@Anonymous wrote:
Hey! Thanks for your responses in advance. My name is Mike, im 29 and am trying to rebuild my credit so i can start investing in real estate. I keep my credit cards under 20%.. I have 4 of them. But my credit utilization is above 200%. I cant figure out why. It has to be affecting my credit score in a negative way. I have a chage off from a capitol one card from 2010 with a balance of 700$ on a 300$ limit. It is a closed account. Would this raise my credit utilization even though its a closed account?? And how many points is this affecting my score? Thanks for the help!
Hello Mike and welcome.
This CO is hurting you quite a bit because if a closed CC account with a balance continues to report the original credit limit, then both the balance and the CL of the closed account will be used in the utilization calculations. You need to get this paid off as soon as possible.
As far as your other accounts if you'll list each of the balances and credit limits it will give us some idea of where you stand.
FICO scores both individual account and overall utilization and both can be managed to help your scores.
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.
