Your utilization is reported to the Fico company when the statement closes each month. Any balance remaining after the statement closes will report to the bureaus and anything over 9% will start to impact your Fico score. If possible keep utilization under 9% to maximize that category in the Fico model. I understand if that isn't currently possible but aim to reach that percentage as soon as you can. You can find your statement closing date on your monthly statement, on the card's website or also by contacting the card issuer and asking.
Once you pay down the card you will regain the points you lost for having higher utilization. I'd like to recommend once you get your scores back around 710 or higher, applying for an Amex Business card.
Both the Amex Blue Business Cash and Blue Business Plus give 2% back and have no annual fee. Their balances aren't reported to the credit bureaus unless you default on payment. It would be a great way for you to cover business expenses without your personal score taking a hit.
If getting a business card isn't an option perhaps opening another personal card will do the trick. Wells Fargo has a new 2% card called the Active Cash. They have a pre-approval section on their website. Also there are a lot of other good personal cards out there that could also work.
The AU card does count on your reports. If its carrying a high balance then yes it will affect you. I agree with the above poster on another business card. If your an account holder with Citi. Checking/Savings. I'd go by the branch and see if you can get a CLI due to the spend you put thru the card. They can see it. It might be a HP. But if it goes thru you wont have to pay so many times a month.
@Wooohah wrote:Hey,
I'm fairly young and am still learning about our credit system. I noticed my score dropped from 710 down to 674 over one month. I believe this may have been due to my higher utilization for the last 2 billing cycles.
A bit of background information, I have a Citi Double Cash card I'm using for business transactions explicitly. I wasn't able to get a 2% Business card, so I decided to use a personal card (but keep it separate). I'm using it only for the 2% cash back (which covers a good portion of my yearly taxes). I generally pay off the balance as soon as it posts to my account. So im paying about a dozen times per month and always making payments early. I spend about 20-45k per month on the card.
I've never made any late payments, none of my payments have ever been returned and I always pay off my balances in full. However it still dings my credit, which I don't really understand...
How can I prevent this from affecting my credit score negatively? This is the only credit card I'm the primary signer on. I have one other card that I am an authorized user on, otherwise I use debit cards.
To my understanding, authorized user accounts are not counted in FICO 8, so is it correct to assume that the credit limit on my one Citi Double Cash card is the total credit limit reported to FICO? If my limit is $6,200, and I use $3100, my overall utilization will be 50%?
Can I find out when utilization is reported to FICO? Can I simply pay off my balance in full and leave one transaction to be reported at the end of the billing cycle?
Should I get another card to increase my overall credit limit to lower utilization?
Just trying to make sense of the credit system. Id like to continue earning 2% cash back rewards, but I also don't want it to be negatively affecting my credit score.
Any help would be appreciated.
Thanks.
"Utilization" in FICO scoring isn't utilization at all. It's based entirely on the reported balance, which in the case of your Citi Double Cash card is the statement balance. So if you were to pay off the balance prior to the statement date, your card would be at 0% utilization.
BTW, this is one of the problems in using a personal card for business purposes.
