How bad is it if i go over the 10% credit utilization?

[Andypanda]

I just got a new disover It cash back card, $2,000 Cl. The billing cycle closing in a couple of days. I am right now just below the 10% threshold. I pay off my credit cards in full evrey month. and I try to maximazie the rewards. How bad would it be if i had approxamitly a 15% Credit utilization? I have to do some shopping that can not wait untill after the new cycle starts. I am trying to play things so i can get a CLI In about 6 months so i do ot have to worry as much about being under 10%

Thanks a lot, and sorry if this has been dissused before.

Andrew

[Anonymous]

Utilization is a snapshot at the moment and carries no memory, when you pay it down to below 10% next month, no one would even know, care or notice about what happened this month. Make your purchases and report the charges with confidence.

[Medic981]

Welcome to the myFICO forums!

FICO scoring does not penalize you for utilization until you reach 30% on any card and if your aggregate utilization reaches 30%.  FICO scoring gives you a bonus if your utilization is under 9%. FICO scoring expects utilization of revolving credit. 

Just remember, FICO scoring has no memory with utilization. If 39% utilization is reported in October and 8% reported in November, your FICO scores will adjust accordingly. 

[Anonymous]

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I just got a new disover It cash back card, $2,000 Cl. The billing cycle closing in a couple of days. I am right now just below the 10% threshold. I pay off my credit cards in full evrey month. and I try to maximazie the rewards. How bad would it be if i had approxamitly a 15% Credit utilization? I have to do some shopping that can not wait untill after the new cycle starts. I am trying to play things so i can get a CLI In about 6 months so i do ot have to worry as much about being under 10%

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Andrew,

Don't sweat the utilization.  You could bring your utilization up to 50%, 75%, etc. and so long as you PIF [your statement balance] every cycle that's all that Discover is going to care about.  In fact, since your goal is to build your limit via CLI, reporting higher utilization is actually a good thing, as it shows Discover that you may actually benefit from the greater limit.  Regarding 6 months, know that this isn't a rule with Discover the way it may be with some other lenders.  Many people report receiving their first CLI from Discover (either automatic or self-initiated) following their 3rd or 4th statement.

[Anonymous]

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FICO scoring does not penalize you for utilization until you reach 30% on any card and if your aggregate utilization reaches 30%.  

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While your point above is well taken, it's not 100% true on all profiles.  I've seen a 2 point drop in taking an individual card across the 8.9% threshold.  I know 2 points doesn't mean much at all, but it's worth mentioning that an 8.9% individual line threshold can impact some profiles.

[Thomas_Thumb]

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@Anonymous wrote:

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FICO scoring does not penalize you for utilization until you reach 30% on any card and if your aggregate utilization reaches 30%.  

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While your point above is well taken, it's not 100% true on all profiles.  I've seen a 2 point drop in taking an individual card across the 8.9% threshold.  I know 2 points doesn't mean much at all, but it's worth mentioning that an 8.9% individual line threshold can impact some profiles.

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Low aggregate utilization is quite important to score. It should be maintained below 9% as a general rule. On the other hand, I agree there is minimal, if any, impact on score relating to increases in individual card utilization below 29%.

It is best to maintain individual utilization below 29% AND aggregate below 9%. Of course, allowing utilization to spike up now and then is not a big deal if you are not planning to apply for new credit. I let a single card report 51% one month and 75% a couple months later while maintaining aggregate UT under 9%. Not a significant event for me scorewise. Also, influence of a prior high utilization has no lingering effect when utilization is reduced.

[HeavenOhio]

@Andypanda, when you're trying to stay under thresholds, these are the numbers to keep in mind: 8.9%, 28.9%, 48.9%, 68.9%, and 88.9%. As an example, to be "under 10%," you need to be at 8.9% or below. This is because 9.0000001% will round up to 10% and will no longer be under 10%.

As mentioned, what's generally considered optimum is overall utilization of 8.9% or below and indivudual card utilization of 28.9% or below. Some have reported dings below those thresholds, though, and we can't really be sure why, how, or when that happens.

If you want to see how your profile reacts, try AZEO one month, then try 8.9%/28.9% the next month (or vice versa). AZEO is when you leave a tiny balance on one card ($5, but not much more) with the rest of your cards reporting zero. The score will probably remain the same, but a very small number of us have been surprised to find out that it hasn't.

[Anonymous]

Hi AndyP.  It sounds like your primary interest is in getting a CLI.  So I will dovetail on the advice you have gotten do far (especially from BBS).

In the three month run-up to the CLI request, is it possible to have your Discover card reporting in the 31-48% range, with your total utilization at < 8.99%?  If so, that shows Discover that you use your card a good deal and might benefit from a CLI, and yet you can keep your total U down.

Of course if you have exactly one card (the Discover) then this distinction between total U (all cards combined) and individual U is pointless.  Your Discover util in that case is your total U.  Let us know.

BTW, if you do decide to go the route of inflating your utilization on your Discover (i.e, up to 31-48%) be absolutely sure that all your CC purchases are things you need (rather than want).  Upping your spending just to pursue some phantom goal of a CLI is a terrible idea.  The most important thing a person should be looking to do every month is reducing his CC spending to stuff he needs rather than merely wants.  Spending is the thing that kills your ability to save.

Finally, you mention that you want a CLI on the Discover so that that you can keep your utilization low.  I can describe a simple method that will enable you to spend $6000 a month on that card and still have a utilization of 1-5% -- all with allowing the CL to remain 2k.  Let me know if your are interested.  (It will work for any card you want to use a lot.)

[FireMedic1]

Just a side note. Echo CGID. On my annual CR's from the Big 3 CRA's. Most cards show highest balance (or how much was charged for a given month) then says the minimun payment due each month. JMO. Showing usage to other creditors when apping then keeping the statement low below 8.99% or zero with AZEO might be a good thing. Shows usage and responsible use.

For instance. My Venture had a high charge amount at $5600 1 month out of $16,000 CL, but it was PIF.

[Andypanda]

I would love any additional advice.

thanks