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Question By
gringolocodc

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Why do I have a C grade for 0% credit utilization?
I pay off my credit card debt on a monthly basis and don't carry a balance, resulting in 0% credit utilization. Why does Credit Karma give me C grade?

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Because it is ideal to have between 1-20% utilization rate. Although it is great all of your debt is paid off, creditors like to see active use of your credit. The best course of action is basically just do one small transaction each month, for example one of the times you stop to fill up your gas tank, use your credit card. Let your bill generate with that ~$40 purchase, then pay it off in full before your due date. Rinse and repeat each month and you will have an A grade the next time your score updates. If you pay it off in full each month you will not be charged any interest, so do not feel like you will be wasting money on interest charges, interest is only where you carry a balance.

Reply by
gringolocodc

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So even though I'm spending $1k-2k on my credit card every month, it doesn't show "active use" because I pay off the entire amount every month? (I basically just log in online 1-2 times per month and pay off the total amount).

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You likely keep track of all charges every month and pay THAT amount when the statement comes in.

WRONG MOVE!!!!

Just pay the Total Amount Due as shown on the s tatement every month.  You WILL NOT incur any interest charges unless you don't pay all that is shown on the statement, then the "left over" that's carried to the next statement WILL be charged interest.

Follow these instructions and you will see an increase in credit score.

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