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Question By
Bagelstein33

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Credit Utilization vs. Credit Score
If I utilize more than 30% of my credit, even if I pay it off in full prior to the due date (before interest), does it have a negative impact on my score? Instead of paying for everything from my checking account, I pay from my credit card in order to build my score. I pay my statement balance off in full prior to the due date, so I never accrue interest. However, I frequently run higher than 30% utilization. Is this damaging to my score, even if I'm paying in full every month?

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Yes

Short answer: it's damaging to your score, yes. 

Long Answer: You have to think of utilization and "paying off your balance" as two separate things. Your CC issuer reports the amount of your balance you've used (your utilization ratio) on a certain date. It then reports whether or not you've paid off your balance on a different date. These are two separate things, both of which affect your score. If you use more than 30% (and many experts have said you should only use up to 10%) of your available credit on the day they report your utilization, your credit score will take a hit regardless of whether or not you pay it off. Keep in mind that you can always call your bank/issuer to ask them WHEN they report your usage to the bureaus. This will help you plan your spending accordingly.

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