CREDIT UTILIZATION - By Card or Entire Profile?

[Anonymous]

I always here people say you should not spend me than 10% of your credit card limit, then other's say 30%, so I decided I won't spend more than 20% which is in the middle. 

My question is, what is the truth. When a bank pulls your credit and they look at utilization, are they looking at each card's utilization, or all your cards combined? 

So if I have a card with a $1,000 limit, are they looking at that card to see if I used over 20%, or are they looking at all my cards and adding my utilization up on all combined?

As an example, right now I justed added it up and all my cards credit limit total $46,000. Now 20% of that 46,000 would be $9,200 a month. 

So can I spend $9,200 a month and will it hurt me if i only used 10% on 1 card, and $90% utilization on another card as long as I dont used over $9,200 a month. Does anyone understand what I mean? 

[Thomas_Thumb]

---

@Anonymous wrote:

I always here people say you should not spend me than 10% of your credit card limit, then other's say 30%, so I decided I won't spend more than 20% which is in the middle. 

My question is, what is the truth. When a bank pulls your credit and they look at utilization, are they looking at each card's utilization, or all your cards combined? 

So if I have a card with a $1,000 limit, are they looking at that card to see if I used over 20%, or are they looking at all my cards and adding my utilization up on all combined?

As an example, right now I justed added it up and all my cards credit limit total $46,000. Now 20% of that 46,000 would be $9,200 a month. 

So can I spend $9,200 a month and will it hurt me if i only used 10% on 1 card, and $90% utilization on another card as long as I dont used over $9,200 a month. Does anyone understand what I mean? 

---

The general utilization guidelines are:

1) Aggregate utilization (all cards combined): report a total utilization less than 9%. Anything above 9.00% rounds up to 10%

2) Individual card utilization: Keep utilization on each card individually under 29%.

Given a total credit line of $46,000 you want total of all reported balances to be less than $4140 (9%). If one of the cards has a $1000 CL, the reported balance on that card should be less than $290 (29%). Any other cards that are in use should also report a balance under 29% of the card's credit limit. Again, total of reported balances on all cards combined should be kept below 9%.

Note: Utilization only has a point in time impact. So reported high balances one month won't hurt score in a subsequent month that reports a low aggregate and individual card utilizations.

[Anonymous]

I'm sorry I do not understand that first part. I am new to all of this. 

[Thomas_Thumb]

You will hear common utilization thresholds mentioned as 10% and 30%. When utilization crosses into the next higher threshold, Fico score often drops due to the increase in utilization. When the Fico looks at your utilization, it first rounds utilization to the next highest whole number and then assigns it a score. For example:

Actual utilization = 8.9% => rounds up to 9%. Fico => top utilization tier

Actual utilization = 9.1% => rounds up to 10%. Fico => 2nd best utilization tier, score affected negatively.

There are separate scoring attributes for total (aggregate) utilization and highest individual card utilization. Aggregate utilization has more impact on score.

[Anonymous]

Ok so bottom line is dont use over 9% which is $4,140 and I already set a ground rule for myself to not use more than 20% anyway on every card. Now, I also have a $2K amex business card, should i add that to this mix, or thats totally different? 

[Revelate]

---

@Anonymous wrote:

Ok so bottom line is dont use over 9% which is $4,140 and I already set a ground rule for myself to not use more than 20% anyway on every card. Now, I also have a $2K amex business card, should i add that to this mix, or thats totally different? 

---

Totally different, Amex business doesn't report to your personal credit.

[SouthJamaica]

---

@Anonymous wrote:

I always here people say you should not spend me than 10% of your credit card limit, then other's say 30%, so I decided I won't spend more than 20% which is in the middle. 

My question is, what is the truth. When a bank pulls your credit and they look at utilization, are they looking at each card's utilization, or all your cards combined? 

So if I have a card with a $1,000 limit, are they looking at that card to see if I used over 20%, or are they looking at all my cards and adding my utilization up on all combined?

As an example, right now I justed added it up and all my cards credit limit total $46,000. Now 20% of that 46,000 would be $9,200 a month. 

So can I spend $9,200 a month and will it hurt me if i only used 10% on 1 card, and $90% utilization on another card as long as I dont used over $9,200 a month. Does anyone understand what I mean? 

---

1. "Utilization" for FICO scoring purposes is not about what you "spend" or what you "use", it's about the reported balance, which is usually the statement balance.

2. If you keep your overall "utilization" at 9% or less, keep your highest individual card "utilization" at 28% or less, and have a majority of your cards reporting a zero balance, you'll be golden.

[Anonymous]

I think the answer you want is don't let it report passed a certain amount. Meaning the balance you owe before your statement cut off date.

Say your statement cuts the 17th of the month make sure you have a balance no more than 9% on the 16th.

They don't care if you spend 90% of the limit as long as the statement doesn't cut on that amount or it will hurt you A LOT!