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Credit card utilization and your credit score

Apr 12, 2016

Some of you are missing something very fundamental about credit scoring.  If you pay off your cards before the statements are issued, the scoring model doesn't know that you used credit responsibly because a balance doesn't get reported.  All the scoring model knows is that you have credit but it doesn't appear you use it.

Not using credit says much less about your risk than using it.  It's far more meaningful in understanding someone's credit risk when they actually use credit *and* subsequently know if they are current or in arrears.

If you want to pay your card in full each month, wait until after the statement is issued.  That way the balance will appear along with a current status which demonstrates to the scoring model that you're using credit in good standing.