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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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Question By
itsjiffybruh

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Most Helpful Response
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I use to be a mortgage loan officer. The way I understand it, you should only use 30% of whatever your limit is on any card you hold. If you have a limit of $1,000.00 for example, you want to keep your balance at or below $300.00. Totally ignore the real limit and treat the card as if your limit is just $300.

To avoid paying high interest, pay off all but $5.00 of your balance (or as much as you can afford) each billing cycle. Leaving a $5.00 balance will automatically register with all three credit bureaus that your manageing the card at less than 30% usage. Bottom line, never allow your limit to go over $300.00 /or 30% of your actual limit.  If you do this with each of your cards, you should have an "A" for credit card usage within a years time. 

Response by
jambababe

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A good trick, once you are able to get on to multipul cards. 

I put a recurring charge such as netflicks or my pbs monthly donation on a card. Then put that card away. Only using occasionally through out the year. Then set up a recurring payment to the account for a little less than the balance due. 

When you use the card for something else. You can pay that off.   The card will show activity and keep the balance low using money you are already spending. 

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Reply by
EddyTX

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thank you, very helpful and well follow what you said  :)

Reply by
jbk109

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GEES I NEVER THOUGHT OF THAT BUT IT WILL REQUIER CONSTENT ROLING OF MONEYS TO KEEP 5.00 IN ACOUNT HUMMM I NEED TO THINK ABOUT THIS SOMEMORE THANKS    

STEVE

Reply by
dragonseye61

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Is it true that if my "total debt" drops below 50% (currently 70%), then my credit score improves dramatically?  That's what I've always been told but now that I'm on CreditKarma, I keep reading about 30% or less.  I just came into some money with a death in the family and I'll be paying down two of my cards (apparently to $5.00 instead of ZERO).  But this still will only get me to about 45% total debt usage.  Will this help my credit score dramatically?  I'm tired of hovering at 720 on my total Credit Score...  Thank you BILL

Reply by
wsmelser

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How is leaving a small balance on each card better than simply paying off the balance on each card at the end of each billing cycle? (In other words, (i) is that better for your credit? and (ii) if so, why is that better for your credit score than simply paying off the entire balance at the end of each month?

Reply by
woahdood

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I historically used to pay all of my credit cards completely off when I used them. I have 5 credit cards, some months I would only use 1 card and keep tha balance on the other 4 at zero. In many cases I was below a 1% utiliziation (many months I didnt use a card at all). This caused my utilization score to go from an A rating to a C rating. Does this mean if some of us do not use more than 1% of our total credit limits combined that we should be carrying balances over?

Reply by
FatalMusa

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Thank you for your advice, Jambababe. I just have one question, when does the $5.00 get paid back, if ever? Will i need to pay it back in lump sum ( $5*12 mos= $60) at the end of the year??

That is a good trick, EddyTx. I'll probably use my card for a reoccuring expense, too.

Reply by
EKage21

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So I have less than 1% usage for the past 90 days and I still have a "C" rating. I have a limit of $37,000.00 and I'm using $120.00 for January so far....this is nuts....

Reply by
JoinMrTerry

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From the tips above:

  • You do NOT have to carry a credit card balance or pay interest every month to show credit card utilization. Even if you pay your credit card balances in full every month, simply using your card is enough to show activity.
  • Experts recommend keeping your credit card utilization below 30 percent on each card and collectively. This shows lenders and credit scorers that you know how to spend responsibly and will help your credit score. However, creditors also care about the total dollar amount of your available credit, so if you have a low credit limit, don't worry if your credit card utilization rate is slightly higher than recommended.
  • Although high credit utilization can be detrimental to credit scores, keeping credit utilization at 0 percent is not recommended either. Creditors want to see people who use their credit, but are able to manage it responsibly.

Reply by
mykarmaacc

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I learned my lesson about the high utilization on a single card the hard way. After building my score up to over a 750 in just 7 months (over a 100 point increase), paying off 2 credit cards in full, I got those 2 cards to give me a great balance transfer deal (0% for 12 months). My third card has a terrible interest rate so I did the balance transfer to my two cards, and although my overall utilization rate is actually lower due to payments I have made, my credit score tanked 76 points practically overnight.  Never do a balance transfer that will leave a single card with over a 90% utilization rate even if your overall rate is good. Luckily I had the money to get the rate under 90% immediately, but watching my score tank 76 points really hurt haha, especially when you have to wait weeks for your due date and the new balance to report.

The advice in the CK article mentions single card utilization rate impact referring to those with little credit history; however, I have a long and overall good credit history and it still tanked my score 76 points, so do not feel comfortable with that advice they gave, no matter your credit history...it hurts.

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Response by
JBirley15

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Thanks.This was very helpful. I have a lot of debt and I have been reduciing the debt down. I wasn considering doing a balance transfer to a single card for the lower rate. So now I will spread the accounts out to lower rated cards to keep the utilization down.

Reply by
rveney

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I can definitely confirm this. I did a balance transfer of 500 so I would stop paying so much interest and hopefully pay off the credit card faster... (and I did this 2 months before my plan of applying for a home loan) and my credit score tanked like a solid 50+ points. 

Reply by
jessieantjoee

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Thanks. Same thing happened to me. Overall utilization is great but that single transfer to get the 0% interest dropped my credit score from excellent to good.  Not good.

Reply by
marilu333

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I wish I had read your post before I listened to CreditKarma's advise. I transferred high rate credit cards to a 18 month no interest credit card. Now my credit score has dropped just as I was rebuilding my credit. Last time I will listen to CK!!

Reply by
CBP1

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My score
Helpful to 176 out of 186 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.

Response by
juniorhorns

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It required  YEARS for me to get all my credit cards paid down to zero.  I cringe when I think about all the money the credit card companys extracted from my wallet in interest fees.  I now am debt free and I have five no-fee credit cards and I pay off all balances in less than 30 days - and I must laugh when I see a 'C' grade for my 'credit card utilization' grade on my credit report.  I pay off my balances on time and get a 'C' ... and if I DON'T pay off the balances quickly I get an 'A'...pah-leeze ... I'll stick with my 'C' grade and NO debt...I sleep better with the 'C' ... 

Response by
Karma2959446

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I know what you are going through with that. I naver carry a balance on my vredit cards but also get a C rating as my utilization is always zero and to the credit reporters computers 0=100 lol. That's why you and I will never get an A as we don't like to let them rip us off with interest charges ;)

Reply by
expatbrit

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Yeah, my best buy cc isn't showing up, but I've got in the habit of paying of my freedom card  every month so that C grade was a shocker... 

Reply by
Shane94116

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I too am debt free and carry a zero balance on my credit cards.  Like you, I received a great score of "C" (sarcasm intended).  My bad I guess.

Reply by
Shadow2084

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I felt the same way you did when I read my credit card utilization grade: "C"!  I too have NO debt - my bad, I guess.

Reply by
Shadow2084

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Me too! I have a 'C' grade even though I pay off my cards every month. I use them constantly but I always pay them off so I supposedly have 0% utilization. I too would rather have the 'C' grade then pay for interest. 

Reply by
kimba999

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ITA....  I was thinking the SAME exact thing myself. It's like I'm ****ed if I do, & I;m ****ed if I don't. Grrrrrr.

Reply by
bLueidbLondie724

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This is a Catch-22 for everyone. I have three cards, but only use one because it keeps things clean. I pay it off twice a month when I'm paid. Hello C grade.

This is a bad situation. The credsit card companies want to make something or they'll hit your credit score.

Reply by
ThomMcCarthy

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i am with you dude, sleeping peacefully, and if you have a chance to do a 0% balance transfer then you would be crazy not to take the offer, worry about your credit score when it really matters, like when your buying a house or car, in most other cases it doesnt matter, sleep well with the C!!

Reply by
zerocarddebtowningaC

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I know. It's all a game to get us to use charge cards. Only in this crazy day is CASH not king!

Reply by
Widman4

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@Shane BBY has trasnfered hands twice in the past year. The latest card (depending on what you credit limit is, is going to take a while to catch up with your credit report) I would recommend treating yourself to something small at BBY and charging it to the card. You can then call the # on the back of the card or online and ask them to upadte with the BIG 3 credit reports and you should soon be golden.... Thats a trade line and it could help. (I by no means know your situation, so please do not do exactly as I said if you feel an inkling that this could be detremental to your score... All in all its a trade line so it could be good or bad depending...

Reply by
jacklondon2255

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Do you think they want us to pay late/ carry a balance in order for them to make money? There is not point in lendig someone that is "always going to pay" right?

I too am a C paticipant that went from a 770's to a 680's by leaving a balance on my ccount for a week.... it happned to be the week the cards reported.... I hope it bounces back, but we will see...

That score is so important to me and I am trying so hard to not obsesss lol.

Has anyone else been in similar situations and had a good outcome? My next step is purchasing a home and after all these years of trying to get it right, this last score was devestating!

Reply by
jacklondon2255

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I agree. This game is STUPID! I have never stiffed anyone for anything but becasue I have a small heating and air business and started using a "rewards" card to purchase instead of the "company credit account" my score tanked due to using 80-90 percent of the credit limit on some months that were very business heavy. Never mind I paid ALL THE BALANCE and did not pay one red cent of interest to the CC company. Ha ha. What wonks came up with this silly crap? What a shame we all have to live on this plantation.

Reply by
RCT1962

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I agree with you! I had over $20,000 in credit card debt two years ago. I now have zero balances and a "C" grade. I love it!

Reply by
Crosstownbus

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Same situation here. Credit card debt free!!  I will take the "C"

Reply by
Coacher2037

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The trick to this is understanding your Closing Date versus your Due Date.  Whatever balance is on your card at your Closing Date will get reported to the credit bureaus.  However, you then have a grace period from then to your Due date to make the payment, interest-free if you pay off the entire balance.  This is how I get my credit utilization to reflect an A grade.  Add in automatic payment of the entire balance each month near or on the Due Date, and you don't even have to worry about it.  I don't pay interest on my credit cards, and I use them for ALL my purchases, for the cash back rewards of course - this way they're essentially paying you to use their cards.

Reply by
duplex80

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That makes a lot of since. What I see is that no matter how hard you go in, they reward those that stay in debt. You are a example of what should be the thought process of all people.

Keep the credit to 0 and use cash.

Reply by
tech05

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Man......... This is so true!  I pay my CC balance of $1000.00 down FAITHFULLY before my due date every month and never been late in 6 months and I was at at D grade which just got upgraded to a C!  WTH!!!

Reply by
Bigbuck00

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Comment To: Karma2959446's Grading Score of ""C" with ZERO (0% Utilization) - Check out the scoring chart, again!  First Column which U and I are fall into, with NO to very little Debt on Credit Cards n Score Way High.... is a "C" with a darker background, then "A", B, C, etc.  I don't believe it is differentiated from the "other grade C" - How to tell and why?  Please explain this scoring, Credit Karma!  I believe my credit scorer should be MUCH higher and is lower than shud be due to this "Grade C"  Thank you!

Reply by
AlexaLog

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I was wondering the same thing...I have a C as well, and I pay my credit card off on the same day that I charge it most times.  I don't understand the C.  Also my "credit score" on this website is a lot lower than the credit score on the 3 major credit company websites.  My score is well in to the 700s on Trans, Experian, and Equifax.  But on here, it's in the upper 680s.  What's up with that?

Reply by
deastl

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I agree completely. The calculation of someone utilizing zero percent of their available credit cards should be an A. It's such a racket. Now, to boost my credit score, do I need to carry a balance on those cards, or is it beneficial to simply use them and pay them off every month?

Reply by
MediaGuy71

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The truth about utilization
Helpful to 377 out of 412 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 

Response by
cemkayhan

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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
BogieHe

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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.

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Reply by
takeshi74

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Thank you so much this really helped me! 

Reply by
selinia1982

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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
lucekl03

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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
Ember42

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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
drm0352

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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 

Reply by
cjakibob

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Most Powerful Credit Repair Advice Ever!
Helpful to 417 out of 478 people

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.  

Response by
jeremymccay

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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
cdhunt09

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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!!!!!!!

Reply by
ladyliberty04

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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.

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Reply by
ernestf01

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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
marneice

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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
jeruffins

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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
clhouse609

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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. 

Reply by
Ysettle4less

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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
BogieHe

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how do you figure out the credit company report date?

Reply by
needmyscoreup

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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
meandchrist

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This was helpful and it works...

Reply by
amilliz12

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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
expatbrit

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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
drm0352

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This article states that you can pay off your revolving accounts monthly and still show activity and have a good rating, but then it states that 0% utilization is also bad. I spend thousands of dollars on my revolving credit cards every month but I pay it in full each month which should be the epitome of responsible spending; however, my utilization shows as 0%, negatively affecting my credit score. This article contradicts itself in that way and I am not willing to pay unneccesary interest on revolving balances just to increase my utilization, so I am being punished for being responsible which is silly. This article makes it sound as though if you use your credit regularly but pay the entire balance each month it will still reflect in your utilization but that is just not true, or at least it hasn't been for me. 

Response by
NotInUseKAS

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i use my cards throughout the month and pay them off before they are due. my credit score on this website does take a slight hit for having a zero percent utilization. but my real scores as checked at annualcreditreport, and through banks etc. are significantly higher than what creditkarma calculates. i think the real institutions recognize the facts and reward paying off the entire balance monthly. zero utilization is probably only a negative factor if someone simply never uses their credit at all. just a guess.

Reply by
hurryblonde

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You misunderstood the article's point of "zero utilization" . It means not using the card at all , totally different from paying off the balance monthly once you have received a statement. You are already doing it the right way . Nothing is reported to the credit bureau if there is no activity(usage) within a cycle. Hence it is advisable to use and pay off whatever balance you get as a bill to avoid interest payment and still get a satisfactory report generated to the bureau

Reply by
shakazoid

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I do the same thing and have a C rating...I charge nearly all my monthly expenses on a credit card (gas, groceries, utilities, etc), then pay off the balance each month. I guess the banks want to "punish" you for either being responsible or not being foolish enough to pay their outrageous interest charges. Ridiculous!

Reply by
srfrgrl1

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I really thnk it all has to do with the credit card company making money off of us in interest and that is that! If they do not make money off of us in interest, we get a "C" as punishment.  They dont care a bit about us.

Reply by
bogwalkercg

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Paying off balances each month in full negatively affects credit, because it doesn't show utilization. The card will report current balance only, not usage, so it is best to leave a few dollars on the account so they can report something. Credit card companies designed it this way, because the cc's purpose is to make money through interest. People who pay off their balances, make them no money, and they certainly will not go out of their way to help those people with their credit scores. It is really not fair, because it is not an accurate portrayal of credit worthiness, but there are ways around it. After poor credit, loan default, maxed out cards, and years of work on my credit, I have figured out how to be the one who benefits from my finances! I have 11 revolving credit accounts (that I worked hard to get), 1 that I paid off and never use due to 31.99% rate, 1 home depot for specific items, and 1 low low low interest card, used daily for gas and restaurants, and nearly paid off each month. The rest are paid off, and each month, I assign one to be used for merchandise, travel, etc for that month only, and I pay it off in 2 or 3 payments after that. This ensures that I pay very little in interest, use all cards at least 2 or 3 months of the year, and maintain very low balances on each. This keeps me living within my budget and paying close attention to my finances. I only carry the low interest card and the card that is assigned for that month, the home depot card only comes out to go to home depot, and the rest stay locked in the safe!

Reply by
theeref

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Same issue with me...

Reply by
buckleroos

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I too, am a person that clears my balances, depending on amount utilized, within a month or 2. I find here that I'm still penalized for not carrying a balance. This doesn't make sense. How should paying off accounts  negatively affect your credit score. How do you correct this

Reply by
oshonbreez58

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Try always leaving a balance of $5.00. Just enough to trigger the credit bureaus that your keeping your limit below 30% of the limit on the card but not so much as to have to pay a lot of interest.

Reply by
jambababe

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Same with me -- utilization shows as zero, even though I do use a little bit of the limit (less than 10%) each month.

Reply by
goldenlioness

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The main point, is that if your trying to build your credit, it takes resources, and it will usually take money in the form of some kind of interest payment. It is true, you do get penalized slightly for having a 0% utilization when it is reported to the credit Bureaus, because this shows them that you haven't been utilizing your credit and they don't have anything to grade your credit on, besides the length of time the account has been open, and whether or not you have been on time with your payments. Even though it is not desireable to have to pay some interest on an account with a utilization balance between 10-20%, it at least gives the credit Bureaus something to go off of for grading how responsibly your using your credit....and not using it at all ( 0% utilization ) tells them you don't use it, and possibly don't need it.

Reply by
drm0352

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Helpful to 32 out of 36 people

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.

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Response by
rjmount

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Helpful to 3 out of 5 people

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

Reply by
wily4god

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Helpful to 4 out of 4 people

I think somebody lost something here ............The fact that credit card utilization comes into play is, the credit card companies get paid by the people who permit you to use the cards in their establishments and when you do not use their cards they do not make any money from issuing you a card hence why should they keep issuing you a card when you do not use same!  This is why low use affects your credit score!  Sort of makes good bussiness sense does'nt it!     willie roberts

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Response by
willieroberts

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Helpful to 3 out of 4 people

Thank you for pointing out what should have been obvious to me but wasn't. CC companies get paid merchant fees so even if you don't pay interest on the balance they make money on utilization. Use the card frequently for small purchases but pay it off every month seems like the best strategy.

Reply by
gregbo520

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Helpful to 11 out of 13 people

I've read all the comments, but here is my take.  SLOW AND STEADY ALWAYS WINS THE RACE!  My credit score was 618 all of 2012 and the first quarter of 2013.  Presently I have a student loan of $10,000 (from $29,000) and my total credit card debt is $4500.  I paid three cards down to a zero balance in April 2013.  I used one card for dinner ($125) and to register on time payments, I am going to pay the minimum payments of $41 for 3 months.  I requested a credit increase from $300 to $550 andI owe nothing on that card.  For the one card I owe $3100 to, I am paying $500 monthly for the next 6 months, which will register on time payments, lower my credit card utilization and raise my FICO score.  I started paying attention to my credit scores in February 2013.  I now have a credit score of 686 as of today, May 10, 2013.  I anticipate paying off my student loan by February 2014, and again my score will increase.  I am looking to have a score of 700 by August 2013.  I am not looking to "beat" te system by paying the day before and using after reports are made to the bureaus.  That is entirely ROO busy for me.  Isn't it easier to just pay your bills on time and lessen your credit debt permanently?

As I said SLOW AND STEADY ALWAYS WINS THE RACE!

Response by
pjmortim

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Helpful to 5 out of 7 people

Not really. Most of these people way they telling things they are very mislead. One credit dont grow if you dont ever hit 70 percent of your limit every once in awhile. It send message even if you were exstended a good limit it wouldnt get used. Never carrying a balance allso send message you wont use it. Letting it carry a balance to long send message Your living from pay check to pay check. using 2 cards on and off opisites months of each other pay them off let them go dorment 30 days. allso keep balance around 30 to 45 percent but every once in awhile use really use it or your credit limit on offers will never be increased. Bank are realizing why extend 4000 credit if person will never go over 500. that why high limits are seldom offered these days.

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Reply by
ernestf01

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