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ArunMannuru

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Credit Card Utilization

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Amount of available credit you use

Utilization is the percent of all available credit that you use each month.  Example:  You have 3 credit cards.

1.  credit line of $1,000 and your current balance is $500.  (That is 50% utilization on that card).  

2. credit line of $2,000 and your current bablance is $1,500 (That is 75% utilizationon that card).

3. credit line of $3,000 and your current balance is $500 (16.7% utilization).  

Your overall credit available is $6,000 and your balances over all three is $2,500.  Your overall utilization is 41.7%.  If you only have one credit card, you should never charge more than 10-20% of your credit limit during any month and pay off completely at the end of the month.  

Some people think they can charge almost their limit during the month and pay it totally off when balance is due and think they have low utilization. Utilization is normally reported to credit bureaus about a week before you get your statement.  So almost maxing out your card will report a very high utilization even though you pay it off totally at the end of the month.

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