level stuff that while true can bump a score but worrying about MAINTAINING an arbitrary bump as your normal course

is NOT where newbies need to be thinking of living.....

 

That's sorta like telling a chubby aging person to hold their stomach in a pull back the eye wrinkles and HOLD IT RIGHT THERE...all the time

it's one thing to 'bump it' for picture day or to get through the wedding but it's a silly unobtainable DAILY goal or way of life.

 

This forum has many ppl who are advanced grad-school' level credit nerds (me included) and when we speak it's shop talk of credit nerds not to be taken as

'normal' speak for regular folk....especially a new builder just trying to get 'best practices' to live a regular life....these 'rules' need to be seen as GENERAL

outlines.....now if a 'wedding' is coming up and one needs some tips on how to get a quick 'bump' for the pictures.....then this temporarily means something to you

 

* Our 'weddings' are an upcoming mortgage/car app etc otherwise BASIC guidelines is just fine

 

30% Good

20% Better

10% Even Better

0 Best (except for at least one account reporting 1-9%...just to show the CAMERA, you're alive and not totally dormant)

 

No different than when it comes to cars...I really LIKE them but I'm NEVER going to be 'deep' enough into them to be online in a forum talking about freaking torgue ratios and the like...I can go on the Lexus Club site and yak a bit about oil and when to change or sorry when to TAKE IT IN for somebody to change this or that ..I can speak and ask 'basic' ish because I know which lane I belong in...

 

No big deal don't get yourself all worked up over THE BEST you'll be fine staying within very safe zones...and enjoy where you are

 

Some ppl can up the XBOX back together others just need to know some basic stuff to have a good time but they are experts in the kitchen...we can't be nerd-level at everything Smiley Wink

 

Also to address your concern about being told about different TYPES of credit being the reason you opened the un-needed Lowes card to begin with.

I'm not sure if you got confused or bad info but a Lowes CC is NOT a diffrent TYPE of an account vs having the major CCs you already have....

 

The TYPES or Credit Mix ...whomever was trying to get you to understand should have made it clear that

Revolvers are revolvers store card is a CC just like Visa or Discover

An Installment loan like a car, house or personal loan would be an example of a different type of credit

the cheat sheet is an installment account has an END date, it is for a fixed time with fixed INSTALLMENTS, hence the name,

Where as a revolver keeps you guess it, revolving....

 

I don't know if you have a goal in mind...like buying a house within the next 20-30 months or are just starting and building but knowing so

is HUGE in how you want to pay attention to this crap...

 

I just MADE my 18 y.o. daughter get her 1st CC ...yes I said 'made' b/c she really had zero interest in having a CC...she has a P/T job has she's a 2nd her college

student whose used to swiping her debit card and carrying no debt....

 

But I know she'll need it later and I feel the BEST time the build credit is when you don't NEED it b/c one can just play the game game manipulate the numbers and

let the TIME work in your favor...that's the biggie everybody who keeps 'score-watching' forgets ...you can't rush TIME the #3 source of points, so if you have it let it work for you....

 

Anybody with young kids...make sure your kids don't WASTE 3-5 years of AGING while your kid is in college, those accounts could be a sweet half a decade old by the time they WANT to use them and get apartments and nicer cars etc....I told my daughter, whose CC came the mail this week...it's time for #2 and she's like Dad are you 'sure' I need ANOTHER one I'm like yep you're getting 1 or 2 more between now and the 1st of the year ...while the vendors are X-mas happy...that way by the this time next year all HP's will age off together and with good relationships like NFCU, Discover or AmEx befor 30 you'll have over a decade old relationship with 3 lenders that may be in your pulse (wallet for guys) for life...these relationships may need to be stroked for refi's home loans car loans IRAs who knows but either way

 

Nobody will say to my 22 y.o. kid "you got no credit...gonna HAVE to charege you more" make sure your kids aren't falling behind....also I never said they need to take on DEBT...just use a card for gas and same same movies and stuff they pay for now just use the CC vs the Debit.

Message 8 of 12
Valued Contributor

Re: Should I Adjust My Credit Utilization?


Utah_grad2015 wrote:

I've been trying to stay around 20-25% utilization of my overall credit line in order to get the best bump to my credit score each month. However, I recently opened a Lowes cards over the weekend in the amount of $1,200 (which did appear on my credit report a few days later as a new account and inquiry). This is for this store use only and cannot be used as a credit card anywhere else. So do I need to now start factoring in this additional $1,200 into my equation when calculating out what my 20-25% utilization of my overall credit line should be each month? Or do cards like this not factor into my credit scoring since they are not full-fledged credit cards and just store accounts?

 

Thanks!


I have read that Lowes cards can easily grow to high limits with a simple call. Maybe you can push your Lowes card to 10,000 and that will help with your util. Good luck.

Message 9 of 12
New Contributor

Re: Should I Adjust My Credit Utilization?

Thanks for the great advice and help everyone! While 10% is definitely my new target from now one, there is one thing that may throw a monkey wrench into all this for the next few months (if not a year). One of the reasons for the Lowe's card is that I can get a 5-10% discount on all my purchases. Over the course of this remodel, that will save me a about a grand or more. So I'd be a fool not to use it. However, that will mean charging up a lot of materials and carrying the balance for a month at a time before paying it off (which is going to blow way past my 10% utilization mark, maybe even pushing it to 50% of my total). So I don't see any way around it, unless you good folks can make a suggestion.

 

Perhaps score building isn’t something I can simultaneously juggle with the remodel? Perhaps I should just focus on keeping my accounts paid on time. Any thoughts?

Message 10 of 12