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Question By
Rawlsinc

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Credit Card Utilization and Credit Score: How Fast?
I am in the process of rebuilding my credit and have recently opened a new credit card (the only one I have at the moment, actually). I have all intentions of only utilizing less than 10% of my credit in hopes of boosting my score; however, I was curious as to how quickly I could see the results of low utilization reflected within my credit score.

The first month that the bank reports to the bureaus, will it impact my score immediately or does it take more time?

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Utilization benefits come quick ...

Helpful to 2 out of 2 people

... pretty much as soon as a creditor reports your balance, your credit score goes up or down accordingly. But don't expect your score to immediately reach unparalleled heights just because your utilization is suddenly good (less than 10%). If you're rebuilding your credit, it's going to take time for your scores to recover.

Congrats on the new card, you're on your way. If you stay current and keep your utilization low, you should see your credit scores steadily increasing as time goes on. Negative items (like missed payments) affect you less and less the older they get (as long as you're all paid up). They should fall off of your report completely after seven years (ten for a bankruptcy).

Utilization is more of an immediate item. Each month your creditors should report your current standing and balance. The report can be sent at any time, so it's really hard to know when.

Five years ago, I was exactly where you are now. I was trying to rebuild my credit, and was finally able to sign up for my first major credit card (though the limit was very low). Generally I used the card to pay for day-to-day expenses. In order to help avoid high utilization, I would either limit my credit purchases to a few small items, or I would pay off the balance weekly (instead of monthly). 

Just give it time and stay the course. In time, you should be able to add some more cards with higher limits, and you should also be able to get higher limits on the card(s) you already have. Higher limits (both individually and across the board) is another way to help with utilization. Starting out it's tough, because most creditors while only approve you with very low amounts. When I started rebuilding, my first store card approved me with an $80 credit limit (that's not a typo). A couple years later I finally tried for a Capital One VISA, and I think the starting limit was $250. Now, I have five cards that I use regularly. The lowest limit of them is $3,600, and the highest is $14,000. So it's now MUCH easier for me to maintain a low utilization.

The older your cards get while being current, the more they'll benefit you. Take your time, and good luck.

Reply by
Rawlsinc

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Thank you so much! Your information and shared experience is so motivating! I can hardly wait to see where my score will be in the next 18 months!

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My score went up 24 points

I didn't have any credit cards for 6 years and paid off my car so had no open accounts.  So I opened a Capital One secured credit card and my score went up 12 points the first month just because I had a new credit card.  First month, I charged less than 10% of my limit and paid it off in total before due date.  My score went up another 12 points.  So 24 points in two months.  I don't expect it to go up 12 points EVERY month from here on but I am on my way to buildling a score.  

My next move will be to get a second secured credit card but this time one that can become unsecured after a period of time.  The Capital One secured card NEVER converts to unsecured.  The only way to get your deposit back is to close account. which throws away your payment history.  So never get a high credit limit on a secured card when it will never convert to an unsecured card.  They get your money without paying you interest and it is tied up for quite a long time while you build sufficient credit history to no longer need the secured card.

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