Please explain the 10% utilization?

[awfarmington]

Hubby just got approved for capital one $300 and j.crew $250. I understand it's best to stay under 10%. But is it a carried over balance after the grace period of 10%? Or can we max out the limit, and pay it off right away, without it counting against his credit score? I'm afraid if we only put $30 a month on the card, they won't feel any need to increase the credit limit.

[NRB525]

Welcome, and congratulations on getting the two cards.

If those are the only cards, then you are fine using them, paying them off each month. Pay in full by the due date printed on the statement, and just be sure the open balance at any moment in time does not exceed the CL.

From other comments elsewhere, if you use the Capital One card regularly, you should expect to see CLI from them, and that will make it easier to start looking at Utilization. Some have used their first low-limit cards by charging and making multiple payments during the month to stay within the CL. That is a faster way to tell Capital One you need a CLI. There are also comments about specific timing of when to expect the CLI from Capital One. Use the Search box to look for those.

When you have larger credit lines, then the 10% utilization becomes more of a factor. When just starting out, with only $350, you want to show usage and that you can pay the amounts within terms, by the due date. That's part of building your credit history.

Good luck!

[SunriseEarth]

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@awfarmington wrote:

Hubby just got approved for capital one $300 and j.crew $250. I understand it's best to stay under 10%. But is it a carried over balance after the grace period of 10%? Or can we max out the limit, and pay it off right away, without it counting against his credit score? I'm afraid if we only put $30 a month on the card, they won't feel any need to increase the credit limit.

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The balance that posts should be under 10%.   So if you spent $270 on the Cap One CC and paid $250 before you first statement date, a balance of $20 would post.  Cap One would be happy with usage and you would have an ideal balance for FICO.   You can always call in to Cap One CSR to determine what your first statement date is.  

Also, if you DH only has the two cards, it's optimal to let one CC report a balance of <10% and the other to report a zero balance.

[awfarmington]

Thank you! I was planning on paying both off in full but will let one keep a 10% on it now

[Anonymous]

I wouldn't worry so much about the 10 percent. For now I would use the cap1 as heavily as possible. Use it for all your purchases and pay it back down multiple times per month. Use it for gas, food, utilities, etc. Remember utilization has no memory. You can bring it to 10 percent at any time and your credit score will see the benefits then. So if your going to apply for credit again you can bring your utilization to the optimal amount at that time. But when you do that remember your accounts only report the balance once a month. That's generally right when your statement cuts. If you charge it to 270 and pay it to 30 after it cuts your reports will show a balance of 270 for the month until your statement cuts again. Make note of what point in the month it is (generally right before you get a bill)  and in the future you'll know when to pay it down by. But utilization today no effect on future credit scores. Unlike late payments. By using it for all your payments and paying it back down capital one will surely give you increases in credit. Good luck!