Utilization Ratio

[hd197824]

Ladies and Gentlemen,

Thank you for any advice and input in my matters in advance.

I have 3 credit cards:

Capital One Quicksilver ( May 2023 approved CL $ 700 / 0 Balance )

Discover It ( August 2023 approved CL $ 2,000 / as of today $ 280 Balance, normally $ 145 )

Wells Fargo Active Cash ( December 2024 approved CL $ 3,500 / First Stament will be on 20.03.2025 )

My UTI has been 2.3 percent as of last week.

Would it be wise to pay the discover card down to around $ 180 or let the $ 280 Balance report this January ?

Just in case, when I get a new statement thr whole statement balance is paid on time in full.

Thank you again.  Sincerely, Hendrik

[GZG]

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@hd197824 wrote:

Ladies and Gentlemen,

Thank you for any advice and input in my matters in advance.

I have 3 credit cards:

Capital One Quicksilver ( May 2023 approved CL $ 700 / 0 Balance )

Discover It ( August 2023 approved CL $ 2,000 / as of today $ 280 Balance, normally $ 145 )

Wells Fargo Active Cash ( December 2024 approved CL $ 2,500 / First Stament will be on 20.03.2025 )

My UTI has been 2.3 percent as of last week.

Would it be wise to pay the discover card down to around $ 180 or let the $ 280 Balance report this January ?

Just in case, when I get a new statement thr whole statement balance is paid on time in full.

Thank you again.  Sincerely, Hendrik

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unless you are directly applying for something in the very near future, just pay your bill in full by the due date

if you are directly applying for something and want the highest possible score, you'll want one card to report under 9% of the credit limit for that card, preferably under 1% and the other cards to report zero.

[hd197824]

Thank you GZG,

The new Wells Fargo Card is $ 3,500 , my mistake.

So total CL  $6,200 .            

[Realist]

Under 10% is ideal and over 30% starts to work against you in regards to utilization.  The beauty in this is, as life goes on, and work experience and income grows up, as credit accumulates and your profile solidifies, the more credit you accumulate, the less credit utilization actually matters in an overall score.  I'll show you why.

For example:

1.    If your total credit line is $1000, it's easy to spend enough to place you into a potential utilization penalty.

2.   If your total credit line is  $10,000, it's still easy enough to spend enough to place utilization in question.  All it takes is $1000 to $3000+ in credit use.

3.   If your total credit line is $100,000, it's hit or miss whether you will want to spend $10,000 to $30,000+ to make utilization even an issue.  Your other issue will be, can you afford to pay it back if you do?   

4.   If your total credit line is 1 million or more, then 100k-300k+ in use is very unlikely to be used, and utilization will hardly ever matter or register with your score.

At some point in your life, you may acquire more credit than you will ever possibly want to use, or can possibly use responsibly.  This means that utiliziation will most likely never really factor as a penalty into your score.

In your scenario, there is no harm in using credit, and paying it off.  There is also no harm in tossing the lenders a bone, and allowing some balances to report out.  You can control this by limiting how much you want them to report, and earn interest on.  Either pay the balance off, or allow them to earn the interest on $180 or $280.  Or instead, you could also allow them to only earn interest on $5 or even $10.

Sometimes you give, many times you take.   Sometimes you take a step back, to earn many steps forward.   Keep that beneficial relationship going, and in the future you will be amazed by where you may end up.

[hd197824]

Thank you very much for your clear written response in my matters.

[SouthJamaica]

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@hd197824 wrote:

Ladies and Gentlemen,

Thank you for any advice and input in my matters in advance.

I have 3 credit cards:

Capital One Quicksilver ( May 2023 approved CL $ 700 / 0 Balance )

Discover It ( August 2023 approved CL $ 2,000 / as of today $ 280 Balance, normally $ 145 )

Wells Fargo Active Cash ( December 2024 approved CL $ 3,500 / First Stament will be on 20.03.2025 )

My UTI has been 2.3 percent as of last week.

Would it be wise to pay the discover card down to around $ 180 or let the $ 280 Balance report this January ?

Just in case, when I get a new statement thr whole statement balance is paid on time in full.

Thank you again.  Sincerely, Hendrik

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The difference between a $180 balance and a $280 balance is not significant. $600 (30%) is where you would get penalized.

[hd197824]

Thank you very much for the input!