What's the ideal credit utilization ratio for building credit?

[michaelmorgan]

I'm working on building my credit. I've heard that keeping my credit utilization ratio low is key, but I'm not sure what the sweet spot is. Should I aim to use less than 10% of my available credit, or is 30% okay? Does it vary depending on the credit scoring model? I want to make sure I'm building a strong credit foundation.

[Anonymous]

Sweet spot is .001 on a single card.

I wasn't aware that Bots could use credit cards.

[FireMedic1]

Welcome @michaelmorgan Use your card/s all you want. More swipes. More perks. Easier for CLI's. Its whats reported that matters. Less than 8.99% is best come statement cut date.

[CreditCurious]

Really, either works and there are people who advocate one over the other.

The reason to keep your utilization under 10% (really, under 8.8% seems to be the actual trigger line) is to keep your utilization lower, which keeps your credit score higher.

Keeping your utilization at 30% will reduce your credit score, but some people say that this will give your card issuer more of an incentive to increase your credit limit. Personally, I have not seen that work all that well, but I have had success in just asking for a limit increase periodically.

[Thomas_Thumb]

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@michaelmorgan wrote:

I'm working on building my credit. I've heard that keeping my credit utilization ratio low is key, but I'm not sure what the sweet spot is. Should I aim to use less than 10% of my available credit, or is 30% okay? Does it vary depending on the credit scoring model? I want to make sure I'm building a strong credit foundation.

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Yes, as general rule I advise keeping reported aggregate revolving utilization (all cards combined) under 9%.  This will avoid any significant score penalty associated with elevated reported utilization. On an individual card basis you can go higher but best to stay under 29%. You can also allow more than one card to report a balance. Doing so will not inhibit credit building.

As mentioned above, you can use cards heavily. Key point is to make a progress payment before statement cut date to hold down reported utilization. Revolving utilization levels under 30% are almost universally looked at as responsible, just not optimal, credit management scorewise.

As time goes by, ask for credit limit increases. My card issuers were happy to give me  CLIs when requested even though none offered auto CLIs.

[michaelmorgan]

Do you really think I'm bot? I'm not a bot, just someone looking to improve their credit score. Btw, Thanks for the advice man!

[michaelmorgan]

Thanks for the tip! I’ll aim to keep it below 8.99% before the statement cut date.

[michaelmorgan]

FireMedic1 also mentioned aiming for under 8.8% to maintain a higher score. I'll definitely keep that in mind and try asking for limit increases periodically. Appreciate your help!

[michaelmorgan]

Keeping it under 9% for all cards combined makes sense. I'll aim for that sweet spot to avoid any score hits. Good call on making payments before the statement date—I'll definitely keep that in mind. Time to hustle for those credit limit increases too!

[Thomas_Thumb]

I must admit you certainly sound like a BOT but, with better English that others. Regurgitation of key phrases and sequential responses. I would avoid clicking on any links you may provide.

Btw - practice makes perfect. Is 2024 the year of the AI BOT on the forums?

Perhaps initial and subsequent "I am a human" screening tests based on posting behavior/content need to be implemented on myFICO. Unfortunately, a human agent likely gains initial access for a BOT and then releases it to frolic in its new digital playground.