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 Cards
Profile Image

Question By
kwozz48

0 Contributions
0 People Helped
How much of my spending limit should I spend?
I just got my first credit card and have a $1500 credit line. Someone told me I should only spend around 20% of my credit line, or it could hurt my credit score. Is that true, and if so can you explain why that is?
Thanks!

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

View your scores and reports anytime.

SIGN UP NOW
All Responses

Results 1-3 of 3Results per page: 5 | 10 | 25Page 1 of 1   Previous | Next
Top Contributor
88 Contributions
352 People Helped

Maxing your score

#1.  Staying under 20% of the limit is definitely good advice.  You can certainly use more but you want to avoid retaining a balance greater than 20%.  If you are going to carry a balance, it may be worth going through the trouble to contact your credit card company to determine what their "Reporting date" is which is different than your due date.  In other words, you might charge $1,000 and pay it off a week before the due date (say the 15th).  If, however, the credit card companies date that they report to the bureau is the 7th on your card, then your $1,000 charge would be there for 30 days regardless of the paid down balance.  Hope that makes sense... 

#2.  A tiny reported balance can trump a zero balance. According to Barry Paperno, consumer operations manager for FICO, "In short, the lower a consumer's credit utilization, the better, but having a small balance is slightly better than having no balance at all,"  Those with a credit score of 800 use only 7% of their available credit, on average, according to myFiCO.com. 

In other words, a teeny charge does a FICO score good. Use the card on an inexpensive item and then pay off the balance when you receive the bill. The small reported balance will help your score, and you'll avoid finance charges at the same time.

Hope that provides further clarity.

Top Contributor
1788 Contributions
3028 People Helped

You only want to spend what you can pay off in full when you get the statement.

You Never Ever  want to carry a balance from one month to another.

Credit Karma Team
Top Contributor
2949 Contributions
4638 People Helped

Helpful to 0 out of 1 people

Hi kwozz48,

Experts typically recommend using no more than 30% of your available limit. Please read this article as it answers your questions about credit card utilization rates: https://www.creditkarma.com/article/credit-card-utilization
Hope that helps!

Results 1-3 of 3Results 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.