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What usage percentage is too much on a credit card per month?

WannaBcreditNerd
Frequent Contributor

What usage percentage is too much on a credit card per month?

What usage percentage is too much on a credit card per month?

For example, if I have a 2k limit visa card. Is it ok to charge up to the balance as long as you pay it off every month?

Will that hurt your chances of CL increases in the future with that lender?

05/2020 Starting Credit Score: 453 with 15 baddies

6/04/2020 Started Rebuild no credit cards at the time of starting rebuild

7/27/2020 received 3 of 3 secure cards: Total Credit Limit: $1,200

1/24/2021 Fico 8: EQ 633, EX 644, TU 634

1/28/2021 Vantage AMX; 616

4/8/2021 4 CC Total CL $4,200 and 1 ssl 1 hard pull; 3 secured cc 1 unsecured cc; down to 4 baddies: like ooo weee making progresss

5/10/2021 Fico Scores: EQ 663, EX 671, TU 661

12/31/2021 goal: No Baddies Have all unsecured ccs: have a total of 4 with a cl goal of 40k. Each card goal 10k. Only seeking major cards.

Credit Score Goal 720 at some point all smiles no date

12 REPLIES 12
Remedios
Moderator

Re: What usage percentage is too much on a credit card per month?


@WannaBcreditNerd wrote:

What usage percentage is too much on a credit card per month?

For example, if I have a 2k limit visa card. Is it ok to charge up to the balance as long as you pay it off every month?

Will that hurt your chances of CL increases in the future with that lender?


Using your card will not "hurt" your chances at CLI, it can help your chances depending on a lender. 

 

When you hear utilization talk, most are referring to what they allow to report, not the percentage of their CL being used but paid prior to statement date. 

 

I'd avoid going over the limit (if that was an option) because your profile isn't there quite yet (it will be eventually, though).

I wouldn't let the maxed card report, bring balance down a bit before it reports. While lender who issued the card knows you paid, all your other lenders see is a maxed card. 

With thin file, that's not a good look. 

 

Just use your cards like you normally would, pay your bill, and don't sweat it too hard. 

Message 2 of 13
SouthJamaica
Super Contributor

Re: What usage percentage is too much on a credit card per month?


@WannaBcreditNerd wrote:

What usage percentage is too much on a credit card per month?

For example, if I have a 2k limit visa card. Is it ok to charge up to the balance as long as you pay it off every month?

Will that hurt your chances of CL increases in the future with that lender?


As @Remedios pointed out it's not how much you use the card, it's what balance gets reported, that counts in scoring. Most cards report the statement balance, but some report the balance as of another date in the cycle. We would need to know the lender to tell you for sure what your lender reports.

 

As a general rule, if you report at 28% or less, you won't get hurt, but even lower is better.


Total revolving limits 663000 (585000 reporting) FICO 8: EQ 716 TU 742 EX 713

Message 3 of 13
designated_knitter
Established Contributor

Re: What usage percentage is too much on a credit card per month?

The most useful thread I have probably read on these boards discussed utilization buckets. 

My apologies to the original author because I can't find the post right now... but here is the pertinent information:

 

Utilization Thresholds:

 

  1. 88.9 -- above this level and the card is considered maxed out (red zone)
  2. 68.9 -- consider this the orange zone
  3. 48.9 -- yellow 
  4. 28.9 -- green
  5. 8.9 -- just about perfect 

I had one card report at 95 percent out of my approximately 20 cards this past month and it caused around a 10-point drop.  The balance wasn't even a big balance (570 out of 600 CL)

 

So even if most of your cards are at a reasonable threshold, if you have even one card max out, it can present a significant dip in your scores.

 

Good news is that once you pay it down, you get most of the points back the next month (at least until FICO trended models start rolling -- but that's a whole 'nuther kettle of fish! 

Started Over Again after Cap1 Death Penalty:
06/15/2019:
03/02/2021:
04/06/2021:
05/28/2021:
Lesson Learned: DON'T POKE THE BEAR!!! THE BEAR WILL WIN!!!
Message 4 of 13
WannaBcreditNerd
Frequent Contributor

Re: What usage percentage is too much on a credit card per month?


@designated_knitter wrote:

The most useful thread I have probably read on these boards discussed utilization buckets. 

My apologies to the original author because I can't find the post right now... but here is the pertinent information:

 

Utilization Thresholds:

 

  1. 88.9 -- above this level and the card is considered maxed out (red zone)
  2. 68.9 -- consider this the orange zone
  3. 48.9 -- yellow 
  4. 28.9 -- green
  5. 8.9 -- just about perfect 

I had one card report at 95 percent out of my approximately 20 cards this past month and it caused around a 10-point drop.  The balance wasn't even a big balance (570 out of 600 CL)

 

So even if most of your cards are at a reasonable threshold, if you have even one card max out, it can present a significant dip in your scores.

 

Good news is that once you pay it down, you get most of the points back the next month (at least until FICO trended models start rolling -- but that's a whole 'nuther kettle of fish! 


That is awesome what you placed in the forum. Thank you very much for the info, very useful.

05/2020 Starting Credit Score: 453 with 15 baddies

6/04/2020 Started Rebuild no credit cards at the time of starting rebuild

7/27/2020 received 3 of 3 secure cards: Total Credit Limit: $1,200

1/24/2021 Fico 8: EQ 633, EX 644, TU 634

1/28/2021 Vantage AMX; 616

4/8/2021 4 CC Total CL $4,200 and 1 ssl 1 hard pull; 3 secured cc 1 unsecured cc; down to 4 baddies: like ooo weee making progresss

5/10/2021 Fico Scores: EQ 663, EX 671, TU 661

12/31/2021 goal: No Baddies Have all unsecured ccs: have a total of 4 with a cl goal of 40k. Each card goal 10k. Only seeking major cards.

Credit Score Goal 720 at some point all smiles no date

Message 5 of 13
WannaBcreditNerd
Frequent Contributor

Re: What usage percentage is too much on a credit card per month?


@SouthJamaica wrote:

@WannaBcreditNerd wrote:

What usage percentage is too much on a credit card per month?

For example, if I have a 2k limit visa card. Is it ok to charge up to the balance as long as you pay it off every month?

Will that hurt your chances of CL increases in the future with that lender?


As @Remedios pointed out it's not how much you use the card, it's what balance gets reported, that counts in scoring. Most cards report the statement balance, but some report the balance as of another date in the cycle. We would need to know the lender to tell you for sure what your lender reports.

 

As a general rule, if you report at 28% or less, you won't get hurt, but even lower is better.

 

I am testing utilization, I am usually under 3 percent, this past month allowed it to go up to 9 percent. I did not see any drops at first, then as of  yesterday from 3 percent utilization to 9 percent utilization I lost the following points

Experian None

Equifax 10

Transunion 1

 

I think its safe to say my best optimization for my current profile is under 3% utiliztion.


 

05/2020 Starting Credit Score: 453 with 15 baddies

6/04/2020 Started Rebuild no credit cards at the time of starting rebuild

7/27/2020 received 3 of 3 secure cards: Total Credit Limit: $1,200

1/24/2021 Fico 8: EQ 633, EX 644, TU 634

1/28/2021 Vantage AMX; 616

4/8/2021 4 CC Total CL $4,200 and 1 ssl 1 hard pull; 3 secured cc 1 unsecured cc; down to 4 baddies: like ooo weee making progresss

5/10/2021 Fico Scores: EQ 663, EX 671, TU 661

12/31/2021 goal: No Baddies Have all unsecured ccs: have a total of 4 with a cl goal of 40k. Each card goal 10k. Only seeking major cards.

Credit Score Goal 720 at some point all smiles no date

Message 6 of 13
WannaBcreditNerd
Frequent Contributor

Re: What usage percentage is too much on a credit card per month?


@Remedios wrote:

@WannaBcreditNerd wrote:

What usage percentage is too much on a credit card per month?

For example, if I have a 2k limit visa card. Is it ok to charge up to the balance as long as you pay it off every month?

Will that hurt your chances of CL increases in the future with that lender?


Using your card will not "hurt" your chances at CLI, it can help your chances depending on a lender. 

 

When you hear utilization talk, most are referring to what they allow to report, not the percentage of their CL being used but paid prior to statement date. 

 

I'd avoid going over the limit (if that was an option) because your profile isn't there quite yet (it will be eventually, though).

I wouldn't let the maxed card report, bring balance down a bit before it reports. While lender who issued the card knows you paid, all your other lenders see is a maxed card. 

With thin file, that's not a good look. 

 

Just use your cards like you normally would, pay your bill, and don't sweat it too hard. 


Let me see if I am hearing this right. So if I have a 3k credit card limit, and I spend up to $2,999.99 but pay it off completely each month prior to the closing statement; this can help me in the future when I request a CLI?

05/2020 Starting Credit Score: 453 with 15 baddies

6/04/2020 Started Rebuild no credit cards at the time of starting rebuild

7/27/2020 received 3 of 3 secure cards: Total Credit Limit: $1,200

1/24/2021 Fico 8: EQ 633, EX 644, TU 634

1/28/2021 Vantage AMX; 616

4/8/2021 4 CC Total CL $4,200 and 1 ssl 1 hard pull; 3 secured cc 1 unsecured cc; down to 4 baddies: like ooo weee making progresss

5/10/2021 Fico Scores: EQ 663, EX 671, TU 661

12/31/2021 goal: No Baddies Have all unsecured ccs: have a total of 4 with a cl goal of 40k. Each card goal 10k. Only seeking major cards.

Credit Score Goal 720 at some point all smiles no date

Message 7 of 13
Horseshoez
Established Contributor

Re: What usage percentage is too much on a credit card per month?

@WannaBcreditNerd, just to underscore what others have said about usage versus reported utilization; last year after my Chapter 13 discharge I started with a secured CapitalOne credit card with a $1,000 limit.  In the six weeks I had the card I charged, paid in full, charged again, paid in full, rinse and repeat enough times to total nearly $4,000 in six weeks; clearly my monthly utilization was way higher than my credit limit.  During that time I received two statements (plus a third and final after I'd closed the card) which showed something like $50 for the first month and $0 for the second month (and obviously $0 for the final); my credit scores reacted quite positively even though I'd had utilization upwards of 250%.

I categorically refuse to do AZEO!

Message 8 of 13
Saeren
Mega Contributor

Re: What usage percentage is too much on a credit card per month?


@WannaBcreditNerd wrote:

@Remedios wrote:

@WannaBcreditNerd wrote:

What usage percentage is too much on a credit card per month?

For example, if I have a 2k limit visa card. Is it ok to charge up to the balance as long as you pay it off every month?

Will that hurt your chances of CL increases in the future with that lender?


Using your card will not "hurt" your chances at CLI, it can help your chances depending on a lender. 

 

When you hear utilization talk, most are referring to what they allow to report, not the percentage of their CL being used but paid prior to statement date. 

 

I'd avoid going over the limit (if that was an option) because your profile isn't there quite yet (it will be eventually, though).

I wouldn't let the maxed card report, bring balance down a bit before it reports. While lender who issued the card knows you paid, all your other lenders see is a maxed card. 

With thin file, that's not a good look. 

 

Just use your cards like you normally would, pay your bill, and don't sweat it too hard. 


Let me see if I am hearing this right. So if I have a 3k credit card limit, and I spend up to $2,999.99 but pay it off completely each month prior to the closing statement; this can help me in the future when I request a CLI?


Generally speaking, yes, assuming that it's real spend at a level they would expect from your reported income and not MS. A number of cards will even let you go past your limit to some degree (AMEX is most famous for this but a number of VISA Signature cards have this capability and my SavorOne WEMC actually reports as a flexible spending credit card on my credit reports) and just require you to pay the excess in full. 





Message 9 of 13
WannaBcreditNerd
Frequent Contributor

Re: What usage percentage is too much on a credit card per month?


@Horseshoez wrote:

@WannaBcreditNerd, just to underscore what others have said about usage versus reported utilization; last year after my Chapter 13 discharge I started with a secured CapitalOne credit card with a $1,000 limit.  In the six weeks I had the card I charged, paid in full, charged again, paid in full, rinse and repeat enough times to total nearly $4,000 in six weeks; clearly my monthly utilization was way higher than my credit limit.  During that time I received two statements (plus a third and final after I'd closed the card) which showed something like $50 for the first month and $0 for the second month (and obviously $0 for the final); my credit scores reacted quite positively even though I'd had utilization upwards of 250%.


Thanks for the info, kinda lost on the three statements in 6 weeks though. Also lost on how in 6 weeks your credit score reacted so fast. I know when I first received my secure card a year ago, I used it to almost the max and then paid off when I maxed it out. Then I did it again basically maxed it out twice in the first month and paid the balance down to zero each time. That card was only a $300 limit so pretty easy to max out. However when the card reported, it reported a zero balance. My score raised but only a few points nothing drastically. During this process I applied for two other secure cards one with $400 and the last one with a $500 limit. With applying for those two cards my credit score went down at first, not because of a hard pull because I applied for three cards that did not use credit pulls to get the cards. My score went down due to mulitiple cards acquired in a short period of time. The scores went up shortly after that but gradually in the first six months. By the sevent month my credit score started going up about 8 points per month across the board. I also made the mistake of paying off all of the cards to report zero balance each month, that was before I knew to allow one card to report with a small balance.  By the 10 month and allowing one card to report with a balance, my scores jump about 40 plus points on two cra's and 13 points on the other.

I do not know what you did in six weeks and 1.5 reporting period have your credit react so well, but great job for making it happen.

I think when think when my last two baddies one age off and the other one is paid I will benefit the most for the credit jump.

My main focus of this statement was how to use the correct percentage of a card to insure I can get a good CLI increase when I request one.

I have only asked for 1 CLi and that was a success on one of my secure cards. I raised the Cl by $200 no HP. I just wanted to see how it was done. The company is OpenSky and the process was painless. They mailed me a letter with instruction. That letter took about 3 weeks to reach me. I just needed to mail in a check, or wire the money in. So I did a wire transfer from my CU and they said it would take about 7-10 days and up to a month to see the changes. OpenSky received the wire the next day and increased my CL by the $200 the same day they received the wire.

In the near future I will eventually request a CL for my one non secure card that I have, and was curious if I am using up too much of the balance to be considered for a CL.

 

Thanks for your input.

05/2020 Starting Credit Score: 453 with 15 baddies

6/04/2020 Started Rebuild no credit cards at the time of starting rebuild

7/27/2020 received 3 of 3 secure cards: Total Credit Limit: $1,200

1/24/2021 Fico 8: EQ 633, EX 644, TU 634

1/28/2021 Vantage AMX; 616

4/8/2021 4 CC Total CL $4,200 and 1 ssl 1 hard pull; 3 secured cc 1 unsecured cc; down to 4 baddies: like ooo weee making progresss

5/10/2021 Fico Scores: EQ 663, EX 671, TU 661

12/31/2021 goal: No Baddies Have all unsecured ccs: have a total of 4 with a cl goal of 40k. Each card goal 10k. Only seeking major cards.

Credit Score Goal 720 at some point all smiles no date

Message 10 of 13
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