Usage and utilization

[Anonymous]

Hello,
The last month I've been establishing my credit. I received my first real credit card as a responsible adult. It's a cap 1 with a limit of $300. I'm looking to keep my utilization at 10% or lower. My question is that my debit card does not give me cash rewards like my cap1 so I've been using my cap1 card(keeping my purchases under 10%) and paying the balance every 2-3 days.

My question is...people say to keep your ultilizatiin under 30%. I know they're talking about the statement balance but are they talking purchases as well? Example - Could I use 80% of my CL(earn more reward cash), PIF with 2-3 days, continue that throughout the month then when my closing date approaches make sure my balance is between 0%-10%?

[SouthJamaica]

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@Anonymous wrote:
Hello,
The last month I've been establishing my credit. I received my first real credit card as a responsible adult. It's a cap 1 with a limit of $300. I'm looking to keep my utilization at 10% or lower. My question is that my debit card does not give me cash rewards like my cap1 so I've been using my cap1 card(keeping my purchases under 10%) and paying the balance every 2-3 days.

My question is...people say to keep your ultilizatiin under 30%. I know they're talking about the statement balance but are they talking purchases as well? Example - Could I use 80% of my CL(earn more reward cash), PIF with 2-3 days, continue that throughout the month then when my closing date approaches make sure my balance is between 0%-10%?

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No they're not talking about usage. It's ok to use the card a lot, just so long as you pay it down to zero a lot.

If you use 80% of your credit limit, and PIF every 2 to 3 days, Capital One will love you.

[Anonymous]

Awesome news, my $30 limit is out the door!

Let's say we compare apples to apples(well sort of) and the only difference is: Card 1 - I keep my usage and statement balance under 10% vs Card 2 - I spend 80 % of my CL and keep my statement balance under 10%. Balances for both cards will be PIL within 2-3 days. Will I see a difference in my fico score or will both be exactly the same?

[HeavenOhio]

Keep in mind that "under 10%" means 8.9% or below, and "under 30%" means 28.9% or below. This is because .000001% rounds up to the next whole number, e.g. 9.000001% rounds up to 10%.

If I'm correctly understanding the scenario you're describing, FICO results would be the same. It's the statement balance that matters. Keep in mind that some oddball cards report something other than the statement balance, notably US Bank.

With two cards, for optimum scoring, you should let one statement cut with a small positive balance (8.9% or lower) with the other card reporting zero. FICO likes to see less than half of your cards reporting positive balances. Obviously, to accomplish that, you'd need three cards. But one card out of two is the next best thing.

[Anonymous]

Thanks for the FYI!

Very informative post, actually this whole board is. I did read on the 3 card scenario and will keep that in mind once more CC's are added to the wallet but currently I'm just a seed barely sprouting.

[Anonymous]

As stated earlier, this is the only cc I have. I'm not sure how accurate the stimulator is but it shows if I pay the balance off and have zero ultilization my score could jump drastically. Not sure how true that is but just want to confirm as long as I keep my balance of 8.9% when reported I should be good correct?

[HeavenOhio]

With one card, it's better to post a small positive balance than zero balance. With two cards, a small positive balance should be on one of the two. With three or more, aim for less than half of your cards reporting a positive balance. However, if you need every point you can get, the safest route is to still have the balance on only one card.

[NRB525]

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@Anonymous wrote:
Hello,
The last month I've been establishing my credit. I received my first real credit card as a responsible adult. It's a cap 1 with a limit of $300. I'm looking to keep my utilization at 10% or lower. My question is that my debit card does not give me cash rewards like my cap1 so I've been using my cap1 card(keeping my purchases under 10%) and paying the balance every 2-3 days.

My question is...people say to keep your ultilizatiin under 30%. I know they're talking about the statement balance but are they talking purchases as well? Example - Could I use 80% of my CL(earn more reward cash), PIF with 2-3 days, continue that throughout the month then when my closing date approaches make sure my balance is between 0%-10%?

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With a new profile and one card at $300 limit, congratulations on getting started. 

The biggest effect on your your score is going to be paying on time and building credit history. Any utilization reporting games at this time will have no effect on your success in apping. And the only reason to worry about the FICO score is if an app is upcoming. 

You would be fine to to use the card for the rewards, pay frequently to keep from going over limit, but that statement utilization number is quite optional. After several months, when you plan to app again, you can manage to a statement report to “optimize” the score, but really, I doubt the “optimization “ is going to yield many points. Another bank is going to be most interested in how long a payment history you have, how many cards you are showing responsible use of, when sizing you up for your next $500 - $1k card. 

You wont get to FICO 800 yet by optimizing utilization, in other words. 

By all means, pay on time. That is the biggest factor in your score. 

[Kforce]

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@Anonymous wrote:
Hello,
The last month I've been establishing my credit. I received my first real credit card as a responsible adult. It's a cap 1 with a limit of $300. I'm looking to keep my utilization at 10% or lower. My question is that my debit card does not give me cash rewards like my cap1 so I've been using my cap1 card(keeping my purchases under 10%) and paying the balance every 2-3 days.

My question is...people say to keep your ultilizatiin under 30%. I know they're talking about the statement balance but are they talking purchases as well? Example - Could I use 80% of my CL(earn more reward cash), PIF with 2-3 days, continue that throughout the month then when my closing date approaches make sure my balance is between 0%-10%?

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Another way is to push money from your checking account billpay service to the CC account in excess. If you are spending a thousand on the card every month, just push 800-900 at the start of the cycle, keep checking the balance and correct as needed near the end of cycle. The loss of the interest in a checking account is small compared to the hassle of paying every 2-3 days.