@f1StudentInUS wrote:
I have three secured cards with me, one of which gives me rewards for gas and another for online purchases.
The third one is a Mastercard - I use that where my VISA cards do not get accepted.
This way, I have 30% utilization on one card, 10% utilization on the other and 0% - 1% on the Mastercard.
I was wondering:
- Is my credit utilization (30 + 10 + 1)/3 = ~14% or is it 30%?
- Will this skewed credit utilization affect my scores in any way (frowned upon by credit bureaus or my provider as high risk)?
- Is it recommended to have an uniform utilization accross your credit cards or is the situation I am in kind of "expected" from users?
Hello there.
FICO scores both overall and individual account utilization plus the number of accounts reporting a balance at the same time. Making sure less than half of all your accounts report a balance helps most people.
To get your overall utilization just divide your total balances by your total available credit.
As far as "recommended" utilization everyone's situation is different and there is no one size fits all approach to this but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.
You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.
On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.
Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.
From a BK years ago to:
EX - 3/11 pulled by lender- 835, EQ - 2/11-816, TU - 2/11-782
"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".
