Credit Card Utilization.

[Anonymous]

I read this in a forum:

I use to be a mortgage loan officer. The way I understand it, you should only use 30% of whatever your limit is on any card you hold. If you have a limit of $1,000.00 for example, you want to keep your balance at or below $300.00. Totally ignore the real limit and treat the card as if your limit is just $300.

To avoid paying high interest, pay off all but $5.00 of your balance (or as much as you can afford) each billing cycle. Leaving a $5.00 balance will automatically register with all three credit bureaus that your manageing the card at less than 30% usage. Bottom line, never allow your limit to go over $300.00 /or 30% of your actual limit.  If you do this with each of your cards, you should have an "A" for credit card usage within a years time.

Is it a good idea to leave $5.00 in your account every month?

[Anonymous]

It's not exactly clear what the person is suggesting. 

If they are suggesting that you pay off your entire balance minus $5 BEFORE the statement cuts, then yes that is a good idea. It is good to show some activity (hence having the statement cut with $5 is better than $0). However, this can be annoying to actually do. I used to do this when I had only one credit card and I think that helped me build a high score fast. But with multiple cards it's annoying. 

If they are suggesting that say, your statement cuts and you owe $500 to the cc company but you only pay $495 and pay a little interest on the $5, then that seems like a bad idea. Won't help your credit any more than paying the entire balance off would. 

[Chris123nTx]

It is sort of right. It does NOT matter how much you charge each month, it is what the cc reports as the balance to the credit agencies each month. Believe it or not, yes having a balance report each month on one card actually helps your score vs. zero balance. That said, keep it under 10% not 30 and just leave the balance on one card, pay the others off each month so you don't have to pay interest on them. That does NOT mean to not use the card as you wish even up to your limit each month. It only matters on what reports, so just be sure to pay it down before the next statement is cut. You can also pay most cc companies many times through the month if you like. I put most everything I can on my amex bcp but pay them multiple times each month. My limit is 20K, but I rarely charge more than 5K a month. I like getting the cash back though so I use it and pay it off usually once a week.

[mongstradamus]

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@Chris123nTx wrote:
It is sort of right. It does NOT matter how much you charge each month, it is what the cc reports as the balance to the credit agencies each month. Believe it or not, yes having a balance report each month on one card actually helps your score vs. zero balance. That said, keep it under 10% not 30 and just leave the balance on one card, pay the others off each month so you don't have to pay interest on them. That does NOT mean to not use the card as you wish even up to your limit each month. It only matters on what reports, so just be sure to pay it down before the next statement is cut. You can also pay most cc companies many times through the month if you like. I put most everything I can on my amex bcp but pay them multiple times each month. My limit is 20K, but I rarely charge more than 5K a month. I like getting the cash back though so I use it and pay it off usually once a week.

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I learned that hardway about zero util, i had an au account report which i thought would show util. It didn't so my score got dinged pretty harshly, about an 25 point drop. I just had my BCP report earlier this week , and my score recouped its 25 points. So as far as util goes have something report i like around the 5 % range is pretty safe. 

[SevenNEW]

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@Chris123nTx wrote:
It is sort of right. It does NOT matter how much you charge each month, it is what the cc reports as the balance to the credit agencies each month. Believe it or not, yes having a balance report each month on one card actually helps your score vs. zero balance. That said, keep it under 10% not 30 and just leave the balance on one card, pay the others off each month so you don't have to pay interest on them. That does NOT mean to not use the card as you wish even up to your limit each month. It only matters on what reports, so just be sure to pay it down before the next statement is cut. You can also pay most cc companies many times through the month if you like. I put most everything I can on my amex bcp but pay them multiple times each month. My limit is 20K, but I rarely charge more than 5K a month. I like getting the cash back though so I use it and pay it off usually once a week.

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+1. You can use your card as much as you want, as long as you pay before the statement cuts.

[Anonymous]

The best option for this in my opinion (if you can do it) is to increase your credit line on the cards you use heavily. 

If you charge $1000 on your cap1 quicksilver or whatever, try to get cap1 to increase your limit to $10,000, set on autopay, never have to worry about it ever again. 

[ezdoesit]

The utilization part of the fico scoring has no memory like payment history and it can change from month to month.  So unless you are planning on applying for something that following month then I would just keep it simple, wait for the statement to cut pay it off and you still pay no interest.  JMO.

[Anonymous]

before the statement cuts (lets say its 3rd aug 2014) & payment due date is 28th july 2014.

if you miss payment by its due date and payoff by statement date isnt a penalty charged by cc which can also bring it to penaltyapr.

u payoff by due date & charge $5 before statement date and payoff before stmt date i think it works better.

[vanillabean]

Leaving $5 in your account at the statement date is good. Leaving $5 in your account at the due date is bad.

Also, there's nothing to indicate that any given percentage such as 30% signals any particular threshold.

[takeshi74]

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@Anonymous wrote:

To avoid paying high interest, pay off all but $5.00 of your balance (or as much as you can afford) each billing cycle. Leaving a $5.00 balance will automatically register with all three credit bureaus that your manageing the card at less than 30% usage.

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Balance does not have to be carried to report.  Most cards report at statement end.  To avoid paying interest pay in full by due date.

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@Anonymous wrote:

Is it a good idea to leave $5.00 in your account every month?

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 Not unless you just want to pay interest on that $5.  Again, balance probably reports at statement end unless it's one of those cards that reports at a different point.