UTIL Question

[AvaMommy]

I have read multiple posts in various forums; however, I have a simple question that I just need a little more explaining. I read that I should find out when are the closing/end of my CC billing cycles and pay off the balances before they close. To include, keep at least 1 CC below 10% UTIL (which I do...thats my Orchard $320 CLI...have my gym membership of $20 coming out every month). I have a BoA with $3000 that I use maybe $1500 a month but pay off every month, but not before the end of the billing cycle. What will this do for my credit score? Thanks

[MarineVietVet]

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@AvaMommy wrote:

I have read multiple posts in various forums; however, I have a simple question that I just need a little more explaining. I read that I should find out when are the closing/end of my CC billing cycles and pay off the balances before they close. To include, keep at least 1 CC below 10% UTIL (which I do...thats my Orchard $320 CLI...have my gym membership of $20 coming out every month). I have a BoA with $3000 that I use maybe $1500 a month but pay off every month, but not before the end of the billing cycle. What will this do for my credit score? Thanks

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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 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.

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.

[AvaMommy]

awesome...thank you