question regarding less than 10% utilization

[Anonymous]

I have 3 accounts currently reporting..

Cap 1 platinum mastercard limit 200$

Cap 1 quicksilver limit 500$

Fingerhut recolving acct limit 400$.

To be at optimum utilization..shoukd i play both cards in full and leave fingerhut balance at abt 9 % of the 400$?i bought an item and am into my third and final payment.mhave abt 25$ balance.

Or is the optimum way to go..leave fingerhut at zero and one card at zero..and have one card report 9%?

Trying ti find out what is ideally recommended in such a scenario. I also have express , vs, j crew cards on the way but want to figure out optimum utilization before these start appearing on my report.

Thanks.

[Anonymous]

Yes, at this time, pay all other cards to $0 before their statement dates so they report zero, and once the fingehut card is paid off, then sock drawer it. They will probably give you a hefty CLI just to try to 'suck you back in', but resist you must.

Let your QS card become your mainstay card. Use it for all of your regular monthly spending and pay it down as soon as it nears its limit. Let it carry a small balance $25 or so and keep all your other cards PIF before their statement dates. Afte rusing your Cap One card heavily like this for a few months, start requesting CLI's on it. After 6 months you can request the platinum card to be upgraded to a QS card as well.

[takeshi74]

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@Anonymous wrote:
To be at optimum utilization..shoukd i play both cards in full and leave fingerhut balance at abt 9 % of the 400$?i bought an item and am into my third and final payment.mhave abt 25$ balance.

Or is the optimum way to go..leave fingerhut at zero and one card at zero..and have one card report 9%?

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Make sure you understand the different between report and leave/carry.  You do not need to leave/carry a balance for scoring purposes.  You can pay in full and have a balance report by paying any remainder on the statement balance after the report date.

I'd also suggest making sure you understand statement balance versus current balance.  You want to pay the statement balance in full by the due date to avoid incurring interest and debt and to avoid losing your grace period.  You do not necesarily need to pay the current balance though it doesn't hurt to do so.

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@Anonymous wrote:
Trying ti find out what is ideally recommended in such a scenario

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The advice applies to all scenarios.  Allow one balance to report at 10% or less.  It's up to the individual to determine if one wants to constantly micromanage utilization like this.  In general just keep it under 30%.  Optimization is mainly suggested for applying when one wants to eke out every possible point.

[Anonymous]

Keep individual cards at 30% or lower or total of all the cards at 30% or lower?

I'm new so I'm trying to figure some of the terminology. If I pay the complete balance on my cards before the min payment due date, it's a good thing as far as utilization?

[MarineVietVet]

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@Anonymous wrote:

Keep individual cards at 30% or lower or total of all the cards at 30% or lower?

I'm new so I'm trying to figure some of the terminology. If I pay the complete balance on my cards before the min payment due date, it's a good thing as far as utilization?

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Hello and welcome.

Everyone's situation is different and there is no one size fits all approach to this and therefore no "ideal" number but what seems to work well for many people is to have only one of their cards report a small (<10% 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.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

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.

Again though this approach is just one you can have. Only you can judge what works best for your situation.

[Anonymous]

I suspect optimizing utilization EVERY month hurts your credit in the long run, and is something you should do in the run up to a major credit application, not every month.

Specifically, running up high utilizations and paying them down signals to lenders that you have increased capacity to pay down debt, and therefore your are a good candidate for more credit, particularly CLI's.

By optimizing your utilization every month you never let your balances report nearer your limits and therefore may be missing out on CLI's that would help your utilization and thus your score long term.

Obviously though if you have a mortgage app in 2 or 3 months you want to pull together the best possible score you cab using the advice here on optimizing your reporting.

Real example: I am letting my amazon store card repeatedly post balances well over 50% , which I repeatedly pay in full. I am not optimizing my utilization for the best score, instead I'm trying to get the biggest CLI from them I can in a few months.

[MarineVietVet]

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@Anonymous wrote:
I suspect optimizing utilization EVERY month hurts your credit in the long run, and is something you should do in the run up to a major credit application, not every month.

Specifically, running up high utilizations and paying them down signals to lenders that you have increased capacity to pay down debt, and therefore your are a good candidate for more credit, particularly CLI's.

By optimizing your utilization every month you never let your balances report nearer your limits and therefore may be missing out on CLI's that would help your utilization and thus your score long term.

Obviously though if you have a mortgage app in 2 or 3 months you want to pull together the best possible score you cab using the advice here on optimizing your reporting.

Real example: I am letting my amazon store card repeatedly post balances well over 50% , which I repeatedly pay in full. I am not optimizing my utilization for the best score, instead I'm trying to get the biggest CLI from them I can in a few months.

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I can't speak for anyone but myself. I've done this every month for several years and seem to be doing just fine. Of course my situation doesn't dictate what might happen to anyone else.

As I said there is no one right or wrong answer. I only know what's worked for me.

These are my scores I pulled here last October:

[Anonymous]

850

#creditgoals

[Revelate]

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@Anonymous wrote:
I suspect optimizing utilization EVERY month hurts your credit in the long run, and is something you should do in the run up to a major credit application, not every month.

Specifically, running up high utilizations and paying them down signals to lenders that you have increased capacity to pay down debt, and therefore your are a good candidate for more credit, particularly CLI's.

By optimizing your utilization every month you never let your balances report nearer your limits and therefore may be missing out on CLI's that would help your utilization and thus your score long term.

Obviously though if you have a mortgage app in 2 or 3 months you want to pull together the best possible score you cab using the advice here on optimizing your reporting.

Real example: I am letting my amazon store card repeatedly post balances well over 50% , which I repeatedly pay in full. I am not optimizing my utilization for the best score, instead I'm trying to get the biggest CLI from them I can in a few months.

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While I tend to agree with your actions, not getting a CLI doesn't hurt one's credit in the long run (or short term) so it's not as if there is any harm being a FICO strategist all the time  For that matter even a denial doesn't hurt your credit... damage to one's credit is pretty much all around payment history, utilization is fleeting.

Personally I just let my balances report generally then clean up a few months ahead of app time as you intimate; really doesn't matter that much though it appears from a banks perspective, just that's what most people do so that's what I do too.  This is not the credit file you're looking for.........