Utilization Question

[Anonymous]

So, if I get two new secured cards at say $1,500 each and I use them several times a month but also pay the balance off in full every month does that constitute good utilization in terms of increasing the FICO score? I've read some of the forum posts and just want to be sure that I understand the methodology. I will pay the balance off every month via direct debit.

[Anonymous]

From what I understand, Utilization is the balance divided by total credit available. You want to keep that as low as possible, but also want to show you are using the cards. From what I have read, there is no memory to Utilization, it is only a snapshot. One month you might have high Util and the scores will drop, but as soon as that Util drops, your score will return to what it was.

There may be others that have a better answer than I do, but that is how I understand it.

[jbsea]

ok, starting off you want 3 cards.  You can use all of your cards of you wish but you want to pay off two of them (or if you only have two cards pay off one) by the statement date.  You only want one card to show with a balance and you want that to be at 9% or less.

[Anonymous]

First off, you don't need to tie up that much money in secured cards, its entirely unnecessary.  Three cards, $300 each is all you need to get the FICO ball rolling - and depending on your scores, one secured card may give you the needed bump to get some unsecured cards.

As for usage, the general rule is to pay in full prior to the statement closing on all but one card - on that card you allow a small balance to show each month, less than 10% of the cards limit.

You can charge as much as you need to each month, just make sure to pay them down before the statement closes.

[Anonymous]

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@Anonymous wrote:

First off, you don't need to tie up that much money in secured cards, its entirely unnecessary.  Three cards, $300 each is all you need to get the FICO ball rolling - and depending on your scores, one secured card may give you the needed bump to get some unsecured cards.

As for usage, the general rule is to pay in full prior to the statement closing on all but one card - on that card you allow a small balance to show each month, less than 10% of the cards limit.

You can charge as much as you need to each month, just make sure to pay them down before the statement closes.

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Is there an automated way to schedule the "pay them down before the statement closes" or will I need to make it a point to log into the accounts manually to pay them down before the statement closes? From there I assume I would wait until the statement drops and then pay the remainder of the balance before the due date, is that correct?

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

First off, you don't need to tie up that much money in secured cards, its entirely unnecessary.  Three cards, $300 each is all you need to get the FICO ball rolling - and depending on your scores, one secured card may give you the needed bump to get some unsecured cards.

As for usage, the general rule is to pay in full prior to the statement closing on all but one card - on that card you allow a small balance to show each month, less than 10% of the cards limit.

You can charge as much as you need to each month, just make sure to pay them down before the statement closes.

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Is there an automated way to schedule the "pay them down before the statement closes" or will I need to make it a point to log into the accounts manually to pay them down before the statement closes? From there I assume I would wait until the statement drops and then pay the remainder of the balance before the due date, is that correct?

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Many lenders sites will allow you to make regular scheduled payments for a specified amount. I just log in right before the statement date and pay as much as I need to.

Yes, on the one card you want the balance on, just log in and pay the balance after the statement close date. That will save you interest charges.