Credit Advice

Have a question? Have advice to share? The combined knowledge and experience of everyone in the Credit Karma community can help you. Enter your question or help others below to get started!

Question

Posted in Credit Scores
Profile Image

Question By
HUskee

6 Contributions
6 People Helped
Credit Karma says credit card utilization of 1%-20% yields much higher scores than 0% utilization?
Am I better off score-wise to keep a small balance each month (1-20% of limit) instead of keeping it paid in full each month? This goes against everything I thought about credit.

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW
All Responses

Result 1-1 of 1Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next
Top Contributor
713 Contributions
2570 People Helped
Most Helpful Response

Helpful to 3 out of 3 people

Yes, it's true that keeping a small utilization will improve your score. Between 1% and 20% is the best range, with somewhere around 5% to 7% being optimal for most people for scoring purposes.

In the real world it's definitely a wonderful thing to have zero credit card debt. But we need to understand that the scoring systems don't actually measure how prudent we are. They measure how profitable we are likely to be as customers. And if we have zero debt, they don't see us as profitable customers. So they like to see us using our credit and paying our bills; that's what they reward us for.

Reply by
HUskee

6 Contributions
6 People Helped
Helpful to 1 out of 1 people

Makes sense, never thought of it that way.  I knew activity helped credit, but I thought they looked for sensibility....but ahh yes, profitibility is what everyone cares about!  Thanks!

Result 1-1 of 1Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next

Your Credit Scores Should Be Free. And Now They Are.

View your scores and reports anytime.

SIGN UP NOW

Reply to this Question

Write your response:
Enter Your Comments

The Credit Advice pages of the Site may contain messages submitted by users over whom Credit Karma has no control. Credit Karma cannot guarantee the accuracy, integrity or quality of any such messages. Some users may post messages that are misleading, untrue or offensive. You must bear all risk associated with your use of the Credit Advice pages and should not rely on messages in making (or refraining from making) any specific financial or other decisions.