Utilization: Balance Percentage

[Anonymous]

I know that your balance as a percentage of credit limit is involved in the FICO score, but I'm a little confused about the following point:

(For a credit card) Is this based on your balance at any time during the month, or is it based on the balance you carry over to the next month?

In other words, is it bad that I have a tendancy to use a significant chunk of my credit limit on a monthly basis even when I pay the balance in full every month?

[llecs]

Welcome to the forums!

Neither actually. It is based on when the CC reports to the CRAs. If you have a CC now with a limit of $1000 and you use $999, the CC won't report $999 unless that is the balance on the day the CC reported.

For example, my BofA is due on or about the 13th of each month. And each statement cuts approx. 10 days later around the 23rd. Coincidentally, my BofA reports right at or near the statement date. So, if I have a balance of $500 now, and obviously I need to pay before the due date on the 13th, then I need to pay at least the min. by then. BUT, if my goal is $0, then by the 22nd or so, not the 13th, my balance needs to be at $0.

You can use all of your credit, just make sure you pay down your balance right before your CC reports for that month.

On a side note, if you do this, the CC will report a "high balance". That won't impact your score, but lenders could see that in a manual review. Also, some CCs love for you to do what you do. Others, not so much.