Question on utilization

[silver_idle]

I have been making sure low util is reported when possible, but what been going through my mind is, does it really help? If someone had a credit card with $1000 SL and only spends maybe about $10/month and that gets reported and pif, wouldnt that begin to hurt the credit file over time vs helping it vs someone spending about $200/month and having that reported and getting that PIF (since that would give more of an idea to creditors who dont know your spending habits)?

(Posted here since I might get more/better answers but if the rebuilding section is incorrect, please let me know)

[OmarGB9]

No, it wouldn't hurt your credit file to only put $10/mo on a $1k CL. FICO only cares about individual and overall utilization. Whether that's $10, or $100, it doesn't matter so long as you stay under the 8.9% threshold (for optimal scoring; if you don't want to micromanage every account, then under 28.9% is a good general rule). Now, every individual creditor knows exactly how much you spend/pay with them internally, regardless of what's reported to the bureaus; they just wouldn't know about your other accounts. Thus, if you wish to "please" (a) certain lender(s) in hopes of getting a CLI, then yes, maybe it'd be a good idea to just use the cards and run up the balance, let it report, and PIF after statement cuts so that other external lenders can see what you're doing with accounts other than theirs. Otherwise, there's no wrong way to use your credit, unless of course you start maxing out all cards and letting them stay that way for months on end, which may indicate financial distress.

[silver_idle]

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@OmarGB9 wrote:
No, it wouldn't hurt your credit file to only put $10/mo on a $1k CL. FICO only cares about individual and overall utilization. Whether that's $10, or $100, it doesn't matter so long as you stay under the 8.9% threshold (for optimal scoring; if you don't want to micromanage every account, then under 28.9% is a good general rule). Now, every individual creditor knows exactly how much you spend/pay with them internally, regardless of what's reported to the bureaus; they just wouldn't know about your other accounts. Thus, if you wish to "please" (a) certain lender(s) in hopes of getting a CLI, then yes, maybe it'd be a good idea to just use the cards and run up the balance, let it report, and PIF after statement cuts so that other external lenders can see what you're doing with accounts other than theirs. Otherwise, there's no wrong way to use your credit, unless of course you start maxing out all cards and letting them stay that way for months on end, which may indicate financial distress.

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Thanks for the reply. Thats interesting though that FICO only looks at the overall utilization. I thought FICO also factors in each account utilization as well (eg if one card is maxed out while others have low balance) to where even if its under 30%, having something maxed out could still hurt, but I guess I was wrong. I know creditors might still look at things differently than just a single score so that high utilization could factor into their decision.

[OmarGB9]

No, that's what I said. FICO looks at BOTH individual AND overall utilization. High util across multiple cards can spook some lenders and lead to a domino effect of AA.

[Remedios]

It "hurts" in a way because it makes it appear as if you're not using credit you have, so why give you more
While the lender may know how much of your limit you're using, other potential lenders dont
In my opinion, best way to do this is to use cards organically, let the statement generate then pay it off. If you're uncomfortable with that, or if it would lead to maxed out card reporting, pay some of it down but not everything.
Unless cards are maxed out, utilization is irrelevant unless you're applying for additional credit.