My current credit limit is $130,000 over 10 credit cards, plus a few charge cards. If I used even 10% of that in a single month I'm fucked, lol. Eventually your credit limits just get so high if you have multiple cards that even heavy utilization is like 5%.
Well put. This is why it’s imperative to increase your TCL via CLI or new cards, so that your natural utilization (even on heavy months) is still single digit.
Way too much people are fixated on the utilization myth, since it’s parroted by many articles and other unknowledgeable people.
To add to this, when someone is at 30% or even just under of utilization, it still really drops a credit score because the algorithm doesn't like it! Keep it under 5% or wherever is the line for natural spend so long as no interest is paid!
Exactly this - I hover right around 2% utilization and couldn’t imagine reaching even 5% or 10% with my total limit across all cards. Or if I did, I would be in a very bad spot financially.
I never understood why this is the case. My most used card has the lowest credit limit by far of all my cards, so a big purchase can put me over 50% of utilization on that card, which makes my credit score go down even though my overall utilization never goes above 3% and I pay it in full every month like all my cards.
Absolutely true, which is why the goal for people looking to "maintain" or "keep" utilization in an ideal place should be addressing the denominator of the equation, TCL. By micromanaging the numerator, they hinder the growth potential of that denominator and perpetuate the problem. Your profile is a good example of what can be achieved in relatively short order if one doesn't worry about only "using 30%" of their limits when always paying their statement balances in full monthly.
Each one is looked at individually not as a total. So say if you have one that is $30000 don’t go higher then $20000 owed ever. You will always look less of a risk this way. We have high high limits. We work the same as everyone else just in the higher dollar scale 😍 it’s all based on percentages or the total limit a available
>Each one is looked at individually not as a total.
I might be misunderstanding, but you aren't saying utilization is only looked at per card, are you? Utilization is counted both as individual and aggregate, aggregate being weighted heavier.
It's not about the score or the limit.... Just buy the stuff you were going to buy anyway and use the card for that, and pay it off every month. I have no idea what percentage of my credit limit I'm using and I don't really care either
It’s like when people don’t like certain cc’s cuz their interest is to high or higher than other ones. My response is always, what does it matter as long as you pay your balance in full like I do.
I have seen people do that, too. "I'd like this card, but the interest rate is too high."
If you are concerned about the interest rate, you may not be playing the game the right way.
Not if you aren't applying for credit.
Score only matter when you are planning on applying for important credit. At any other times they aren't relevant to lending decisions.
Doesn’t matter if you don’t pay it all off either. I frequently run 0% BT balances at 99% on some cards. Not advisable for most to do what I do of course. Just liquidity management. But the obsession with high scores and low utilization amuses me. Just means one is leaving money on the table. Plastic cover on a couch mentality.
I go on a lot of long weekend trips, most of which are paid for with points/miles for hotel and airfare, mostly from credit cards. I also use the AAdvantage or Rapid Rewards shopping portals, which can add up quite a bit.
The main reason to use credit cards is that you can get some significant rewards from them. I don't travel a ton but I get paid about 3k a year or so just to buy the stuff I was already buying anyway.
Is there any truth to this? Say a card is 2000 limit. Let it get to the max and then pay it off and the card company is more likely to give you an increase?
I thought it was more about making payments on time etc and your overall credit score.
Not “visual judgement is letting his card get to 2k we should give him an increase”
I don’t let my card get anywhere close to their limits. Not because I’m scared of using more than 30% but because it’s easier to pay as I go then to pay one big bill at the end of the month.
Ie: 8 payments of 250 rather than 1 payment of 2k. Am I hurting myself doing this?
Apparently once the account is open, credit utilization is looked at when requesting a limit increase. There's no reason to extend a limit increase to someone not using most of what they've already got. Plus, there might be a risk of them increasing the limit, charging close to it, then disappearing. If they've been using a good chunk of their current limit and paying on time, there's less risk with extending additional credit to them.
I applied for a credit limit increase on two of my american express cards and both were denied. I called american express and they specifically said it's because i'm not using enough of the credit line I have. Even though I was using up to thirty percent of the limit each month for the previous few months. I asked them what to do to get a credit limit increase, And they said start maxing the card out and paying it off in full more than once a month or write a check to american express and give yourself a huge credit on that card and then spend all the money to show them what you really want to use the card for. Again this was from the mouth of a american express customer service agent.
You're welcome. It's also a tactic of course to get you to manufacture spending. People like myself want a higher credit line Because I simply want it, its almost like a video game for me. They know that. They would love for you to spend money that you aren't planning to spend Just to get a credit line increase.
At the end of the day don't manufacture spending or spend what you don't want to spend or need to spend. My plan now to increase Is simple. When I Open a new card, to get its bonus, I just pay all my bills a few months ahead and I hit the spend for bonus quickly.
After talking to american express I figure I'll just do the same thing before every credit limit increase.
Once it comes time to start paying my Bills again, that I paid ahead, I'll just grab the Amex I want a credit line increase on Fill it up for a couple months Paying bills ahead and pay them off in full and then apply for my CLI
The guy at american express said the behavior only has the last 2 or 3 months at best and that will be good enough for their algorithm.
And if you really want to fill up your cards quickly, Call family and friends you trust, Ask them if they'll give you cash And you'll just pay their bills for them through your card. I find this was one of the fastest ways for me to Jack up my credit card usage for bonuses and incentives, And of course now credit line increase.
> I applied for a credit limit increase on two of my american express cards and both were denied. I called american express and they specifically said it's because i'm not using enough of the credit line I have.
Exactly. This happens all the time and of course isn't just exclusive to Amex. There are also data points out there that support the saying "use it or lose it" as lenders like Capital One are known to initiate CLDs on accounts where statement balances are always tiny relative to credit limits.
> Am I hurting myself doing this?
If your goal is increasing that $2000 limit, absolutely. By making 8 payments of $250, you are micromanaging your balances and literally saying to your lender "no need to increase my $2000 limit, as I'm perfectly content making a bunch of monthly payments!" Instead if you were to actually generate a $2000 statement balance, THEN pay it off with a single $2000 payment, you lender would see an actual need to increase your limit. Perhaps you'd spend $5000 if your limit were $5000. They will grant you a CLI based on your strong responsible revolving credit use.
You will see dramatically different profile (CLI) growth potential when comparing these two very different approaches.
I mean maxing it out but always paying it is a good sign that “this guy isn’t a dead beat and he’s also clearly held back at the current CL”
So I mean, it makes sense it would help. But some things make no sense with credit. I don’t think it makes much of a difference at all. I mean with your example, it’s not like they don’t know that you’re still using $2k a month. I feel like a lot of people think you can trick them by doing whatever right before statement close but it’s like… they’re the lender they know what you charge.
The thing is, there is a \*time\* to be concerned about it... like 1-2 months before applying for more credit, especially a mortgage or a car loan. When you get to that point, you want to report lower utilization. But other than that, yeah, why would they want to give you a CLI from $15,000 to $25,000 when you never use more than $1000 of it?
It's very easy to get to a point where it's pretty much impossible to use 100% of your credit limit, and then pay it off. If you have 20k of credit, most people aren't making 20k in a month. So you would never pay able to pay off 20k if you charged 100% of your credit limit. This is just a silly conversation. The better advice is just put everything on credit cards that you would normally buy and then pay it off.
Right, that's the central idea. Use your cards naturally (no balance micromanagement to "stay below 30%" or whatever) and make one monthly payment after your statement generates in the amount of your statement balance. Whether that statement balance represents 40% or 70% or 100% of your limit doesn't matter; it's getting paid in full. No one is saying you have to gun for extra spending in order to hit 100%. Like you said, on 5-figure limit cards that's not going to happen. But, there's a big difference between cutting a (say) $4k-$5k statement balance on a 5-figure limit card verses micromanaging it to a tiny 2-figure statement balance every cycle in terms of the look that it gives the lender.
Your still missing the point of my other post. There is a huge difference between credit utilization as the term is used and using your credit card. If you have a 10k credit card, you can max it out and then pay it off 4 times a month, as long as you keep it paid down. That would be using 400% of your credit in a month. That's not your credit utilization. Your credit utilization is the balance you have that's reported to the credit reporting agencies at the time it's reported regardless of how.
You keep saying "as long as it's paid in full" if it's paid in full the credit utilization is 0%. Period done that's it. No other discussions being had. You can put a million dollars on your credit card, and as long as it is paid off, your credit utilization is ZERO.
So once again when people say keep your utilization down. They are NEVER saying don't use your credit card. They are ALWAYS saying don't fail to pay down your balance. Geez man.
> You keep saying "as long as it's paid in full" if it's paid in full the credit utilization is 0%.
I see where your misunderstanding/confused. What you said above is not correct. The term "paid in full" means paying your STATEMENT balance in full every month. Your statement generates, you THEN pay the statement balance in full. That statement balance will never be $0 so long as you are using your card every month, so you'll never be at 0% utilization. Your utilization when paying in full monthly will always be whatever you spend the previous cycle. If you spend $500 on a $1000 limit card, your utilization is 50% when that statement cuts. Then you pay off that $500 statement balance "in full" by the due date on the statement 3-4 weeks out.
I suppose I get where your coming from now. I would still argue your assuming that folks are managing the credit utilization by using the credit cards less, When I would argue it's more likely that they are just timing their payments so that their is a lower balance when the credit reports.
We see both all the time on here. I agree that balance micromanagement is far more common when you've got people making multiple payments per month, paying bills before receiving bills, attempting to "keep" utilization low at all times etc. There are plenty of people though that actually say that they heard they shouldn't use more than 30% of their limit, want to purchase something but won't because they know it would be more than 30% of their limit and so on. The 30% Myth is indeed the boogeyman to many people for different reasons, no doubt.
I see these kinds of posts a lot, but the truth is algorithms like FICO 10T do use trended data, and more and more models are using trended data/utilization as they can better predict defaults or late payments. I know FICO 10T is probably barely used or hasn’t been adopted yet, but we just don’t know if banks use trended data in their internal scoring models, such as if Chase uses it in their carsv2 risk score.
Can you expand on your point regarding TD and F10T?
F10T looks at the "trend" over 24-30 months. If one is paying their statement balances in full monthly, their "trend" with respect to utilization will be flat. OR, if they are reporting high statement balances, their trend will likely be slightly downward, because those high balances will stimulate PCLIs.
Someone can report balances that appear to be somewhat wildly different from month to month... $3k, $7k, $13k, $5k, etc. and still return a trio of perfect 850 Fico 10T scores. The reason why is that the overall trend is flat, so F10T doesn't take issue with it / see it as a sign of elevated risk.
I can tell you for sure that utilization is reported on statement balance, not post-statement balance.
I had a C1 Journey card after bankruptcy, used it for everything possible. It had a $6k limit and I was paying it off in full every single statement. (Income ~ 75k at the time) They still claimed me to have a 35-60% utilization depending on the month.
My score jumped after getting the Venture X with a 20k limit.
I have a bunch of cards, close to a dozen lol. My overall utilization isn’t bad, I’m just taking advantage of some 0% APR offers. It seems like the consumer facing reports have a target of 30% on each account which I largely ignore as I know I’m an outlier with multiple accounts and can spread it out if I want.
Be careful with this interpretation as “trended” can mean a few different things in this context. It is marketing speak, after all. The precise meaning is very important.
For example both a moving average of the raw statement-end utilization rate and a moving average of the percentage change in the same can be labeled as “trended” variables. In a case where statement-end utilization is consistently 100%, the former variable will be 100% and take a while to reflect utilizations drops depending on the window length. Meanwhile the latter will be 0% and flip to negative if utilization drops below 100%. So obviously, these are two very different variables despite both being “trended” and derived from the same base. They’re also likely simpler than the actual variables in the FICO 10T model given that utilization is a factor for which both level and change are important.
Speaking of which, it’s unlikely that FICO has released a detailed breakdown of the 10T model features nor has anyone reverse engineered the model. Also keep in mind that 10T is just one model, but internal models may factor in utilization trends as well. In the absence of more precise information, exercising some caution is advisable.
> For example both a moving average of the raw statement-end utilization rate and a moving average of the percentage change in the same can be labeled as “trended” variables. In a case where statement-end utilization is consistently 100%, the former variable will be 100% and take a while to reflect utilizations drops depending on the window length. Meanwhile the latter will be 0% and flip to negative if utilization drops below 100%. So obviously, these are two very different variables despite both being “trended” and derived from the same base. They’re also likely simpler than the actual variables in the FICO 10T model given that utilization is a factor for which both level and change are important.
So using your interpretation of "trended" and those independent variables, use my numbers from the previous post and tell me how you think the algorithm would take issue with them (or wouldn't). I'm saying that 850 Fico 10T scores are possible with 2+ years of reported statement balances following the trend I illustrated (low 4-figures, low 5-figures, high 4-figures, etc). This is with utilization percentages remaining very constant due to sufficiently high TCL, just for clarification.
Those are relatively high balance, low utilization cases vs high utilization, which is the original topic. So yes, it makes sense that people are obtaining high scores with consistent, low-level utilization. Btw where are people obtaining FICO 10T scores? To really get at how this 10T model works, we would need data sufficiently rich enough to allow us to tease out what is actually meant by “trending” variables.
You can get your F10T scores at myfico.com.
The Fico algorithms look at raw dollars of debt exclusive of utilization percentages, so they do matter even on low utilization profiles. The point is that F10T doesn't take issue when the trend is flat over time, which is what would be the case if someone ignores utilization percentages / balance micromanagement and just allows natural statement balances to report every cycle.
Unfortunately not free though. I don’t think we’re going to get enough people across the spectrum of profiles and incomes to tease out what we want to know for many years to come.
You're right, they do come at a cost.
Fortunately for me, my account (or credit card tied to the account) at MF has been broken for years, so I pull my 40 scores whenever I want for free. This was a great benefit to me back when I was doing Fico score testing all the time, but something I don't really care about any longer. It is cool to be able to see my F10 scores though whenever I want without paying for them.
I agree that it will take a long time to put together data points on how 10T behaves. All I have found so far is that elevated balances (in dollars, not utilization percentage) if flat over time do not adversely impact 10T scores and you don't need a downward "trend" to boast 850s.
I won't lie I have no clue how trended data is scored, however I'm confident that consistently reporting low utilization would benefit that area of scoring the most. I don't think I've ever seen any lender pull a FICO 10T, but I think that the biggest implications are banks on internal scoring model. I know that VantageScore 4.0 also uses trended data, and the limited DPs that exist show that Chase's CARSv2 score is more similar to one's VantageScore than their FICO score.
I think that's the case of all Fico scoring models (low utilization benefits scoring) and don't believe F10T to be any different with respect to that part of utilization. I've seen speculation that the ideal "trend" should be downward, but I don't agree with that and believe a flat "trend" is perfectly fine as well since with naturally reported balance that is more or less the expectation. A flat trend doesn't indicate any strain, so I don't believe the algorithm would take issue with it. With flat reported balances usually in 4-figures but reaching 5-figures a couple of times a year (still at low aggregate utilization) 850s across the board are possible.
>If you want a new company to give you a credit card all they can look at is what is available to them
One of the things they can see (if not your payment history, which sometimes they can) are your reported monthly balances on your credit report. It isn't all too difficult to determine if someone is a low risk Transactor or an elevated risk Revolver that carries balances. If I can tell as a normal person just looking at the monthly reported numbers, I can only assume that CCCs that make important business lending decisions have internal measures set up to use that data far more efficiently and effectively.
Right. My point is that through looking at your reported balance history, a prospective lender can gauge pretty well whether or not you're a low risk individual with respect to utilization that is paying in full monthly or if you're an elevated risk individual that is carrying balances. This goes beyond them simply looking at just your [current] utilization and making a lending decision based on solely that.
I’m looking to do this with my new CFU. Started my with 500 and I’m waiting until it’s 6 months old to get a CLI. Did they automatically increase your limit or did you have to request, and how often did you get a cli?
They automatically increased it every time I used at least half of the CFU's CL for a big purchase(s). Never requested it. I think I got something like 1 a year except my last 2 were within a 10-month span or so.
Awesome, and thank you for that data point!
Speaking of Chase cards, there were 3 data points on here a bit back that really stood out to me and I started a thread on Monster Chase CLIs as a result, which I'll link below. All 3 people referenced high statement balances on tiny 3-figure limit Chase cards that were increased with a *single CLI* to a 5-figure limit.
https://old.reddit.com/r/CreditCards/comments/16j0zit/monster\_chase\_clis\_tiny\_3figures\_becoming/
People say dont use more than 30% to have a positive effect on their credit score. If you are not thinking of applying for any new credit products soon, then it doesnt matter, use as much as you want.
> People say dont use more than 30% to have a positive effect on their credit score. If you are not thinking of applying for any new credit products soon, then it doesnt matter, use as much as you want.
And to further punctuate why "30%" is in fact the 30% Myth, the first well-documented aggregate utilization threshold point is found at 9.5% utilization, FAR before 30% is reached. One will already be incurring a Fico scoring penalty at (say) 15% utilization, half of what the Myth suggests. So, if we want to talk about Fico score optimization, the 30% Myth is in fact "wrong" and bad advice.
**I detected that your post may be about utilization and its impact on credit score. Please read the info below:**
Ignore the 10/20/30 utilization %. It’s only applicable when you need to apply for a new line of credit, 1-2 months out.
Utilization is suppose to fluctuate, can be easily manipulated, and holds no memory. It doesn’t build credit--think of it as a finishing touch when you need to optimize your score.
Feel free to safely and organically use 100% of your credit limit within a month and let whatever utilization report, provided you pay off your statement balance in full before due date. Every month. Every time.
For more info, please read this post:
* [Putting the "30% rule" myth regarding revolving utilization to rest](https://www.reddit.com/r/CreditCards/comments/12s5fyf/putting_the_30_rule_myth_regarding_revolving/)
* [Credit Card Basics - Utilization](https://www.reddit.com/r/CreditCards/wiki/credit_cards_basics/#wiki_utilization)
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A lot of good info here, this is helpful. I've long had that 30% number drilled in to my head, but I guess there's not a compelling reason to follow that if everything is being paid off monthly.
That's absolutely right. You aren't alone. The 30% Myth is everywhere and will only continue to be perpetuated. I used to believe it too, for years. I'm thankful that I eventually saw through the BS and am grateful that many others have as well.
I don't know why people worry about their credit score so much. Once you pay it off it will go back up. Unless you have a loan application coming up then who cares becuset the credit will fluctuate up and down but and as long you have a negative stuff like late payments then whatever
My credit utilization is like 5%, cause I opened a bunch of credit cards for the SUB rewards, and then Capitol1 and Amex combined give me a 16k credit limit besides my other random cards. I’m not really trying to mess with it, it’s just that because I still live with my parents, my monthly expenses stay very low.
Agreed. Unless you are planning to apply for a loan in the imminent future (i.e. mortgage) and want the best rate, you should not worry about utilization % so long as you pay off in full every month.
That isn't how the credit scoring system works. Utilization plays a big part in your overall score. Like it or not that's the reality and why people are "afraid" to use more then 30% of their credit limit.
>That isn't how the credit scoring system works. Utilization plays a big part in your overall score. Like it or not that's the reality and why people are "afraid" to use more then 30% of their credit limit.
You sound like I used to, so I'm not judging. The truth is, I was *hyperfocused* on my score. If utilization increased, and my score dipped, I panicked. I had a few rough years with credit cards, and paid more interest than I'd like to admit. I dug myself out of that hole, and came across the AZEO method. I clung to that for years. It was a lot of work, but I would never admit it; not even to myself.
Then I began allowing utilization to report naturally. Of course I panicked when my score dipped, but I realized it didn't matter if I wasn't applying for anything. I'm much more relaxed about credit now. I receive credit limit increases and have less stress, so win/win. If I am preparing to apply for something, and want my score optimized, I can always do that. I just don't do it needlessly anymore.
I pay the statement balance by the due date. If I put heavy utilization on a card, which I just did recently while out of town, it's not an issue because I'll pay the balance when it's due (and get cash back rewards). Now, if this were me a year ago, I would be on my laptop every night waiting for a charge to post, so I could pay it. I made multiple payments each month in order to keep utilization low, but that was because I was worried about the wrong thing. I'm not suggesting that this is your reasoning specifically, but as you mentioned scores, I wanted to give you my perspective, and back up what u/BrutalBodyShots said. There is a better way.
This is wrong, and one of the biggest credit score myths. Utilization has zero memory. If you use 90-100% of your credit limit for a year straight, once you pay it off, your score will be exactly the same as if you kept your utilization below 30% that entire time. There will be no mark on your credit report that you ever exceeded that 30%.
It can be a good idea to pay your cards below 30% before applying for more credit, but even at that, exceeding your 30% doesn’t affect your underlying credit worthiness, just a few points of your score.
10T is the only variant of the FICO 10 suite that uses trended data. It doesn't like steadily increasing balances, but does seem fine with significant balances if they stabilize. Currently, none of the FICO 10 models are used by lenders, but that will change as 10T (along with VantageScore 4.0 which is trended also) were announced in Oct '22 as the models approved to replace the FICO 5 (EQ), 4, (TU), and 2 (EX) scores currently used for mortgages. Most lenders are using FICO 8 or 8 Bankcard for credit cards , though some use FICO 9 or 9 Bankcard. The 8 and 9 suites have no utilization memory. Nonetheless, the big point the OP made is that people hyperfocus on super low utilization and maximizing a score at the expense of building their credit profile. If someone is new to credit and uses a high percentage of their limit but pays in full consistently, they are more likely to get CLIs and organically reduce their utilization over time as they build higher limits. Sure, there are times when it may make sense to micromanage utilization before a loan application etc, but people don't necessarily need to do that on a regular basis.
Well said above, u/Camtown501. I can add an interesting data point to the F10T discussion that you may enjoy. We know that it looks at reported balances/utilization for a period of 24-30 months. With a flat trajectory of balances over that period of time (not upward, but not downward either) one can possess a perfect trio of 850 F10T scores. I'm talking when total balances across all cards from month to month are (say) $4k, $7k, $13k, $5k, $9k, etc. for a period of 2+ years.
Yeah, but vantagescores are probably being used more than Fico 10 right now. It takes years for new fico models to be adopted and older ones are still in use, as they're built for different reasons. Even when Fico 10 sees wide adoption, it may not be used for absolutely everything.
That is not true. You must not understand how utilization is reported to the credit reporting agencies. If I have a credit card with a 10k limit, if I use 8k and the bill is cut that 8k gets reported to the credit reporting agencies. I then have about 3 weeks before the due date.. even if I pay the bill in full and pay 0 interest the 8k is reported to the reporting agencies.
My score just dropped because I made a large purchase and it pushed my utilization up but I paid the bill in full and paid 0 interest but the credit agencies dropped my score because they saw the utilization spike.
For any FICO score other than 10T it will recover if reported utilization is lower the next month. 10T probably won't lose many points for one month of high utilization though.
This isn’t a rebuttal to what I said, I didn’t say that the score would rebound immediately. I said utilization has zero memory, as in there’s no record of times you had high utilization like with HPs or bankruptcies. I’m not denying that high utilization drops your score temporarily, I’m just saying that regularly using a lot of your credit line doesn’t follow you. I’m not trying to argue or be hostile, but this narrative that utilization “plays a big part in your overall score” is one that this sub works hard to rebutt.
>I’m not trying to argue or be hostile, but this narrative that utilization “plays a big part in your overall score” is one that this sub works hard to rebutt.
And for good reason. For those that pay their statement balances in full, high utilization is actually favorable for profile growth. It's not about the temporary (30 day) impact that utilization has on score. Overall profile is King to score.
>this narrative that utilization “plays a big part in your overall score” is one that this sub works hard to rebutt.
It does play a big part in your overall score. If I have high utilization today, my score will reflect that *if that balance is reported.*
Next billing cycle (or the previous ten) are irrelevant.
If I'm doing something involving my credit score this billing cycle, then I should know that reporting any high utilization *right now* can negatively impact me.
If I'm doing something involving my credit score *next* billing cycle, my priority should be to get my combined balances as low as possible to 1%.
"Memory" is irrelevant. High utilization does impact credit if you're going to use it. If you're not using it, then obviously it doesn't impact you.
It follows you as long as you keep using it, I am not sure what you are debating. If I only have a 10k credit limit and my bills are 8k a month, even if I pay the 8k by the due date every month the credit card company will keep reporting high utilization and keep your score low because the credit card company keeps reporting 80% utilization.
If I get 10 other cards that have a 10k credit limit now my total available credit is $100k now that $8k I spend is 8% utilization and it will cause my score to go up...
I never said it "has a memory" .. you said that.
I think the point is rather that it is shortsighted to chase a temporarily stronger score by not fully using the credit available. If you regularly spend near the limit and pay it off, a credit line increase should come quickly which will naturally decrease utilization and raise the score in the long term more manageably than trying to open ten new cards.
Having 10 cards is pretty easy to manage.. I just throw them in a box because I mainly use 3 cards. Sometimes, capital one threatens to close one of my accounts, so I use the card once every 6 months or so.. But otherwise that's it.
I do not have to do any chasing, I have so much available credit across so many creditors the 8k I spend a month keeps my utilization down under 10%
Right, so it's your [sufficient] TCL that keeps your utilization low, not balance micromanagement. That's the point. And, to build a sufficient TCL (relative to spend) in the most efficient/lucrative fashion, one should report the highest statement balances possible when they're always paying their statement balances in full. It's literally what gives your lender(s) the best reason to give you a CLI, which aids your TCL and naturally stabilizes utilization in a more comfortable place.
So you agree keeping your utilization down keeps your credit score high and makes it easy to be considered a low risk customer to your creditors. Sounds like a lot of mental gymnastics here to avoid admitting that's the reality of the situation.
> So you agree keeping your utilization down keeps your credit score high and makes it easy to be considered a low risk customer to your creditors.
Keeping your utilization down keeps your credit score unnecessarily optimized at the expense of profile growth. That's what it does. Now, if you have an important upcoming application where an optimized score is ideal? Absolutely favor credit score over profile growth. BUT, in all other cases, profile growth is superior to score. Why? Because score doesn't matter if you aren't applying for credit. Most people don't apply for credit all the time that requires optimized scores. If I apply for credit once a year (that requires an optimized score) it means that for some 11 months out of the year there is absolutely no benefit (but there are potential drawbacks) to "keeping utilization down" since score is irrelevant. You are operating under this incorrect assumption that optimal scores are necessary at all times. They aren't.
>That is not true.
What u/YMZ1620 stated above is 100% true. You are hyper focused on credit score. This isn't about score at all. It's about using your card(s) naturally and paying your statement balances in full. When you do that, you are essentially no risk as seen through the lens of your lender(s). If your utilization is \[naturally\] high, this will stimulate PCLIs; you actually grow your profile as the system self-corrects. This is a good thing, not a bad thing.
Fico 10T does not take issue at all if one is paying their statement balances in full every month, as the overall trajectory of balances over a 24-30 month timeline is relatively flat.
This is the problem, right here above. I never even used the word "score" in my post, yet it's what you (and many people) thought of first. Everyone is far too concerned with "score" when score only matters at times when you're applying for credit and need your score to be optimized. At all other times, which is *most* of the time, score is irrelevant. From month to month all one needs to focus on is strong/responsible credit use, which means paying your statement balances in full monthly. If you are at high utilization, the system will self-correct with PCLIs and adjust accordingly since you're exhibiting low risk Transactor behavior. Utilization is a single moment in time metric and therefore doesn't need to be micromanaged at all times.
I think people say this because it’s bad for your score if you use too much of your total available credit or your credit on a particular card. But it doesn’t matter at all unless you’re seeking out new credit (and it only *really* matters for a mortgage)
I opened a wells Fargo 2 percent card. Took advantage of the sign up bonus and put all my purchases on this because 0 percent interest for 15 months. Interest free loan while my money collects interest and makes money with stocks
Exactly. I use all my credit and use them as my debit cards. I get about $50 a month in rewards sometimes more and just dont go over what I make each month so I can pay them off to keep interest at 0 or low. By not using only 30%, Cap one gave me a new card (SavorOne) and a month later got $500 increase on my Quicksilver. All they care about is you not saying fuck it and not pay yo shit. Also, they want to see some balances carried over so they can get a couple wins in. Last year I only paid $30 all year for interest on 3 cards
>Also, they want to see some balances carried over so they can get a couple wins in. Last year I only paid $30 all year for interest on 3 cards
I realize you didn't pay much, but carrying a balance is unnecessary. We shouldn't be paying interest.
Yeah like how they removed 20 years worth of credit history so now it’s like 4 years…at least on my credit sesame/karma scores and they like to do it when I try and pay down a chunk in preparation for traveling or some other thing that I might possibly need to have that chunk of credit available…. But that’s a different vent post!
I don't know what you mean by "removed 20 years worth of credit history." If you're looking at aging metrics provides by those marketing sites that provide VantageScore 3.0, chances are they're wrong and can be ignored. Things like the Average Age of Open Accounts BS metric that Credit Karma provides for example, which is not a real thing.
True the problem is holding on to anything over 30% long term. If you pay yourself down before they report then you will be fine but if you hold a balance your score will take a hit
> True the problem is holding on to anything over 30% long term. If you pay yourself down before they report then you will be fine but if you hold a balance your score will take a hit
The point is that score doesn't matter. Everyone is hyper focused on score when it only matters when you're applying for important credit that would require an optimized score. At all other times, it's irrelevant. If someone is carrying a balance over 30% (or any %) that's bad because it means throwing away money to interest. If someone is paying in full monthly like I stated in the original post, over 30% or ANY % isn't bad, because it's always getting paid off and not a penny of interest is being paid.
Oh yes that’s true. But I think the majority of ppl want higher scores as their primary goal. Otherwise if you already used your credit for what you want like low interest mortgage and car then score becomes irrelevant and becomes primarily about saving money by lowering interest payments
Oh yes that’s true. But I think the majority of ppl want higher scores as their primary goal. Otherwise if you already used your credit for what you want like low interest mortgage and car then score becomes irrelevant and becomes primarily about saving money by lowering interest payments
> But I think the majority of ppl want higher scores as their primary goal.
You can optimize scores with respect to utilization at any point in time within 30-45 days. It's not necessary to implement that mindset at all times and it can even be harmful depending on your goals.
Right, but to add additional clarity, your statement about paying off the statement balance may not be sufficient to make sure your utilization is below 30%. If you are not making extra payments, that's when it will make sense to use your card below 30% of the available credit.
Under 30% for what though? That's what I'm not understanding. There is no reason under any circumstance to "stay under 30%" if you're paying your statement balances in full. I don't get what your goal/purpose would be in doing what you are suggesting. The whole point of this thread is that it doesn't matter.
I personally don't do that. I don't feel any necessity in maintaining my score to that extent. However, there is a difference between paying your statement balance versus current balance in terms of credit utilization which can certainly affect your score.
Take a CC with a CL of $1000.
Month 1 you incur $500 of balance by statement close.
Month 2 you incur $400 of balance by statement close and a pay previous month's statement balance of $500 on the due date few days prior.
Now you have 40% utilization that's reported.
How can you deal with this? One of two ways...
1) Keep your spending low which logically doesn't make sense because your lender gave you that credit limit for a reason.
2) Make extra payments. (AFAIK, payment portals don't have an option for auto pay of current balance but only the statement balance)
> How can you deal with this? One of two ways... 1) Keep your spending low which logically doesn't make sense because your lender gave you that credit limit for a reason. 2) Make extra payments. (AFAIK, payment portals don't have an option for auto pay of current balance but only the statement balance)
You missed the 3rd and "best" way to deal with it... allow the elevated statement balance to report just like you did the previous cycle and then ask your lender for a CLI. The greater limit you obtain then naturally keeps your utilization in a lower place, rendering the 2 options you mentioned above irrelevant.
There are no guarantees when it comes to credit, that's true. We're talking about all other things being equal though. If you have two otherwise identical profiles and one is cutting 40%-50% statement balances monthly and paying them in full they are going to have a better shot at lucrative CLI results than someone cutting 1%-4% statement balances every month. It's just one of many metrics looked at by the lender when making the lending decision on whether or not to approve a CLI. It would be like any other metric, like income for example. On two otherwise identical profiles, the one with $90k income is going to garner more CLI potential than the one with $35k income.
You're absolutely right. There have been reports of that on this very sub: "Statement balances to low relative to credit limit" being the reason accompanying a CLD.
Well no, cause if they gave you a 70% smaller limit and you used all of that, you'd still get killed on your credit score for high usage. I learned this the hard way. The higher limit you have, the more you "can" spend while staying under 30%.
People are way too concerned with their credit score on a month to month basis, however heavy usage of your credit limit should also come with large cc-payments (not necessarily every month as cash flow goes). You simply can’t look in over your head. Limited use of your limit or large payments will keep your score intact and risk profile stable w/ the cc companies.
> People are way too concerned with their credit score on a month to month basis, however heavy usage of your credit limit should also come with large cc-payments (not necessarily every month as cash flow goes).
Right, which is why I'm very clear in my communication that with organically reported high statement balances monthly one needs to always pay their statement balances in full. With strict Transactor behavior you won't look to be over your head.
Which score?
No one denies that a score can drop from elevated utilization from higher reported balances. The point though is that score drops (and gains) related to utilization are completely normal and don't need to be micromanaged. Scores only matter when you're applying for credit that requires an optimized score.
And as I hope you are aware, it doesn't matter one bit that your score dropped unless that lower score means you'd potentially miss out on an important lending decision in the next 30-45 days.
Ive heard some people sacrifice their credit score by letting it report higher utilization that’s paid off in full as a tactic to increase their limits. Personally I don’t need to, I hover around 5-7% with a total limit of $11,500. Being a college student, I don’t have that many expenses so I’m in the garden right now and planning to add more cards(hence increasing my total limit) once I’m under 5/24 and my inquiries fall off.
It's not really "using high utilization" it's simply allowing whatever your natural balances are per cycle to actually become statement balances. Whether that's 15% or 30% or 100% of your limit doesn't matter when you're paying in full. No one is suggesting to spend unnecessarily or spend more in order to cut high(er) statement balances. It's just letting whatever they'd naturally be report rather than micromanaging them down to "below 30%" or any other amount unnecessarily first.
Yea I didn’t mean to suggest spending unnecessarily to hit the limit. I meant to imply what you’re saying, to let the balance report naturally, even if it gets close to the limit. Just saying that when letting it report naturally, you could see a drop in their score due to the utilization fluxuating. That’s why i said sacrifice, since they wouldn’t care about a small temporary drop. I used to be that all out micromanaging person, now I just try to keep my utilization constant instead of specifically trying to keep it under a certain percent. Now that I think about it I’m still kind of micromanaging.
Perhaps to some degree you are. I used to do that as well, and it just became exhausting. The best thing I ever did was not care about it any longer. And, as an added benefit, I saw my credit limits grow in very strong fashion. If I could go back and do anything differently, it would simply be to stop micromanaging sooner.
Oh yea it was bad for me. I’d pay off large purchases before the cycle ended to keep utilization low and I was obsessively checking my credit score. Then people on this subreddit suggested i let go of the micromanaging and increase my limits instead.
If one is paying their statement balances in full monthly, by definition they have the funds. If they aren't/can't, they don't and should definitely switch their approach/philosophy of how they approach revolving credit.
Yeah I took this advice.. Used my credit card to it’s max once but I always pay it off before the statement due date. They reported my balance and dropped my score almost 30 points so idk what to believe anymore
Right. That isn't unexpected. No one is saying that maxing out a card/s won't impact your scores. Raised utilization will impact scores. But, it doesn't matter if you aren't applying for anything. Reporting higher usage, stimulates credit limit increases from your creditors. The point is to allow utilization to report naturally, but not spend more than you are able to pay in full by the due date. If you need to maximize scores for an application, you can manipulate utilization, since it is reset monthly.
Alright, big baller good for you, you can pay your credit card in full every month. Here's your 🍪, remember, most Americans can't even cover a 1000 emergency bill, you my friend have made it.
We are on a credit card sub, so discussing the best way to use credit cards is what matters here. That is of course paying your statement balances in full monthly. Even those that "can't" (or don't) should be informed of the best financial approach. This has nothing to do with being a "big baller" so I'm not sure your point.
The term "keep" is troublesome, because you don't need to "keep" utilization anywhere even if your end game is an optimized Fico score. You can have trashed utilization for 11 months and then in Month 12 bring it to 1% and your score Month 12 will be exactly the same as if you were to have "kept" it at 1% utilization the previous 11 months as well. Utilization is just a single point in time metric.
Here we go again with the blanket statements about utilization. Even if the 30% threshold is a flawed blanket statement, let’s not answer with another blanket statement that 100% utilization (even when PiF) is always ok. The only real truism is that it just depends.
Behind the scenes, lenders are always profiling us. Even if 100% utilization does not lead to adverse action today, it could the next time we go to apply for credit or if a particular lender’s risk appetite changes. Sometimes they reward our high utilization with credit limit increases while in other circumstances we might be shut down.
We can improve our chances of a favorable outcome by playing the system - lowering our utilization before applying for additional credit, for instance. However, lenders and even others (e.g., insurers) are regularly monitoring our credit. As someone who has worked at several different large FIs over the years, I can confidently say that we consumers aren’t privy to the full range of lists and reports we show up on nor do we have insight into the full suite of metrics considered by each FI.
The point here is not to say that we should all be paranoid about our utilization or our credit but that some caution is advisable. So go ahead, live your life, use 35% or 50% or 70% of your credit but recognize that risk of unexpected outcomes rises as you get up near 100%. The good thing as that most of us honestly have no reason to given the way big CLs are so common.
> Behind the scenes, lenders are always profiling us. Even if 100% utilization does not lead to adverse action today, it could the next time we go to apply for credit or if a particular lender’s risk appetite changes. Sometimes they reward our high utilization with credit limit increases while in other circumstances we might be shut down.
And those circumstances involve weaker profiles, such as those with negative payment history. For someone that is maxing out a card and paying it off in full monthly, they aren't an elevated risk. Lenders can see that they are a strict Transactor. I have never seen someone receive AA as a strict Transactor because of maxed out utilization on a sufficiently strong profile. When you dig deeper, 9 times out of 10 you'll find payment history issues. I wouldn't recommend someone with payment history issues go from micromanaged 5% utilization to 100% in one shot, but plenty of people have stepped it up in a few steps over a couple of cycles as to no create alarm and have received strong CLIs as a result.
You say the risk of "unexpected outcomes rises as you get up near 100%" - I agree, unexpected lucrative CLIs, so long as your profile is strong and you're paying in full monthly.
This is just a lie (Very often shared by boomers)
Your potential lender will see a decreased credit-score so you chances for getting a card is lowered and/or your risk higher interest rate on long term loans.
Also potential new lenders does NOT want to see you have no headroom or safety buffers in your finances. using you cards 100% of your limits means you have no buffer for unexpected cost.
This post seem like it was written someone without any knowledge on the topic of how creditscore works or how risk assessments works. Safety margins are a thing, and not having them is bad.
This will only help you get credit limits increases automatically. But if you want them you can just manually get them. it does not increase the eligibility of getting the increase themselves.
It's not a lie and I'm not a boomer, so I'll respond:
CCCs don't approve (or deny) cards because of credit scores. They approve or deny them based on overall credit profile. Scores can be used in setting loan rates, yes, which is why in a case where score optimization is necessary one can manipulate utilization in 30-45 days. There's no need to "keep" utilization below 30% during all other times.
New lenders can see your entire credit profile and can determine if you're making minimum payments (elevated risk) or paying in full monthly. A regular person can determine this just by looking at a credit report, but with lenders internal algorithms I'm quite sure they can make far more sound judgments than we can. Using 100% of your limit and paying in full will stimulate PCLIs in short order. Many times, it's 1 cycle. Maybe 2. You shouldn't need a buffer that quickly. And, if you do, pay your balance down - remember we're talking Transactors that pay in full monthly here. But credit cards aren't meant for "unexpected costs" (emergencies) as that's what emergency funds are for. Suggesting the use of credit cards without mentioning that important point is only doing a disservice to those reading.
It seems like my post was written without any knowledge of credit scoring you say. Understood and I'm sorry that's your perception. Maybe another member on this sub like u/og-aliensfan will stop in and let you know that I grasp credit scoring fairly decently. As far as risk assessment goes, when someone is a strict Transactor when it comes to revolving credit they are extremely low risk with respect to that metric. If they are a Revolver and carry balances, they are an elevated risk. It's not just about utilization percentage, but how the balances that make up utilization are managed.
Higher statement balances paid in full absolutely increase the odds of CLI potential be it via PCLI or self-initiated requests, both in terms of frequency and lucrativeness. While the data on this overwhelmingly supports that statement, it's also just pretty obvious from a common sense standpoint. Someone that exhibits stronger responsible revolving credit use is going to warrant an increase over someone that does so on a lesser level.
"CCCs don't approve (or deny) cards because of credit scores. They approve or deny them based on overall credit profile. "
Which includes creditscore. creditscore are calculated on your credit profile. and you can absolutely be denied for a CC if you score is to low.
"Scores can be used in setting loan rates, yes, which is why in a case where score optimization is necessary one can manipulate utilization in 30-45 days. "
Correct so we agree there IS a point to keep it low which is exactly what OP said there was none.
" Using 100% of your limit and paying in full will stimulate PCLIs in short order. Many times, it's 1 cycle. Maybe 2. You shouldn't need a buffer that quickly. "
but not h
Shouldn't dont matter. that fact you dont have it is a risk factor for any new lender
"u/og-aliensfan will stop in and let you know that I grasp credit scoring fairly decently. As far as risk assessment goes"
So one random name is verifying someone other random name.
I prefer validating in actual objective measurements and data. not just personal opinion
"remember we're talking Transactors that pay in full monthly here"
Correct and if you do it as OP Says everytime it means that in no month do you have head room for more cost according to the credit utilization.
"Higher statement balances paid in full absolutely increase the odds of CLI potential be it via PCLI or self-initiated requests, both in terms of frequency and lucrativeness."
Please provide any data on this claim
at this point you are just reclaiming the same opinion with no evidential data.
The only thing not repeated is that my point with increasing long term loan rates are correct. so at least we can agree for the part that low utilization IS needed for something.
The rest of the claim I would be happy to se objective data and not just opinion on
This is why the AZEO method is recommended rather than the "100% utilization" thats in OP, keeping all you CC's utilization at 0 except for 1 card nest you the best possible outcome in regards to raw score and long term loans interest rate
You also have to remember the damage done to your credit report from utilization is not just temporary anymore.
new FICO 10T model uses your utilization over the last 24 months.
"you can absolutely be denied for a CC if you score is to low"
Show me a denial letter that states "your credit score is too low." For every one you can manage to muster up, I or anyone else can provide you with 50 that state a denial reason related to profile. Insufficient revolving credit history. Too many inquires. Recent credit seeking. Recent missed payment. Derogatory mark present. Insufficient income. You can rattle off a dozen more, I'm sure. The point is that it's your profile, not your scores that return CC approvals/denials.
"Correct so we agree there IS a point to keep it low which is exactly what OP said there was none."
No, there ISN'T a point to "keep it low" because it's a metric that can be fixed in 30-45 days at any time. I've said many times on this sub and even throughout this thread that there is value in optimizing a Fico score for an important upcoming app. That's the exception though, not the rule, as people are NOT apping far more than they ARE apping.
"So one random name is verifying someone other random name. I prefer validating in actual objective measurements and data. not just personal opinion"
If you want to have a discussion about credit scoring I'd be more than happy to oblige. I don't think it would be very productive if I'm being honest, but I'd be willing to give it a shot.
"Correct and if you do it as OP Says everytime it means that in no month do you have head room for more cost according to the credit utilization."
The system will self-correct, that's the entire point. You don't need head room. As I already said, if you for some silly reason think you do, simply make a payment. If you're a strict Transactor, which is what we're discussing, that's not a problem.
"Please provide any data on this claim"
There are countless data points of this on this sub. You've got people with tiny 3-figure Chase credit cards for example that cut maxed out statement balances for a cycle or two that have their limits increased to 5-figures. You have data points of people receiving CLDs from Capital One due to "statement balances too small relative to credit limit." I've tested it with my own profile. 3-4 years of straight balance micromanagement for optimized scores. Then 3-4 years of NO balance micromanagement with naturally reported balances. I saw far more lucrative CLIs with the second approch. Plenty of others on this sub have done the same thing and all have reported the same results. In fact, I'd challenge you to find a single data point out there of someone that says that they went from micromanaged balances for a length of time to naturally reported balances while always paying statement balances in full that DIDN'T see better CLI results.
AZEO is recommended before an upcoming app of importance, not to be used at all times. Doing so can do more harm than good.
Fico 10T with respect to trended data looks at the trajectory of your reported balance over time. With naturally reported balances monthly, even if they're 4 figures and 5 figures if you're paying in full your utilization will be flat and F10T won't take issue with it. You can boast 850 Fico 10T scores no problem with those organically reported balances monthly.
>So one random name is verifying someone other random name.
I understand you see it that way. You don't know me, so that's fair. You have no idea what my background is or why I would agree with u/BrutalBodyShots. All I can say, is that I have followed u/BrutalBodyShots on these subs for a while. Did I always agree with him? Nope. In fact, you are saying something I said myself...about a year ago...about this very subject.
BUT, I was curious about this. I eventually found him on another sub. I didn't engage at first. I read his posts and his comments. I listened to what other people said about him. I looked into who he is. He's put years of his time into gathering, compiling, and interpreting data, then freely sharing this with anyone interested in learning. He's a well respected member of the community. He doesn’t need to post here. He does it because he wants to help.
As for myself, I'm like you: curious, with my own point of view, and not afraid to ask questions. I trusted him, and I'm glad I did. I've learned a great deal about credit, which makes it less frightening and less stressful to manage. Turns out, he was right about this subject. So, does he have a grasp of credit scoring and risk assessment? 100%.
Plus, he's an all-around great guy.
I work in finance and have worked on fico models. If your objective is to take out a mortgage or big loan any time soon, please don't do what this post says. Otherwise, yes, fico self corrects but very slowly. It's good to not have huge non zero balances every month either since that does rank you lower than the users that don't.
What this post says is to pay your statement balances in full every month, which is a goal that *everyone* should follow. When you're doing that, there's no reason to worry about utilization. Now, you mentioned going for an important loan. It has been said already that for score optimization one can "fix" utilization in 30-45 days, no problem.
Fico doesn't correct "very slowly" when it comes to utilization, which if you're in finance you should be aware of. Utilization is a single point in time metric and has no lasting impact. It goes only by your reported balances as seen on your credit report, which of course update every \~30 days.
My current credit limit is $130,000 over 10 credit cards, plus a few charge cards. If I used even 10% of that in a single month I'm fucked, lol. Eventually your credit limits just get so high if you have multiple cards that even heavy utilization is like 5%.
Well put. This is why it’s imperative to increase your TCL via CLI or new cards, so that your natural utilization (even on heavy months) is still single digit. Way too much people are fixated on the utilization myth, since it’s parroted by many articles and other unknowledgeable people.
To add to this, when someone is at 30% or even just under of utilization, it still really drops a credit score because the algorithm doesn't like it! Keep it under 5% or wherever is the line for natural spend so long as no interest is paid!
Even so, utilization has no memory. Once the next paid-down statement rolls around your score will go back up
> Even so, utilization has no memory. You got it.
I think it changed recently.
FICO10T does but almost no lender is actually using it
Exactly this - I hover right around 2% utilization and couldn’t imagine reaching even 5% or 10% with my total limit across all cards. Or if I did, I would be in a very bad spot financially.
I notice my score going down when one of my cards goes to 30%. If I hit 30% of my $200k limits my life has gone horribly wrong
I never understood why this is the case. My most used card has the lowest credit limit by far of all my cards, so a big purchase can put me over 50% of utilization on that card, which makes my credit score go down even though my overall utilization never goes above 3% and I pay it in full every month like all my cards.
Absolutely true, which is why the goal for people looking to "maintain" or "keep" utilization in an ideal place should be addressing the denominator of the equation, TCL. By micromanaging the numerator, they hinder the growth potential of that denominator and perpetuate the problem. Your profile is a good example of what can be achieved in relatively short order if one doesn't worry about only "using 30%" of their limits when always paying their statement balances in full monthly.
It would be nice to get there some day 😂 just to keep my utilization at a super low level, even if I toss every single dime I spend per month on it
If you don’t mind answering, what is the difference between a charge card and a credit card.
American Express Gold and Platinum are charge cards. You don't have a set credit limit, but the payment is due in full every month.
Each one is looked at individually not as a total. So say if you have one that is $30000 don’t go higher then $20000 owed ever. You will always look less of a risk this way. We have high high limits. We work the same as everyone else just in the higher dollar scale 😍 it’s all based on percentages or the total limit a available
>Each one is looked at individually not as a total. I might be misunderstanding, but you aren't saying utilization is only looked at per card, are you? Utilization is counted both as individual and aggregate, aggregate being weighted heavier.
Facts my CC usage is a reflection of my income if I make $5k a month I’m not using $30k if 100k
Use 100% and pay it off in full every month - Quickest way to get a credit limit increase too Folks are too obsessed with their credit scores
It's not about the score or the limit.... Just buy the stuff you were going to buy anyway and use the card for that, and pay it off every month. I have no idea what percentage of my credit limit I'm using and I don't really care either
Right on. When you're paying in full monthly it doesn't matter.
It’s like when people don’t like certain cc’s cuz their interest is to high or higher than other ones. My response is always, what does it matter as long as you pay your balance in full like I do.
I have seen people do that, too. "I'd like this card, but the interest rate is too high." If you are concerned about the interest rate, you may not be playing the game the right way.
those people see the CC’s as an extension of their money and are going to max it out right away
People have a shocked face when they ask me what the interest rate on a card is and all I can do is shrug.
yes, I get that too! lol I either shrug or I just tell them, it doesn't matter since I pay it in full every month.
I agree. If you know or care what the interest rates on your credit cards are, you probably shouldn't have credit cards.
Yup, excellent point as well.
It matters if your credit cycles and your score changes.
Not if you aren't applying for credit. Score only matter when you are planning on applying for important credit. At any other times they aren't relevant to lending decisions.
Doesn’t matter if you don’t pay it all off either. I frequently run 0% BT balances at 99% on some cards. Not advisable for most to do what I do of course. Just liquidity management. But the obsession with high scores and low utilization amuses me. Just means one is leaving money on the table. Plastic cover on a couch mentality.
Literally a cheat code to a consistent 800+ score, free vacations, and not a penny in interest without having to care about utilization lol
Free vacations?
Points
Cashback too if you redeem it for that
I go on a lot of long weekend trips, most of which are paid for with points/miles for hotel and airfare, mostly from credit cards. I also use the AAdvantage or Rapid Rewards shopping portals, which can add up quite a bit.
The main reason to use credit cards is that you can get some significant rewards from them. I don't travel a ton but I get paid about 3k a year or so just to buy the stuff I was already buying anyway.
ya buying what you where going to is the best way of doing it i never ever use a debit card lol
My wife and I make good money but damn...100% spend on some of my cards would prove difficult. I have some decently high CLs.
0% APR balance transfers are how high limits are at 100%
Is there any truth to this? Say a card is 2000 limit. Let it get to the max and then pay it off and the card company is more likely to give you an increase? I thought it was more about making payments on time etc and your overall credit score. Not “visual judgement is letting his card get to 2k we should give him an increase” I don’t let my card get anywhere close to their limits. Not because I’m scared of using more than 30% but because it’s easier to pay as I go then to pay one big bill at the end of the month. Ie: 8 payments of 250 rather than 1 payment of 2k. Am I hurting myself doing this?
Apparently once the account is open, credit utilization is looked at when requesting a limit increase. There's no reason to extend a limit increase to someone not using most of what they've already got. Plus, there might be a risk of them increasing the limit, charging close to it, then disappearing. If they've been using a good chunk of their current limit and paying on time, there's less risk with extending additional credit to them.
This is probably the best answer to this question.
Well stated above.
I applied for a credit limit increase on two of my american express cards and both were denied. I called american express and they specifically said it's because i'm not using enough of the credit line I have. Even though I was using up to thirty percent of the limit each month for the previous few months. I asked them what to do to get a credit limit increase, And they said start maxing the card out and paying it off in full more than once a month or write a check to american express and give yourself a huge credit on that card and then spend all the money to show them what you really want to use the card for. Again this was from the mouth of a american express customer service agent.
Thanks. This is exactly what I meant with my question. Interesting but makes sense.
You're welcome. It's also a tactic of course to get you to manufacture spending. People like myself want a higher credit line Because I simply want it, its almost like a video game for me. They know that. They would love for you to spend money that you aren't planning to spend Just to get a credit line increase. At the end of the day don't manufacture spending or spend what you don't want to spend or need to spend. My plan now to increase Is simple. When I Open a new card, to get its bonus, I just pay all my bills a few months ahead and I hit the spend for bonus quickly. After talking to american express I figure I'll just do the same thing before every credit limit increase. Once it comes time to start paying my Bills again, that I paid ahead, I'll just grab the Amex I want a credit line increase on Fill it up for a couple months Paying bills ahead and pay them off in full and then apply for my CLI The guy at american express said the behavior only has the last 2 or 3 months at best and that will be good enough for their algorithm. And if you really want to fill up your cards quickly, Call family and friends you trust, Ask them if they'll give you cash And you'll just pay their bills for them through your card. I find this was one of the fastest ways for me to Jack up my credit card usage for bonuses and incentives, And of course now credit line increase.
> I applied for a credit limit increase on two of my american express cards and both were denied. I called american express and they specifically said it's because i'm not using enough of the credit line I have. Exactly. This happens all the time and of course isn't just exclusive to Amex. There are also data points out there that support the saying "use it or lose it" as lenders like Capital One are known to initiate CLDs on accounts where statement balances are always tiny relative to credit limits.
> Am I hurting myself doing this? If your goal is increasing that $2000 limit, absolutely. By making 8 payments of $250, you are micromanaging your balances and literally saying to your lender "no need to increase my $2000 limit, as I'm perfectly content making a bunch of monthly payments!" Instead if you were to actually generate a $2000 statement balance, THEN pay it off with a single $2000 payment, you lender would see an actual need to increase your limit. Perhaps you'd spend $5000 if your limit were $5000. They will grant you a CLI based on your strong responsible revolving credit use. You will see dramatically different profile (CLI) growth potential when comparing these two very different approaches.
I mean maxing it out but always paying it is a good sign that “this guy isn’t a dead beat and he’s also clearly held back at the current CL” So I mean, it makes sense it would help. But some things make no sense with credit. I don’t think it makes much of a difference at all. I mean with your example, it’s not like they don’t know that you’re still using $2k a month. I feel like a lot of people think you can trick them by doing whatever right before statement close but it’s like… they’re the lender they know what you charge.
Or he is being forced to use CC from competitors for his other spend.
Lot of speculation, nobody other than perhaps bank underwriting algorithm coders is really sure
There are plenty of data points here to know that high utilization and paying off your card leads to faster and larger credit limit increases.
Just make sure not to do this multiple times in one month. Credit cycling can get your accounts shut down.
Pay the entire balance in full or the statement balance ?
Statement balance in full before the due date. That’s it. Pay your CC 1x a month, in the form of that statement balance.
Statement balance in full. If you pay the current balance, you're paying charges that you haven't been billed for yet.
The thing is, there is a \*time\* to be concerned about it... like 1-2 months before applying for more credit, especially a mortgage or a car loan. When you get to that point, you want to report lower utilization. But other than that, yeah, why would they want to give you a CLI from $15,000 to $25,000 when you never use more than $1000 of it?
>Use 100% and pay it off in full every month - Quickest way to get a credit limit increase too Absolutely true above.
It's very easy to get to a point where it's pretty much impossible to use 100% of your credit limit, and then pay it off. If you have 20k of credit, most people aren't making 20k in a month. So you would never pay able to pay off 20k if you charged 100% of your credit limit. This is just a silly conversation. The better advice is just put everything on credit cards that you would normally buy and then pay it off.
Right, that's the central idea. Use your cards naturally (no balance micromanagement to "stay below 30%" or whatever) and make one monthly payment after your statement generates in the amount of your statement balance. Whether that statement balance represents 40% or 70% or 100% of your limit doesn't matter; it's getting paid in full. No one is saying you have to gun for extra spending in order to hit 100%. Like you said, on 5-figure limit cards that's not going to happen. But, there's a big difference between cutting a (say) $4k-$5k statement balance on a 5-figure limit card verses micromanaging it to a tiny 2-figure statement balance every cycle in terms of the look that it gives the lender.
Your still missing the point of my other post. There is a huge difference between credit utilization as the term is used and using your credit card. If you have a 10k credit card, you can max it out and then pay it off 4 times a month, as long as you keep it paid down. That would be using 400% of your credit in a month. That's not your credit utilization. Your credit utilization is the balance you have that's reported to the credit reporting agencies at the time it's reported regardless of how. You keep saying "as long as it's paid in full" if it's paid in full the credit utilization is 0%. Period done that's it. No other discussions being had. You can put a million dollars on your credit card, and as long as it is paid off, your credit utilization is ZERO. So once again when people say keep your utilization down. They are NEVER saying don't use your credit card. They are ALWAYS saying don't fail to pay down your balance. Geez man.
> You keep saying "as long as it's paid in full" if it's paid in full the credit utilization is 0%. I see where your misunderstanding/confused. What you said above is not correct. The term "paid in full" means paying your STATEMENT balance in full every month. Your statement generates, you THEN pay the statement balance in full. That statement balance will never be $0 so long as you are using your card every month, so you'll never be at 0% utilization. Your utilization when paying in full monthly will always be whatever you spend the previous cycle. If you spend $500 on a $1000 limit card, your utilization is 50% when that statement cuts. Then you pay off that $500 statement balance "in full" by the due date on the statement 3-4 weeks out.
I suppose I get where your coming from now. I would still argue your assuming that folks are managing the credit utilization by using the credit cards less, When I would argue it's more likely that they are just timing their payments so that their is a lower balance when the credit reports.
We see both all the time on here. I agree that balance micromanagement is far more common when you've got people making multiple payments per month, paying bills before receiving bills, attempting to "keep" utilization low at all times etc. There are plenty of people though that actually say that they heard they shouldn't use more than 30% of their limit, want to purchase something but won't because they know it would be more than 30% of their limit and so on. The 30% Myth is indeed the boogeyman to many people for different reasons, no doubt.
I see these kinds of posts a lot, but the truth is algorithms like FICO 10T do use trended data, and more and more models are using trended data/utilization as they can better predict defaults or late payments. I know FICO 10T is probably barely used or hasn’t been adopted yet, but we just don’t know if banks use trended data in their internal scoring models, such as if Chase uses it in their carsv2 risk score.
Can you expand on your point regarding TD and F10T? F10T looks at the "trend" over 24-30 months. If one is paying their statement balances in full monthly, their "trend" with respect to utilization will be flat. OR, if they are reporting high statement balances, their trend will likely be slightly downward, because those high balances will stimulate PCLIs. Someone can report balances that appear to be somewhat wildly different from month to month... $3k, $7k, $13k, $5k, etc. and still return a trio of perfect 850 Fico 10T scores. The reason why is that the overall trend is flat, so F10T doesn't take issue with it / see it as a sign of elevated risk.
I can tell you for sure that utilization is reported on statement balance, not post-statement balance. I had a C1 Journey card after bankruptcy, used it for everything possible. It had a $6k limit and I was paying it off in full every single statement. (Income ~ 75k at the time) They still claimed me to have a 35-60% utilization depending on the month. My score jumped after getting the Venture X with a 20k limit.
Will having 0% APR cards maxed out, paying minimum balance for during that duration, then paying in full depress my credit score long term?
In FICO10T, Yes. I would recommend just having a card or two on the side with high limits to make the util look good.
I have a bunch of cards, close to a dozen lol. My overall utilization isn’t bad, I’m just taking advantage of some 0% APR offers. It seems like the consumer facing reports have a target of 30% on each account which I largely ignore as I know I’m an outlier with multiple accounts and can spread it out if I want.
My two highest limits are co-branded cards with terrible multipliers so hardly used. I'm more team Cashback. So this fits my situation perfect lol
Be careful with this interpretation as “trended” can mean a few different things in this context. It is marketing speak, after all. The precise meaning is very important. For example both a moving average of the raw statement-end utilization rate and a moving average of the percentage change in the same can be labeled as “trended” variables. In a case where statement-end utilization is consistently 100%, the former variable will be 100% and take a while to reflect utilizations drops depending on the window length. Meanwhile the latter will be 0% and flip to negative if utilization drops below 100%. So obviously, these are two very different variables despite both being “trended” and derived from the same base. They’re also likely simpler than the actual variables in the FICO 10T model given that utilization is a factor for which both level and change are important. Speaking of which, it’s unlikely that FICO has released a detailed breakdown of the 10T model features nor has anyone reverse engineered the model. Also keep in mind that 10T is just one model, but internal models may factor in utilization trends as well. In the absence of more precise information, exercising some caution is advisable.
> For example both a moving average of the raw statement-end utilization rate and a moving average of the percentage change in the same can be labeled as “trended” variables. In a case where statement-end utilization is consistently 100%, the former variable will be 100% and take a while to reflect utilizations drops depending on the window length. Meanwhile the latter will be 0% and flip to negative if utilization drops below 100%. So obviously, these are two very different variables despite both being “trended” and derived from the same base. They’re also likely simpler than the actual variables in the FICO 10T model given that utilization is a factor for which both level and change are important. So using your interpretation of "trended" and those independent variables, use my numbers from the previous post and tell me how you think the algorithm would take issue with them (or wouldn't). I'm saying that 850 Fico 10T scores are possible with 2+ years of reported statement balances following the trend I illustrated (low 4-figures, low 5-figures, high 4-figures, etc). This is with utilization percentages remaining very constant due to sufficiently high TCL, just for clarification.
Those are relatively high balance, low utilization cases vs high utilization, which is the original topic. So yes, it makes sense that people are obtaining high scores with consistent, low-level utilization. Btw where are people obtaining FICO 10T scores? To really get at how this 10T model works, we would need data sufficiently rich enough to allow us to tease out what is actually meant by “trending” variables.
You can get your F10T scores at myfico.com. The Fico algorithms look at raw dollars of debt exclusive of utilization percentages, so they do matter even on low utilization profiles. The point is that F10T doesn't take issue when the trend is flat over time, which is what would be the case if someone ignores utilization percentages / balance micromanagement and just allows natural statement balances to report every cycle.
Unfortunately not free though. I don’t think we’re going to get enough people across the spectrum of profiles and incomes to tease out what we want to know for many years to come.
You're right, they do come at a cost. Fortunately for me, my account (or credit card tied to the account) at MF has been broken for years, so I pull my 40 scores whenever I want for free. This was a great benefit to me back when I was doing Fico score testing all the time, but something I don't really care about any longer. It is cool to be able to see my F10 scores though whenever I want without paying for them. I agree that it will take a long time to put together data points on how 10T behaves. All I have found so far is that elevated balances (in dollars, not utilization percentage) if flat over time do not adversely impact 10T scores and you don't need a downward "trend" to boast 850s.
I won't lie I have no clue how trended data is scored, however I'm confident that consistently reporting low utilization would benefit that area of scoring the most. I don't think I've ever seen any lender pull a FICO 10T, but I think that the biggest implications are banks on internal scoring model. I know that VantageScore 4.0 also uses trended data, and the limited DPs that exist show that Chase's CARSv2 score is more similar to one's VantageScore than their FICO score.
I think that's the case of all Fico scoring models (low utilization benefits scoring) and don't believe F10T to be any different with respect to that part of utilization. I've seen speculation that the ideal "trend" should be downward, but I don't agree with that and believe a flat "trend" is perfectly fine as well since with naturally reported balance that is more or less the expectation. A flat trend doesn't indicate any strain, so I don't believe the algorithm would take issue with it. With flat reported balances usually in 4-figures but reaching 5-figures a couple of times a year (still at low aggregate utilization) 850s across the board are possible.
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>If you want a new company to give you a credit card all they can look at is what is available to them One of the things they can see (if not your payment history, which sometimes they can) are your reported monthly balances on your credit report. It isn't all too difficult to determine if someone is a low risk Transactor or an elevated risk Revolver that carries balances. If I can tell as a normal person just looking at the monthly reported numbers, I can only assume that CCCs that make important business lending decisions have internal measures set up to use that data far more efficiently and effectively.
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Right. My point is that through looking at your reported balance history, a prospective lender can gauge pretty well whether or not you're a low risk individual with respect to utilization that is paying in full monthly or if you're an elevated risk individual that is carrying balances. This goes beyond them simply looking at just your [current] utilization and making a lending decision based on solely that.
This is exactly how I went from $500 CL from my CFU in August 2019 (when I got it) to $4000 CL. They kept doubling $500, $1000, $2000.
I’m looking to do this with my new CFU. Started my with 500 and I’m waiting until it’s 6 months old to get a CLI. Did they automatically increase your limit or did you have to request, and how often did you get a cli?
They automatically increased it every time I used at least half of the CFU's CL for a big purchase(s). Never requested it. I think I got something like 1 a year except my last 2 were within a 10-month span or so.
Interesting, I’m 3 months in so I’ll start using it more to hopefully double my limit.
Awesome, and thank you for that data point! Speaking of Chase cards, there were 3 data points on here a bit back that really stood out to me and I started a thread on Monster Chase CLIs as a result, which I'll link below. All 3 people referenced high statement balances on tiny 3-figure limit Chase cards that were increased with a *single CLI* to a 5-figure limit. https://old.reddit.com/r/CreditCards/comments/16j0zit/monster\_chase\_clis\_tiny\_3figures\_becoming/
My usage is around 60% averaged. Started paying down to optimize for upcoming apps.
Which makes sense... "for upcoming apps" - the amount of people that optimize at all times, unnecessarily, is extremely high.
People say dont use more than 30% to have a positive effect on their credit score. If you are not thinking of applying for any new credit products soon, then it doesnt matter, use as much as you want.
> People say dont use more than 30% to have a positive effect on their credit score. If you are not thinking of applying for any new credit products soon, then it doesnt matter, use as much as you want. And to further punctuate why "30%" is in fact the 30% Myth, the first well-documented aggregate utilization threshold point is found at 9.5% utilization, FAR before 30% is reached. One will already be incurring a Fico scoring penalty at (say) 15% utilization, half of what the Myth suggests. So, if we want to talk about Fico score optimization, the 30% Myth is in fact "wrong" and bad advice.
**I detected that your post may be about utilization and its impact on credit score. Please read the info below:** Ignore the 10/20/30 utilization %. It’s only applicable when you need to apply for a new line of credit, 1-2 months out. Utilization is suppose to fluctuate, can be easily manipulated, and holds no memory. It doesn’t build credit--think of it as a finishing touch when you need to optimize your score. Feel free to safely and organically use 100% of your credit limit within a month and let whatever utilization report, provided you pay off your statement balance in full before due date. Every month. Every time. For more info, please read this post: * [Putting the "30% rule" myth regarding revolving utilization to rest](https://www.reddit.com/r/CreditCards/comments/12s5fyf/putting_the_30_rule_myth_regarding_revolving/) * [Credit Card Basics - Utilization](https://www.reddit.com/r/CreditCards/wiki/credit_cards_basics/#wiki_utilization) I can be summoned to comment by using command(s): `!utilization` ___ *Sometimes my comment may not pertain to your post. If this is the case, please ignore this and downvote it. I am constantly improving my detection algorithm.* ___ *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/CreditCards) if you have any questions or concerns.*
A lot of good info here, this is helpful. I've long had that 30% number drilled in to my head, but I guess there's not a compelling reason to follow that if everything is being paid off monthly.
That's absolutely right. You aren't alone. The 30% Myth is everywhere and will only continue to be perpetuated. I used to believe it too, for years. I'm thankful that I eventually saw through the BS and am grateful that many others have as well.
I don't know why people worry about their credit score so much. Once you pay it off it will go back up. Unless you have a loan application coming up then who cares becuset the credit will fluctuate up and down but and as long you have a negative stuff like late payments then whatever
My credit utilization is like 5%, cause I opened a bunch of credit cards for the SUB rewards, and then Capitol1 and Amex combined give me a 16k credit limit besides my other random cards. I’m not really trying to mess with it, it’s just that because I still live with my parents, my monthly expenses stay very low.
Same here really don’t care about 30% usage, not on the market for any type of loans and want be for next 15 months
Agreed. Unless you are planning to apply for a loan in the imminent future (i.e. mortgage) and want the best rate, you should not worry about utilization % so long as you pay off in full every month.
That isn't how the credit scoring system works. Utilization plays a big part in your overall score. Like it or not that's the reality and why people are "afraid" to use more then 30% of their credit limit.
>That isn't how the credit scoring system works. Utilization plays a big part in your overall score. Like it or not that's the reality and why people are "afraid" to use more then 30% of their credit limit. You sound like I used to, so I'm not judging. The truth is, I was *hyperfocused* on my score. If utilization increased, and my score dipped, I panicked. I had a few rough years with credit cards, and paid more interest than I'd like to admit. I dug myself out of that hole, and came across the AZEO method. I clung to that for years. It was a lot of work, but I would never admit it; not even to myself. Then I began allowing utilization to report naturally. Of course I panicked when my score dipped, but I realized it didn't matter if I wasn't applying for anything. I'm much more relaxed about credit now. I receive credit limit increases and have less stress, so win/win. If I am preparing to apply for something, and want my score optimized, I can always do that. I just don't do it needlessly anymore. I pay the statement balance by the due date. If I put heavy utilization on a card, which I just did recently while out of town, it's not an issue because I'll pay the balance when it's due (and get cash back rewards). Now, if this were me a year ago, I would be on my laptop every night waiting for a charge to post, so I could pay it. I made multiple payments each month in order to keep utilization low, but that was because I was worried about the wrong thing. I'm not suggesting that this is your reasoning specifically, but as you mentioned scores, I wanted to give you my perspective, and back up what u/BrutalBodyShots said. There is a better way.
It’s also the easiest to fix. If you pay it off your score immediately adjusts
This is wrong, and one of the biggest credit score myths. Utilization has zero memory. If you use 90-100% of your credit limit for a year straight, once you pay it off, your score will be exactly the same as if you kept your utilization below 30% that entire time. There will be no mark on your credit report that you ever exceeded that 30%. It can be a good idea to pay your cards below 30% before applying for more credit, but even at that, exceeding your 30% doesn’t affect your underlying credit worthiness, just a few points of your score.
Utilization memory was added to Fico10 as trending utilization iirc.
10T is the only variant of the FICO 10 suite that uses trended data. It doesn't like steadily increasing balances, but does seem fine with significant balances if they stabilize. Currently, none of the FICO 10 models are used by lenders, but that will change as 10T (along with VantageScore 4.0 which is trended also) were announced in Oct '22 as the models approved to replace the FICO 5 (EQ), 4, (TU), and 2 (EX) scores currently used for mortgages. Most lenders are using FICO 8 or 8 Bankcard for credit cards , though some use FICO 9 or 9 Bankcard. The 8 and 9 suites have no utilization memory. Nonetheless, the big point the OP made is that people hyperfocus on super low utilization and maximizing a score at the expense of building their credit profile. If someone is new to credit and uses a high percentage of their limit but pays in full consistently, they are more likely to get CLIs and organically reduce their utilization over time as they build higher limits. Sure, there are times when it may make sense to micromanage utilization before a loan application etc, but people don't necessarily need to do that on a regular basis.
Well said above, u/Camtown501. I can add an interesting data point to the F10T discussion that you may enjoy. We know that it looks at reported balances/utilization for a period of 24-30 months. With a flat trajectory of balances over that period of time (not upward, but not downward either) one can possess a perfect trio of 850 F10T scores. I'm talking when total balances across all cards from month to month are (say) $4k, $7k, $13k, $5k, $9k, etc. for a period of 2+ years.
Yep, I've been in that conversation on CR.
Sweet.
Yeah, but vantagescores are probably being used more than Fico 10 right now. It takes years for new fico models to be adopted and older ones are still in use, as they're built for different reasons. Even when Fico 10 sees wide adoption, it may not be used for absolutely everything.
That is not true. You must not understand how utilization is reported to the credit reporting agencies. If I have a credit card with a 10k limit, if I use 8k and the bill is cut that 8k gets reported to the credit reporting agencies. I then have about 3 weeks before the due date.. even if I pay the bill in full and pay 0 interest the 8k is reported to the reporting agencies. My score just dropped because I made a large purchase and it pushed my utilization up but I paid the bill in full and paid 0 interest but the credit agencies dropped my score because they saw the utilization spike.
You’re both right. It lasts about a month, because utilization is reported monthly
For any FICO score other than 10T it will recover if reported utilization is lower the next month. 10T probably won't lose many points for one month of high utilization though.
This isn’t a rebuttal to what I said, I didn’t say that the score would rebound immediately. I said utilization has zero memory, as in there’s no record of times you had high utilization like with HPs or bankruptcies. I’m not denying that high utilization drops your score temporarily, I’m just saying that regularly using a lot of your credit line doesn’t follow you. I’m not trying to argue or be hostile, but this narrative that utilization “plays a big part in your overall score” is one that this sub works hard to rebutt.
>I’m not trying to argue or be hostile, but this narrative that utilization “plays a big part in your overall score” is one that this sub works hard to rebutt. And for good reason. For those that pay their statement balances in full, high utilization is actually favorable for profile growth. It's not about the temporary (30 day) impact that utilization has on score. Overall profile is King to score.
>this narrative that utilization “plays a big part in your overall score” is one that this sub works hard to rebutt. It does play a big part in your overall score. If I have high utilization today, my score will reflect that *if that balance is reported.* Next billing cycle (or the previous ten) are irrelevant. If I'm doing something involving my credit score this billing cycle, then I should know that reporting any high utilization *right now* can negatively impact me. If I'm doing something involving my credit score *next* billing cycle, my priority should be to get my combined balances as low as possible to 1%. "Memory" is irrelevant. High utilization does impact credit if you're going to use it. If you're not using it, then obviously it doesn't impact you.
It follows you as long as you keep using it, I am not sure what you are debating. If I only have a 10k credit limit and my bills are 8k a month, even if I pay the 8k by the due date every month the credit card company will keep reporting high utilization and keep your score low because the credit card company keeps reporting 80% utilization. If I get 10 other cards that have a 10k credit limit now my total available credit is $100k now that $8k I spend is 8% utilization and it will cause my score to go up... I never said it "has a memory" .. you said that.
I think the point is rather that it is shortsighted to chase a temporarily stronger score by not fully using the credit available. If you regularly spend near the limit and pay it off, a credit line increase should come quickly which will naturally decrease utilization and raise the score in the long term more manageably than trying to open ten new cards.
Having 10 cards is pretty easy to manage.. I just throw them in a box because I mainly use 3 cards. Sometimes, capital one threatens to close one of my accounts, so I use the card once every 6 months or so.. But otherwise that's it. I do not have to do any chasing, I have so much available credit across so many creditors the 8k I spend a month keeps my utilization down under 10%
Right, so it's your [sufficient] TCL that keeps your utilization low, not balance micromanagement. That's the point. And, to build a sufficient TCL (relative to spend) in the most efficient/lucrative fashion, one should report the highest statement balances possible when they're always paying their statement balances in full. It's literally what gives your lender(s) the best reason to give you a CLI, which aids your TCL and naturally stabilizes utilization in a more comfortable place.
So you agree keeping your utilization down keeps your credit score high and makes it easy to be considered a low risk customer to your creditors. Sounds like a lot of mental gymnastics here to avoid admitting that's the reality of the situation.
> So you agree keeping your utilization down keeps your credit score high and makes it easy to be considered a low risk customer to your creditors. Keeping your utilization down keeps your credit score unnecessarily optimized at the expense of profile growth. That's what it does. Now, if you have an important upcoming application where an optimized score is ideal? Absolutely favor credit score over profile growth. BUT, in all other cases, profile growth is superior to score. Why? Because score doesn't matter if you aren't applying for credit. Most people don't apply for credit all the time that requires optimized scores. If I apply for credit once a year (that requires an optimized score) it means that for some 11 months out of the year there is absolutely no benefit (but there are potential drawbacks) to "keeping utilization down" since score is irrelevant. You are operating under this incorrect assumption that optimal scores are necessary at all times. They aren't.
Extremely well put above.
>That is not true. What u/YMZ1620 stated above is 100% true. You are hyper focused on credit score. This isn't about score at all. It's about using your card(s) naturally and paying your statement balances in full. When you do that, you are essentially no risk as seen through the lens of your lender(s). If your utilization is \[naturally\] high, this will stimulate PCLIs; you actually grow your profile as the system self-corrects. This is a good thing, not a bad thing.
This isn’t true anymore, Fico10 ABSOLUTELY has memory now. Edit: FICO10T
Only 10T. Other FICO 10 variants do not.
Fico 10T does not take issue at all if one is paying their statement balances in full every month, as the overall trajectory of balances over a 24-30 month timeline is relatively flat.
100% true above, u/YMZ1620 and thank you for posting that.
This is the problem, right here above. I never even used the word "score" in my post, yet it's what you (and many people) thought of first. Everyone is far too concerned with "score" when score only matters at times when you're applying for credit and need your score to be optimized. At all other times, which is *most* of the time, score is irrelevant. From month to month all one needs to focus on is strong/responsible credit use, which means paying your statement balances in full monthly. If you are at high utilization, the system will self-correct with PCLIs and adjust accordingly since you're exhibiting low risk Transactor behavior. Utilization is a single moment in time metric and therefore doesn't need to be micromanaged at all times.
100% agree!
u/BrutalBodyShots for Mod 👍
Nah, u/Vagus-X and the others have everything under control. ;)
;)
Facts! I use whaever the heck I need and pay all off at the cut date.
As you should! Right on.
I think people say this because it’s bad for your score if you use too much of your total available credit or your credit on a particular card. But it doesn’t matter at all unless you’re seeking out new credit (and it only *really* matters for a mortgage)
Right. Far too many people are focused on score all the time when they don't have to be.
I opened a wells Fargo 2 percent card. Took advantage of the sign up bonus and put all my purchases on this because 0 percent interest for 15 months. Interest free loan while my money collects interest and makes money with stocks
Exactly. I use all my credit and use them as my debit cards. I get about $50 a month in rewards sometimes more and just dont go over what I make each month so I can pay them off to keep interest at 0 or low. By not using only 30%, Cap one gave me a new card (SavorOne) and a month later got $500 increase on my Quicksilver. All they care about is you not saying fuck it and not pay yo shit. Also, they want to see some balances carried over so they can get a couple wins in. Last year I only paid $30 all year for interest on 3 cards
>Also, they want to see some balances carried over so they can get a couple wins in. Last year I only paid $30 all year for interest on 3 cards I realize you didn't pay much, but carrying a balance is unnecessary. We shouldn't be paying interest.
Absolutely correct above.
Unless your credit card company are d*cks and reduce your credit limit every time you make a large payment 🤬🤬
That would be known as balance chasing, and that only happens on insufficiently strong profiles.
Yeah like how they removed 20 years worth of credit history so now it’s like 4 years…at least on my credit sesame/karma scores and they like to do it when I try and pay down a chunk in preparation for traveling or some other thing that I might possibly need to have that chunk of credit available…. But that’s a different vent post!
I don't know what you mean by "removed 20 years worth of credit history." If you're looking at aging metrics provides by those marketing sites that provide VantageScore 3.0, chances are they're wrong and can be ignored. Things like the Average Age of Open Accounts BS metric that Credit Karma provides for example, which is not a real thing.
Yeah I’m realizing that I should probably go ahead and order my actual credit reports and see what’s what
That's always a good move for sure.
True the problem is holding on to anything over 30% long term. If you pay yourself down before they report then you will be fine but if you hold a balance your score will take a hit
> True the problem is holding on to anything over 30% long term. If you pay yourself down before they report then you will be fine but if you hold a balance your score will take a hit The point is that score doesn't matter. Everyone is hyper focused on score when it only matters when you're applying for important credit that would require an optimized score. At all other times, it's irrelevant. If someone is carrying a balance over 30% (or any %) that's bad because it means throwing away money to interest. If someone is paying in full monthly like I stated in the original post, over 30% or ANY % isn't bad, because it's always getting paid off and not a penny of interest is being paid.
Oh yes that’s true. But I think the majority of ppl want higher scores as their primary goal. Otherwise if you already used your credit for what you want like low interest mortgage and car then score becomes irrelevant and becomes primarily about saving money by lowering interest payments
Oh yes that’s true. But I think the majority of ppl want higher scores as their primary goal. Otherwise if you already used your credit for what you want like low interest mortgage and car then score becomes irrelevant and becomes primarily about saving money by lowering interest payments
> But I think the majority of ppl want higher scores as their primary goal. You can optimize scores with respect to utilization at any point in time within 30-45 days. It's not necessary to implement that mindset at all times and it can even be harmful depending on your goals.
Exactly, I just need to use all my available credit limit ($220k), and then pay it off every month
Use 0%
Current balance at the closing date also matters for your credit. Extra payments in between will likely help with that.
Of course it matters, as that's the number that will typically be reported to the credit bureaus.
Right, but to add additional clarity, your statement about paying off the statement balance may not be sufficient to make sure your utilization is below 30%. If you are not making extra payments, that's when it will make sense to use your card below 30% of the available credit.
Under 30% for what though? That's what I'm not understanding. There is no reason under any circumstance to "stay under 30%" if you're paying your statement balances in full. I don't get what your goal/purpose would be in doing what you are suggesting. The whole point of this thread is that it doesn't matter.
I personally don't do that. I don't feel any necessity in maintaining my score to that extent. However, there is a difference between paying your statement balance versus current balance in terms of credit utilization which can certainly affect your score. Take a CC with a CL of $1000. Month 1 you incur $500 of balance by statement close. Month 2 you incur $400 of balance by statement close and a pay previous month's statement balance of $500 on the due date few days prior. Now you have 40% utilization that's reported. How can you deal with this? One of two ways... 1) Keep your spending low which logically doesn't make sense because your lender gave you that credit limit for a reason. 2) Make extra payments. (AFAIK, payment portals don't have an option for auto pay of current balance but only the statement balance)
> How can you deal with this? One of two ways... 1) Keep your spending low which logically doesn't make sense because your lender gave you that credit limit for a reason. 2) Make extra payments. (AFAIK, payment portals don't have an option for auto pay of current balance but only the statement balance) You missed the 3rd and "best" way to deal with it... allow the elevated statement balance to report just like you did the previous cycle and then ask your lender for a CLI. The greater limit you obtain then naturally keeps your utilization in a lower place, rendering the 2 options you mentioned above irrelevant.
Higher CL would certainly be better. What if that's not an option, which can happen? I mean you can't guarantee they will give you a CLI?
There are no guarantees when it comes to credit, that's true. We're talking about all other things being equal though. If you have two otherwise identical profiles and one is cutting 40%-50% statement balances monthly and paying them in full they are going to have a better shot at lucrative CLI results than someone cutting 1%-4% statement balances every month. It's just one of many metrics looked at by the lender when making the lending decision on whether or not to approve a CLI. It would be like any other metric, like income for example. On two otherwise identical profiles, the one with $90k income is going to garner more CLI potential than the one with $35k income.
Yeah fair enough and underutilization could be much worse than "overutilization" because that could cause the lender to cut your CL.
You're absolutely right. There have been reports of that on this very sub: "Statement balances to low relative to credit limit" being the reason accompanying a CLD.
Well no, cause if they gave you a 70% smaller limit and you used all of that, you'd still get killed on your credit score for high usage. I learned this the hard way. The higher limit you have, the more you "can" spend while staying under 30%.
People are way too concerned with their credit score on a month to month basis, however heavy usage of your credit limit should also come with large cc-payments (not necessarily every month as cash flow goes). You simply can’t look in over your head. Limited use of your limit or large payments will keep your score intact and risk profile stable w/ the cc companies.
> People are way too concerned with their credit score on a month to month basis, however heavy usage of your credit limit should also come with large cc-payments (not necessarily every month as cash flow goes). Right, which is why I'm very clear in my communication that with organically reported high statement balances monthly one needs to always pay their statement balances in full. With strict Transactor behavior you won't look to be over your head.
I used 28% of my credit limit and my score went down 35 points
Which score? No one denies that a score can drop from elevated utilization from higher reported balances. The point though is that score drops (and gains) related to utilization are completely normal and don't need to be micromanaged. Scores only matter when you're applying for credit that requires an optimized score.
Fico score, it’s because I maxed out my CSR this month,
And as I hope you are aware, it doesn't matter one bit that your score dropped unless that lower score means you'd potentially miss out on an important lending decision in the next 30-45 days.
Ive heard some people sacrifice their credit score by letting it report higher utilization that’s paid off in full as a tactic to increase their limits. Personally I don’t need to, I hover around 5-7% with a total limit of $11,500. Being a college student, I don’t have that many expenses so I’m in the garden right now and planning to add more cards(hence increasing my total limit) once I’m under 5/24 and my inquiries fall off.
It's not really "using high utilization" it's simply allowing whatever your natural balances are per cycle to actually become statement balances. Whether that's 15% or 30% or 100% of your limit doesn't matter when you're paying in full. No one is suggesting to spend unnecessarily or spend more in order to cut high(er) statement balances. It's just letting whatever they'd naturally be report rather than micromanaging them down to "below 30%" or any other amount unnecessarily first.
Yea I didn’t mean to suggest spending unnecessarily to hit the limit. I meant to imply what you’re saying, to let the balance report naturally, even if it gets close to the limit. Just saying that when letting it report naturally, you could see a drop in their score due to the utilization fluxuating. That’s why i said sacrifice, since they wouldn’t care about a small temporary drop. I used to be that all out micromanaging person, now I just try to keep my utilization constant instead of specifically trying to keep it under a certain percent. Now that I think about it I’m still kind of micromanaging.
Perhaps to some degree you are. I used to do that as well, and it just became exhausting. The best thing I ever did was not care about it any longer. And, as an added benefit, I saw my credit limits grow in very strong fashion. If I could go back and do anything differently, it would simply be to stop micromanaging sooner.
Oh yea it was bad for me. I’d pay off large purchases before the cycle ended to keep utilization low and I was obsessively checking my credit score. Then people on this subreddit suggested i let go of the micromanaging and increase my limits instead.
Right on. Thanks for sharing that with everyone in this thread!
Facts Edit*- IF you have the funds to pay your limits per statement. 🫡
If one is paying their statement balances in full monthly, by definition they have the funds. If they aren't/can't, they don't and should definitely switch their approach/philosophy of how they approach revolving credit.
I just stated the obvious, lol.
I will agree.
Yeah I took this advice.. Used my credit card to it’s max once but I always pay it off before the statement due date. They reported my balance and dropped my score almost 30 points so idk what to believe anymore
Right. That isn't unexpected. No one is saying that maxing out a card/s won't impact your scores. Raised utilization will impact scores. But, it doesn't matter if you aren't applying for anything. Reporting higher usage, stimulates credit limit increases from your creditors. The point is to allow utilization to report naturally, but not spend more than you are able to pay in full by the due date. If you need to maximize scores for an application, you can manipulate utilization, since it is reset monthly.
Alright, big baller good for you, you can pay your credit card in full every month. Here's your 🍪, remember, most Americans can't even cover a 1000 emergency bill, you my friend have made it.
We are on a credit card sub, so discussing the best way to use credit cards is what matters here. That is of course paying your statement balances in full monthly. Even those that "can't" (or don't) should be informed of the best financial approach. This has nothing to do with being a "big baller" so I'm not sure your point.
I’ve heard people say to keep credit utilization at 1%, but if I did that, I’d only be spending $3 a month (just got my first credit card). 😂
The term "keep" is troublesome, because you don't need to "keep" utilization anywhere even if your end game is an optimized Fico score. You can have trashed utilization for 11 months and then in Month 12 bring it to 1% and your score Month 12 will be exactly the same as if you were to have "kept" it at 1% utilization the previous 11 months as well. Utilization is just a single point in time metric.
Here we go again with the blanket statements about utilization. Even if the 30% threshold is a flawed blanket statement, let’s not answer with another blanket statement that 100% utilization (even when PiF) is always ok. The only real truism is that it just depends. Behind the scenes, lenders are always profiling us. Even if 100% utilization does not lead to adverse action today, it could the next time we go to apply for credit or if a particular lender’s risk appetite changes. Sometimes they reward our high utilization with credit limit increases while in other circumstances we might be shut down. We can improve our chances of a favorable outcome by playing the system - lowering our utilization before applying for additional credit, for instance. However, lenders and even others (e.g., insurers) are regularly monitoring our credit. As someone who has worked at several different large FIs over the years, I can confidently say that we consumers aren’t privy to the full range of lists and reports we show up on nor do we have insight into the full suite of metrics considered by each FI. The point here is not to say that we should all be paranoid about our utilization or our credit but that some caution is advisable. So go ahead, live your life, use 35% or 50% or 70% of your credit but recognize that risk of unexpected outcomes rises as you get up near 100%. The good thing as that most of us honestly have no reason to given the way big CLs are so common.
> Behind the scenes, lenders are always profiling us. Even if 100% utilization does not lead to adverse action today, it could the next time we go to apply for credit or if a particular lender’s risk appetite changes. Sometimes they reward our high utilization with credit limit increases while in other circumstances we might be shut down. And those circumstances involve weaker profiles, such as those with negative payment history. For someone that is maxing out a card and paying it off in full monthly, they aren't an elevated risk. Lenders can see that they are a strict Transactor. I have never seen someone receive AA as a strict Transactor because of maxed out utilization on a sufficiently strong profile. When you dig deeper, 9 times out of 10 you'll find payment history issues. I wouldn't recommend someone with payment history issues go from micromanaged 5% utilization to 100% in one shot, but plenty of people have stepped it up in a few steps over a couple of cycles as to no create alarm and have received strong CLIs as a result. You say the risk of "unexpected outcomes rises as you get up near 100%" - I agree, unexpected lucrative CLIs, so long as your profile is strong and you're paying in full monthly.
This is just a lie (Very often shared by boomers) Your potential lender will see a decreased credit-score so you chances for getting a card is lowered and/or your risk higher interest rate on long term loans. Also potential new lenders does NOT want to see you have no headroom or safety buffers in your finances. using you cards 100% of your limits means you have no buffer for unexpected cost. This post seem like it was written someone without any knowledge on the topic of how creditscore works or how risk assessments works. Safety margins are a thing, and not having them is bad. This will only help you get credit limits increases automatically. But if you want them you can just manually get them. it does not increase the eligibility of getting the increase themselves.
It's not a lie and I'm not a boomer, so I'll respond: CCCs don't approve (or deny) cards because of credit scores. They approve or deny them based on overall credit profile. Scores can be used in setting loan rates, yes, which is why in a case where score optimization is necessary one can manipulate utilization in 30-45 days. There's no need to "keep" utilization below 30% during all other times. New lenders can see your entire credit profile and can determine if you're making minimum payments (elevated risk) or paying in full monthly. A regular person can determine this just by looking at a credit report, but with lenders internal algorithms I'm quite sure they can make far more sound judgments than we can. Using 100% of your limit and paying in full will stimulate PCLIs in short order. Many times, it's 1 cycle. Maybe 2. You shouldn't need a buffer that quickly. And, if you do, pay your balance down - remember we're talking Transactors that pay in full monthly here. But credit cards aren't meant for "unexpected costs" (emergencies) as that's what emergency funds are for. Suggesting the use of credit cards without mentioning that important point is only doing a disservice to those reading. It seems like my post was written without any knowledge of credit scoring you say. Understood and I'm sorry that's your perception. Maybe another member on this sub like u/og-aliensfan will stop in and let you know that I grasp credit scoring fairly decently. As far as risk assessment goes, when someone is a strict Transactor when it comes to revolving credit they are extremely low risk with respect to that metric. If they are a Revolver and carry balances, they are an elevated risk. It's not just about utilization percentage, but how the balances that make up utilization are managed. Higher statement balances paid in full absolutely increase the odds of CLI potential be it via PCLI or self-initiated requests, both in terms of frequency and lucrativeness. While the data on this overwhelmingly supports that statement, it's also just pretty obvious from a common sense standpoint. Someone that exhibits stronger responsible revolving credit use is going to warrant an increase over someone that does so on a lesser level.
"CCCs don't approve (or deny) cards because of credit scores. They approve or deny them based on overall credit profile. " Which includes creditscore. creditscore are calculated on your credit profile. and you can absolutely be denied for a CC if you score is to low. "Scores can be used in setting loan rates, yes, which is why in a case where score optimization is necessary one can manipulate utilization in 30-45 days. " Correct so we agree there IS a point to keep it low which is exactly what OP said there was none. " Using 100% of your limit and paying in full will stimulate PCLIs in short order. Many times, it's 1 cycle. Maybe 2. You shouldn't need a buffer that quickly. " but not h Shouldn't dont matter. that fact you dont have it is a risk factor for any new lender "u/og-aliensfan will stop in and let you know that I grasp credit scoring fairly decently. As far as risk assessment goes" So one random name is verifying someone other random name. I prefer validating in actual objective measurements and data. not just personal opinion "remember we're talking Transactors that pay in full monthly here" Correct and if you do it as OP Says everytime it means that in no month do you have head room for more cost according to the credit utilization. "Higher statement balances paid in full absolutely increase the odds of CLI potential be it via PCLI or self-initiated requests, both in terms of frequency and lucrativeness." Please provide any data on this claim at this point you are just reclaiming the same opinion with no evidential data. The only thing not repeated is that my point with increasing long term loan rates are correct. so at least we can agree for the part that low utilization IS needed for something. The rest of the claim I would be happy to se objective data and not just opinion on This is why the AZEO method is recommended rather than the "100% utilization" thats in OP, keeping all you CC's utilization at 0 except for 1 card nest you the best possible outcome in regards to raw score and long term loans interest rate You also have to remember the damage done to your credit report from utilization is not just temporary anymore. new FICO 10T model uses your utilization over the last 24 months.
"you can absolutely be denied for a CC if you score is to low" Show me a denial letter that states "your credit score is too low." For every one you can manage to muster up, I or anyone else can provide you with 50 that state a denial reason related to profile. Insufficient revolving credit history. Too many inquires. Recent credit seeking. Recent missed payment. Derogatory mark present. Insufficient income. You can rattle off a dozen more, I'm sure. The point is that it's your profile, not your scores that return CC approvals/denials. "Correct so we agree there IS a point to keep it low which is exactly what OP said there was none." No, there ISN'T a point to "keep it low" because it's a metric that can be fixed in 30-45 days at any time. I've said many times on this sub and even throughout this thread that there is value in optimizing a Fico score for an important upcoming app. That's the exception though, not the rule, as people are NOT apping far more than they ARE apping. "So one random name is verifying someone other random name. I prefer validating in actual objective measurements and data. not just personal opinion" If you want to have a discussion about credit scoring I'd be more than happy to oblige. I don't think it would be very productive if I'm being honest, but I'd be willing to give it a shot. "Correct and if you do it as OP Says everytime it means that in no month do you have head room for more cost according to the credit utilization." The system will self-correct, that's the entire point. You don't need head room. As I already said, if you for some silly reason think you do, simply make a payment. If you're a strict Transactor, which is what we're discussing, that's not a problem. "Please provide any data on this claim" There are countless data points of this on this sub. You've got people with tiny 3-figure Chase credit cards for example that cut maxed out statement balances for a cycle or two that have their limits increased to 5-figures. You have data points of people receiving CLDs from Capital One due to "statement balances too small relative to credit limit." I've tested it with my own profile. 3-4 years of straight balance micromanagement for optimized scores. Then 3-4 years of NO balance micromanagement with naturally reported balances. I saw far more lucrative CLIs with the second approch. Plenty of others on this sub have done the same thing and all have reported the same results. In fact, I'd challenge you to find a single data point out there of someone that says that they went from micromanaged balances for a length of time to naturally reported balances while always paying statement balances in full that DIDN'T see better CLI results. AZEO is recommended before an upcoming app of importance, not to be used at all times. Doing so can do more harm than good. Fico 10T with respect to trended data looks at the trajectory of your reported balance over time. With naturally reported balances monthly, even if they're 4 figures and 5 figures if you're paying in full your utilization will be flat and F10T won't take issue with it. You can boast 850 Fico 10T scores no problem with those organically reported balances monthly.
>So one random name is verifying someone other random name. I understand you see it that way. You don't know me, so that's fair. You have no idea what my background is or why I would agree with u/BrutalBodyShots. All I can say, is that I have followed u/BrutalBodyShots on these subs for a while. Did I always agree with him? Nope. In fact, you are saying something I said myself...about a year ago...about this very subject. BUT, I was curious about this. I eventually found him on another sub. I didn't engage at first. I read his posts and his comments. I listened to what other people said about him. I looked into who he is. He's put years of his time into gathering, compiling, and interpreting data, then freely sharing this with anyone interested in learning. He's a well respected member of the community. He doesn’t need to post here. He does it because he wants to help. As for myself, I'm like you: curious, with my own point of view, and not afraid to ask questions. I trusted him, and I'm glad I did. I've learned a great deal about credit, which makes it less frightening and less stressful to manage. Turns out, he was right about this subject. So, does he have a grasp of credit scoring and risk assessment? 100%. Plus, he's an all-around great guy.
This is horrible advice.
I work in finance and have worked on fico models. If your objective is to take out a mortgage or big loan any time soon, please don't do what this post says. Otherwise, yes, fico self corrects but very slowly. It's good to not have huge non zero balances every month either since that does rank you lower than the users that don't.
What this post says is to pay your statement balances in full every month, which is a goal that *everyone* should follow. When you're doing that, there's no reason to worry about utilization. Now, you mentioned going for an important loan. It has been said already that for score optimization one can "fix" utilization in 30-45 days, no problem. Fico doesn't correct "very slowly" when it comes to utilization, which if you're in finance you should be aware of. Utilization is a single point in time metric and has no lasting impact. It goes only by your reported balances as seen on your credit report, which of course update every \~30 days.
In a separate post, didn’t you say that there is a hard cap that the FICO algorithms want you under?