Credit Cards are most important.
Student Loans are least important (as long as no negatives.)
You want to be under 9% total on credit cards
or
under 29% or under 49% depending on where you are now.
You also need to pay attention to the same numbers for each card.
Finally, you also need to pay attention to how many cards have ANY balance.
In other words, try to balance out your cards if you HAVE to keep a balance. It is better to have 3 $1000 cards at 25% than 1 card at 10%, 1 card at 20% and 1 card at 45% in general.
Sometimes it is not possible (I just did a $20k 0% check) and it will affect your score but it is temporary and less impactful the thicker your file is.
GL!
@Anonymous wrote:
I'm in a rebuilding process and would like help understanding utilization. Is utilization calculated on overall or on individual accounts such as credit cards? I have 3 credit cards that I've gotten in the past year (2 of those in the last 6 months) and have paid significantly more than the minimum on each and have never been late. I have also learned to pay them multiple times a month. What is the best way to manage utilization to help my credit score? Does each card need to be under 30% or do I just need to make sure I'm low on overall combined limit? I have car and student loans as well - do they count? Any advice on how best to manage utilization with these cards will be greatly helpful!
Thanks!
1. There are 2 separate revolving utilization factors. 1 is individual cards, 1 is aggregate utilization.
2. As @Anonymous pointed out, the utilization is computed as of the reporting date, which is usually -- but not always -- the statement date. We would need to know the specific lenders to tell you if they follow the general rule, or are exceptions. You can always find out yourself when your lender reports by examining your credit reports carefully.
3. The best way to manage utilization is to make sure that the reported balance for any individual account does not exceed 28% and that the aggregate reported balances do not exceed 8.9%. Additionally, it is important to have some account(s) reporting zero balances. When trying to enhance your mortgage scores this is especially important, but it is important to your scores at any given moment that there be at least one account reporting a small balance.
4. The installment loans are computed separately. Those are evaluated solely on aggregate installment utilization. You get points for paying them down, but you don't get the really big bang until your aggregate utilization is down to 9%. In FICO 8 scores you will get penalized when your installment loans are paid off; the mortgage scores are barely affected.
@Anonymous wrote:
Thank you for clarifying. My first question is what does "OP" mean? Also; I have the means to pay in full, but I read a lot about making multiple payments, much larger than minimum and to carry a small (5-10%) balance to have the greatest positive impact on score. Is this not the best approach? There is so much information out there - I am trying to figure the best way to manage the cards to build trust with the issuers and to raise score. What is the best advice given my goals with the credit cards? Are there others who have seen success in scores, limit increases, etc? I have Capital One Platinum, Quicksilver and a Discover. The Capital One Platinum is over a year old and the other two are less than 6 months old.
1. OP refers to the original post, or the original poster.
2. Making multiple payments does not help at all; that is fiction you were provided with. If you can pay in full, pay in full. If you want to optimize your score, pay all but one of them in full before the balances report, be sure the balance reported on the one account is a small balance and pay it off after it reports.
3. Carrying a small balance doesn't help you at all; it probably hurts you. As mentioned above, letting a small balance report before you pay it off, on one card, is good.
As to the "best advice", I've given you the best advice.