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Question By
itsjiffybruh

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credit card utilization.
My CC limit is 1500; my question is if i dont use my credit card, my utilization will be lower but will this help increase my credit score at all? or must u actually use a the card in order to increase your credit score? Also, what if i use my credit card and then pay it off before the bill is even processed, hence my credit card still has an available balance of 1500, would this help my credit score?
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Most Powerful Credit Repair Advice Ever!

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The best and most powerful, important, advice ever period for improving your credit report is..... Find out your due date and your credit card reporting date and pay your card off in full 1 day before your due date and then DO NOT TOUCH YOUR CARD UNTIL "ONE DAY AFTER" YOUR CREDIT CARD COMPANY REPORTS TO THE CREDIT BUREAUS. Let’s say your bill due date is the 20th and your closing date is the 27th Pay your card in full on the 19th and wait till your credit card company reports on the 27th Don't touch your card till the 28th. Use your card just like cash and spend almost the whole limit but never go over the limit! Make sure every month you pay off your card in full or you will screw up your credit going over 30% of your credit card limit. Also make sure you pay one day before your due date and wait till after the reporting closing date to use your card again. If you do this you will show the credit bureaus that you can make high monthly payments and you will have zero interest. This formula will have the most impact on building your credit fast.  

Reply by
cdhunt09

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This is completely misleading. You started off with what seems like good advice, but NEVER SPEND ALMOST THE WHOLE LIMIT!!! This will only get you in over your head to where you cannot afford to pay the card off.  Try to keep usage around 20% of the card limit, (which of course there are exceptions depending on income and total credit limits). When you apply for a loan or other, they know how much your income is, and the credit bureau tracks the "high balance" or highest balance you've had on the card, you do not want that balance to be too high compared to your monthly take home income.  I use my card for regular monthly, budgeted, expenses, have a card with cash rewards and no annual fee. I don't end up paying off the balance in full because I use it consitently, but always the statement balance is paid off to avoid any interest. Therefore you make money off the card and not them making money off of you. You can ALWAYS make more than one payment to the cards monthly, like me I pay towards it often to keep the balance reasonable to pay off by the statement date. And like I said, budgeted, monthly expenses, or emergencies only so that you always have the means to pay it back.

Reply by
ladyliberty04

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I just found this information after already discovering this for myself!!! it's trueand works except please try not to go up to your limit because as we all know anything can happen and at the end of your cycle you may be scrambling to find the money to pay your bill!!! Also whatever you do do not let the cycle begin with a zero balance which I did and which got reported to the bureaus which actually works against you too! I've found that 30% or lower so far is the best formula for a steady upward climb!!!again do not let them report a Zero balance!!!!!!!

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Reply by
ernestf01

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I can see this working. For simple reason your showing you pay on time. You dont carry a balance. And to rest of you guys Im sorry but credit cards companys are in the business of making money if some one is maxing out a 2000 dollar limit every month and has zero balance come interest date then Ive clearly not giving him a high enought limit to hook him. Ive seen every one here talking about good scores and getting low limit cards. First time I rebuilt credit I had 2 secured cards but I did use them and in few months had a chase with 6000 dollar limit.

Reply by
drm0352

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Actually...no...this isn't correct or helpful advice. I have noticed that paying off your balance before the due date is great for not having to pay interest on the balance, but is not helpful when trying to buld credit. The only thing that matters for your actual credit score is that your payments are on time, and that you keep your utilization between 10-20% when the cc utilization is reported to the credit Bureaus. The percentage of utilization is what they consider, and having a record of 0% utilization does not help to build your credit score, in fact, I've personally experienced it slightly dropping my score....and that's because when your not showing any utilization of your credit, then what would they have to grade your credit score on? Just try to have the balance of the card paid down to around 10% before it's due date, and by the time it is reported to the credit Bureaus to show that you pay on time, and that you are responsibly utilizing your credit by actually showing some percentage of utilization on the balance. I am not completely sure if having a balance ranging from 1%-10% when it is reported to the credit Bureaus will have a much different impact on your credit score, or what impact if any it will cause as compared to having a balance of at least 10%. I guess it would be possible ( though I haven't tried this yet, as my cc company reports 2 days after my bill is due ) to pay your balance in full 2 days before the due date so you don't have any interest charged, and then increase your balance to around 10% immediately after your bill due date, so that the balance of ~10% will be the utilization that is reported to the credit Bureaus, but you won't get charged interest at the same time. Let me know if someone has tried this, and what impact it has had....in the meantime i hope this was helpful, and I will be trying the method I mentioned towards the end of the post.

Reply by
clhouse609

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CC companies report the amount you charge for any given month. Thus, charging up to your limit (even if you pay it off my the closing date) can be detrimental.

Reply by
jeruffins

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You are so true. I have tried this formula and my score has improved. I realize the dates and started taking advantage as well. This definitely works.

Reply by
expatbrit

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NEVER ever let your utilization fall to zero unless you are happy with a score consistently about 12 points below what it could be, as the credit reporting companies computers treat a zero the same as a 100% utilization and your score will be dinged.  It's the reason I always get a C for utilization every month instead of an A as I always pay in full before the due date.  I'm happy with it as not carrying debt suits the way I want to live and a few points lower score doesn't worry me.

Reply by
amilliz12

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This was helpful and it works...

Reply by
meandchrist

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Thank you so much for this helpful advice. I just found out that myutilization rate has increased which dropped my credit score drastically. Not what I needed because I am trying to rebuild my credit so I can eventually buy a house. I now know what I need to do to get back on track. Thanks everyone for your helpful advice.

Reply by
needmyscoreup

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how do you figure out the credit company report date?

Reply by
BogieHe

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Given that my credit limits are over 100k, I think it would be both stupid and nearly impossible to follow this crazy advice.  I don't think this person has a clue.

Reply by
marneice

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This is exactly true.  You can put the money for your payment in savings each month.  Pay, and basically reuse the funds that you just paid your card with following the above guidelines.  It works.  The key that is not mentioned here, is that if you have a card with a 500 limit, put 500 into a savings account each month.  Then pay your card with it once you used the 500 limit on the card.  Eventually you have this revolving cycle of 500 in savings, use 500 limit on card, pay bill with 500 from savings, 500 in savings, 500 use on card, pay bill with 500 from savings....(you don't have to max it, just an example)  Key is to save a surplus equal to limit on the card and this acts as a surplus to use for your monthly credit card bill.  I learned this from a mortgage broker.

Reply by
Ysettle4less

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Id have to agree that this method works. Did this for 2 billing cycles and received $6K credit limit increase across 2 credit cards and FICO increase of 30+ points. 

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Reply by
bluedog2384

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I've also been using this method and it works.  One must be very vigilant to keep track of the due dates and reporting dates.  I agree with the replies to your post that it is not necessary to max out the card to benefit.  I absolutely LOVE that this method allows me to use the "banks" money free of charge for at least 30 - 45 days.  I don't give those suckers one dime of my money and it's alllll good!

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The truth about utilization

Helpful to 434 out of 474 people

So there is a lot of misinformation here. First, if you leave a balance on your card this actually hurts your score and the only one that benefits is the cc company that charges you interest. Even when your utilization is 0, one of the things that is reported in your score  is recent cc use (and yes even when you pay it down to zero this is still visible in your credit score).  You should use your card and pay off every month. Keep the utilization under 10 percent for best score, although the effect is minimal even if you approach 20 percent (don't go above). Try to also increase your cc limits, which not only effects your utilization rates but having a low total amount of credit also hurts your score as this shows you have not build a relationship with the cc company as they only trusted you with a low limit. Hope this helps 

Reply by
cjakibob

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I was using my cc to purchase everything and paying it off every month. well not every month but never more than 2. By using my credit card like this I got a check from the cc company for over 700.00.  So getting the free money is actualy hurting me?  would it be better to have say 30 cards, and spread them out over the month? or just have 1 or 2 

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Reply by
takeshi74

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Your comment is misleading as well.  Carrying a balance *can* negatively impact your score.  You even state this: it depends on utilization which is balance compared to credit limit.

Reply by
selinia1982

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Thank you so much this really helped me! 

Reply by
drm0352

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And what if you have a secured card with a cc, and you have utilized it and payed it off monthly for a year, and the cc still will not approve an increase in the credit limit on the card? I beleive that this is one factor that it currently keeping me from increasing my credit an further than I already have, having a low credit limit with a cc that isn't willing to raise it....any suggestions?

Reply by
BogieHe

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I think you are wrong, as far as C.Karma is concerned, anyway.  You get a BETTER score (A) if you leave SOME money outstanding than if you pay it all off (C).  My best guess is that this rating is to help c.c. companies see who they WANT as a customer.  viz., someone with very good credit, BUT who carries a balance and pays interest.  Those of us who pay off the card each month don't make them nearly as much money.  BUT, this is a very unfair grade for the credit-worthy, imo.

Reply by
Ember42

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When people say leave a balance on the card - they mean only until the end of the billing cycle. Then the bill amount is registered with the credit companies. You are not charged interest unless you pay less than the amount due. You usually have 30 days to pay w/o interest. 

Reply by
lucekl03

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When is the best time to ask for a credit limit increase? My husband and I have had two cards. One for 7 months and the other for 8 months. Should I wait until a year or wait until I reduced my debt to income ratio concerning my house, school, and car loans or what? We are 21 and 22 years old.

Reply by
osdwC

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This question is for "cemkayhan". WIll it hurt or benefit my credit if I use, let say 98% of my credit, and pay the entire balance before the due date and the date the credit card report to the credit agencies. My current score is 779 and I trying to think of ways to bring that number above 800. What are you thoughts, comments and/or suggestions? Thank you

Reply by
larmo2000

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i went to bot of the credit unions i use and according to them you are 100% i have a 0 balance on my cards and credit karma moved my score from an A to a C BUT IT DID NOT CHANGE MY SCORE AT ALL , so i am staying with the 0% and the C even though ck says it affects my score it did not.

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My score

Helpful to 279 out of 295 people

My credit sucked and I wanted to buy a home my score was 601 the bank required a 620 they suggested I get a cc so I did I used it for 6 mos and was never late with my payment in full after 6 mos I went back my score was 626 they approved the loan I closed the card w a 0 balance 3 mos later I bought a new car my score dropped to 574 so I opened a new cc thru Barclays  it's the nfl extra points card my scores is coming back up some ,your debit to income ratio is what most definitely affects your score if you do have a cc using it def helps every month the only way a cc hurts you is if you don't pay your balance in full every month,as far as the 30 % thing goes if you never go above the 30% mark of your card your cc company will not increase your  cc limit very often because of this which in turn keeps your score lower so use your cards on gas cigs food day to day stuff just pay it off in full every month without being late ,within 6 mos your score will inprove without a doubt.

Reply by
benz300

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Thank you for that. I'm gonna try it. 

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Reply by
bluedog2384

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Congrats on the new house and improving your score!  One thing I noticed was you mentioned that you closed the cc after 6 months.  It seems in your case (with a 626) closing the credit card would not be a good idea as it would reduce your available credit and reduce the age of accounts.  Since I'm commenting, I'll throw in my 2 cents of advice. Any cc that advertises 'extra points' usually means a higher interest rate.  Nothing is for free my friend, they're going to get their money out of you one way or another.

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You do not need to use a card to increase your score, that will come with on-time payments and length of history over time.

However, you should use the card ~3 months (depending on the lender) to keep it active, otherwise the line could be closed.

Utilization under 30% is best, under 10% is even better.  If you do plan on using the card, and you go over those percentages it would be best to pay it before the cut-off date for reporting (which is not always the same as your statement reporting date).  However, utilization report isn't historic.  E.G. if 50% util gets reported one month, but you pay it down to 0 and don't use it and 0% util is reported the next month, lenders can't see that you ever had the 50% util.

They can, however, see the high-limit that was reported.  This isn't really looked at that often, depending on the strength of the rest of your report.

Reply by
wily4god

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could you explain a little more on this issue of Utilization.  Generally speaking, the higher your credit card utilization, the lower your credit score.

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PENALIZED for 0% Utilization

Helpful to 2 out of 2 people

I have a large total limit on my cards (over $150,000 available credit) and recently paid them off so I'm now sitting at a 0 Utilization.

I was SHOCKED to watch my credit score go DOWN 25 points!!!   Why?  Because the 'optimum' balance is between 1% and 10%.... 0% untilization is at the same level as having 30% Utilitization!

I REFUSE to carry a a $1,500 balance on my cards in order to raise my score.  .  .  The interest charged on that would basically mean I'm having to PAY to get a higher score.  

This isn't right.

Reply by
jcabc22

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Hi!

Luckily Utilization is based on a snapshot of your balance at a certain time.

That means you don't have to carry a balance at all, the buraeus are looking to see if you are using your credit cards even if you pay it off completely (as you should) at the end of any billing period.

Reply by
bgillming

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You don't need a full 1% or $1500.  ANY amount will cause it to register.  They round up and down.

Reply by
darksom1

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You are looking at it only halfway. You charge something you HAVE to pay for in any given month, like a bill or gas for example. Let's say you have a statement period of November 15 to December 14, and a due date on January 12.

Using those dates above, you charge stuff you need/want during the statement period, or up to December 14. BEFORE December 14, you pay the balance down on what you charged so that it is no more than 1-10% on December 14 (which is the date that your balance will be reported to the credit bureau). Then, BEFORE your due date of January 12 - you pay the balance off so that you don't pay interest! By doing this simple method, you show utilization of your account(s) between 1-10% and you never pay interest.

The trick is, that you want them to SEE you using 1-10%, but you don't pay interest on your balance! Works everytime without failure. Just monitor your account within those timelines and you will not carry balances past your due date and rack up high scores!

Summary:

15-14 = charge your account

Prior to 14 = pay it down below 10%

Prior to Due date 12 = pay in full

No interest and higher score! Good luck!

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Reply by
Jasper2

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You are incorrect.  Your utilization is the percentage of your available credit...the lower the better.  That said, 6% is a good number to shoot for.  You can achieve that usually by making sure you pay your accounts in full every month and you don't carry a balance into the next month.  If you have 30%, you will take a hit on your credit, but why would you want to have that much debt at high interest rates? 

Reply by
cdl15

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@darksom1's...I understand your stategy. thanks for sharing, I am going to try this. My statement date is coming up on the 16th. I will make sure I pay down to 20% before my statement date...once that is reported I will check credit karma and see if my score have went up. My score fell from 734 to 706 because i was using 70 percent of my available credit. I do not want to take that type of hit again. 

Reply by
fitz888

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Im in the same situation. Im going to cancel newer cards just for this reason.

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help its a mess!

Helpful to 5 out of 8 people

I have very poor credit 530.  I have so much negative stuff, that I dont know where to start.

Any suggestions???

Reply by
Deborahknight53

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Helpful to 13 out of 16 people

Get a copy of your credit report at free annual credit report.com and dispute the information! Or get a company like Lexington to do it for you. The really old stuff will fall off. Then get 1 credit card & pay on time. That's where u start.

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My question is kind of in this area...

Helpful to 4 out of 6 people

I paid off all cards about 1 month ago.  I have decided to do the "tank-of-gas-and-pay-bill-100%" plan.  First thing I notice is my credit score is NOT moving.  Also, I used to get credit alerts all the time and have not gotten a single alert recently?  In any case, I also have a few store cards which I really don't like using at all.  Is it important to use all "majors" every month (tank of gas) or is it necessary to use all cards (including those store accounts) to show usage?  I can use the store cards if it is necessary and just buy something small and pay it off if that is what it takes to build my score. 

Your advice is greatly appreciated!  I *love* this community!  I troll about once per week looking for advice!

Reply by
cemkayhan

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As long as you have at least one card active in the month, the system sees it as active and does not penalize you. You do not need to use multiple cards, but remember to rotate use every other month or so, that way the cc company would not shut down the account due to nonuse (which is about 6 months to a year). 

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Helpful to 1 out of 1 people

I don't know anymore. I reduced my credit utilization from 90% down to 34% and it made absolutely no difference in my score, according to this website. I've had 100% on time payments for the past three years and still can't get out of the 600's. 

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Helpful to 25 out of 32 people

I would just use it once a month if you do not really need to rack up credit card debt and then pay it off. Many cc companies are closing cards that are not used on a regular basis. Use of it will not affect your score unless you start adding debt.

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Reply by
ernestf01

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Helpful to 5 out of 6 people

oh god it took a credit card with a 6000 dollar limit on it 3 years for them to close it on me for not using it. I thinking about apply for a new one from them again :) It really depends on the card company

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Stuck???

Helpful to 1 out of 1 people

I have a question in relation to yours.. I have an credit card account open and it's maxed out $1700 worth. I'm concerned that if I pay this card off, the credit grantor will close the account and it's one of my oldest accounts I have. They have already lowered my limit from 3000 initially. Confused, please ssomeone help! 

Reply by
kmcavin

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Helpful to 6 out of 7 people

While Drauka is correct about never going over 30%, I disagree with the advice to not pay it off. If you have the ability to pay it down to zero balance, do it. Then use it only to the point you can pay off the balance each month. Why pay hundreds or maybe thousands of dollars in interest? The credit reporting companies only get a monthly snapshot of the balance on the card. There is no way for them to tell if you are carrying a balance and they don't care. They look at utilization and on time payments.

Reply by
cdhunt09

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If you have the financial means to pay it off, then pay it off. You should continue to use the card at least once a month, even on something small like gas in the car and pay it off completely before the payment is due. Should not lower credit limits ever unless you are concerned with your own self control. This makes the utilization on that card about 50-60%now which is truly hurting your credit :/

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