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Question By
LDelSanto86

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Why is my credit card hurting my credit?
I've been using a Secured Mastercard to rebuild my credit and I was off to a pretty good start. My credit was on the rise with every bill paid, I've never been late on a payment, and every time my statement comes in I completely pay off the balance, so I've never had to pay any sort of percentage on it other than what I've actually spent. I've only put $200 on the card and I'm mainly using it for gas. My last update was at the end of August, and I believe my score was 647 at that time. I've since paid a few bills. I rechecked my score today and I'm down by 19 points, and the only reason seems to be that I have a $199 balanace on my card. Like I said, the balance is paid off completely whenever a statement comes in. I guess my question would be how is a card supposed to help me build good credit if they're penalizing me for using it, and having a balance, even though I'm paying it off perfectly each month? This is really getting to me because I felt like I was doing very good and this just comes as a shock. Any help would be appreciated.

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Top Contributor
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Don't use more than 30% of ur credit

Helpful to 3 out of 3 people

It sucks, but to look good and improve your score you want to use a little of credit as possible on that card. You never want to go more than that 30% before it starts negatively affecting your scores. And when you max it out, it looks like you are getting desperate. Even though you pay it off every month, by using all that credit, it looks like you use your credit card as a payday loan service. Either use less, or put more on that card. Just stay under 30%.

Reply by
LDelSanto86

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THANK YOU! I had no idea. I have plenty of money to cover the bills in my bank account, I was just under the impression that the more I used the card without being late on payments, the faster my credit would build. Okay, so now I have some followup questions:

1. For building credit, is 30% the key? Or should I not be using my card at all? I mean, if I continue to do what I've been doing every month, but keep it at the 30% is that the best option, or should I use it less..?

2. Would it help my credit to add more to do the card, say bring it up to around $1,000, and then spend $300 every month and immediately pay it off instead of the 30% of the $200 I have on there, or is it all based solely on percentages rather than amounts?

Thanks again for the help, I really appreciate it!

Top Contributor
15 Contributions
16 People Helped

Balance on statement date is what counts

You can charge to your limit each month if you want (not that I'd recommend it just because of the higher risk) and still watch your score climb each month as long as you do two things - 1. pay your bill on time each month but 2. leave a balance of 1-9% reporting on your STATEMENT date.  The due date and statement date are two separate things.  Credit cards report the info. from your card each month from your statement date. So, even if you paid your card in full on the due date, let's say that was the 1st of the month, if on your statement date which might be the 15th of the month you had a $100 balance - the credit bureaus would report that you have a 50% utilization rate, not 0%, and your score will drop.  Find out when your statement date is, then keep a balance on that date of 1-9%, that will bring your credit score up faster than 0%.  I do this every month and it works like a charm. 

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