High Credit Utilization on a Low-Limit Card

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High Credit Utilization on a Low-Limit Card

Postby Austin » Mon Nov 03, 2014 12:16 am

Hi all,

I'm in college and just received a StateFarm student Visa card this summer, my first credit card. I started using it for all of my purchases because I like the lack of fraud responsibility compared to a debit and because I read that the more you use your card the quicker your credit score increases. Also, I just read another article that says if you have a high credit utilization that hurts your credit score. I have a $500 limit and I usual put $450/month on the card. I pay it off every month (I'm very lucky to have a decent job in college) and I've never been late on a payment. ...but if I go back to using my debit card more again will that help my credit score more? I don't know, I'm confused about the issue. Help?

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Postby Brad Bishop » Mon Nov 03, 2014 12:59 pm

If you're paying it off each month then I wouldn't worry about it. You've your foot in the door and you're not being irresponsible. You'll get a CLI or another card soon enough.

Maybe call the bank and ask them to up the limit.

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Postby Vattené » Mon Nov 03, 2014 3:51 pm

Yep, as long as you are paying in full you're good. Keep using the card and avoiding interest fees.

You CAN make payments shortly before the balance is reported to get the utilization down, but I agree there is no need to worry about this. Utilization for credit-reporting purposes is just a snapshot in time (whereas the other factors have a long memory), so if you won't be taking out a loan in the next month it will have no impact on you.
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Postby takeshi » Tue Nov 04, 2014 8:21 am

Brad Bishop wrote:If you're paying it off each month then I wouldn't worry about it.

Paying in full doesn't necessarily mean that utilization doesn't matter. If paid after the account reports then the account could be consistently reporting high utilization and 450/500 is 90%. It probably won't be an issue with the creditor that the card belongs to but it may not appear favorable to other creditors reviewing the OP's reports. OP could do some testing to see if there's much to gain by managing reported utilization on the card.

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