Best credit utilization ratio for good credit score?

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zapper_89
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Best credit utilization ratio for good credit score?

Postby zapper_89 » Wed Aug 31, 2011 10:14 am

I understand that as a rule of thumb, you should not charge more than 10% or 20% of your total credit limit. I pay everything off at the end of the month, so I am not planning on holding balances. I have $20,000 available listed on my CR, which is good because my monthly payments rarely exceed $3000.

However, I also know that the card issuers like to see usage. Not only do that want to see regular use but they also want to see a large balance. I am considering cycling though my cards over the next few months, so that the "maximum balance," is relatively close to the limit. Obviously I will still pay it off each month, I just want to improve my FICO score.

1. Is this a good idea?

2. Does past utilization affect your long term score, or just the current month?

3. Is it a problem if the utilization is very high on just one card?

4. I plan on asking AMEX in 61 day to increase my CL on my new card from them. I hope to move from $2,000 to $6,000. Should I make the balance for each month as close to $2,000 as I can over the next two months?


ooxs
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Postby ooxs » Wed Aug 31, 2011 4:08 pm

Rarely do i get an alert from MyFico that my score went up due to an account balance increase, for the most part i get notified that my score is down a few points because an account of A balance increase on an account. While i don't know what the computation formula is or how it is calculated, i can safely say that every time my balance goes up, i will see a drop of 5 to 10 points.

zapper_89
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Postby zapper_89 » Wed Aug 31, 2011 4:25 pm

ooxs wrote:Rarely do i get an alert from MyFico that my score went up due to an account balance increase, for the most part i get notified that my score is down a few points because an account of A balance increase on an account. While i don't know what the computation formula is or how it is calculated, i can safely say that every time my balance goes up, i will see a drop of 5 to 10 points.


Certainly that is the case in the short run, but your score will jump right up once the bills are paid. I am interested in the long term ramification, the big picture. I have already done several hour of research on this issue, but I still lack definitive answers. I understand this is primarily due to the system mechanics remaining a secret, but someone should be able to take a better educated guess than me.

On the CR it lists the CL and the highest credit used (HCU). Do you want the HCU to be near the CL or way below? Is this even scored?

ooxs
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Postby ooxs » Wed Aug 31, 2011 5:30 pm

I have to agree with you with everything. I myself will like some light on this issue; hopefully we can get some light on this topic.



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