Will increasing utilization to 33% hurt my credit?

Discuss the Visa & MasterCard payment networks as well as cards that operate through them.
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Will increasing utilization to 33% hurt my credit?

Postby sleepysentry » Sun Aug 21, 2011 5:04 pm

I'm a college student with a Citi Forward card and a $2,000 monthly limit. I've had the card for four months and pay it off monthly. I have never utilized more than 20% of my credit because I have no credit history and want a good score. My long-term plan is to qualify for an American Express in a year or so, and I may get a car loan around the same time.

There's a $670 camera lens I want to put on my Forward for the one-year warranty, but this would put my utilization at 33%. I'm going to be in Germany for the next year, where I probably utilize no more than 5% or 10% of my credit for the next 12 months.

Will putting this on my card impact my credit? I would like to have the warranty, but I see no point in using this benefit if it's going to hurt my credit.

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Postby sticf » Sun Aug 21, 2011 5:31 pm

The percentage of CC utilization is more a "rule of thumb" than an absolute limit. In my experience it only applies to charges that are on the card when it is reported to the credit bureau. In other words, most CCs do not take your high balance for the report. If you charge the lens and pay off the debit before the Citi reports to the bureau it should never hit your report. In my experience banks report right around the time of your statement (your mileage may vary).

Hope it helps.

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Postby LTomBerry » Tue Aug 23, 2011 10:45 am

Keep in mind your score only matters when you are applying for credit. If you're not planning on getting another card for a year, it's no big deal if you make a large purchase this month, even if it shows up on your report and the util affects your score a little. As soon as you pay in full next month your score will go right back up to where it was before. Banks care what your score is when you apply, not what it was a year ago. In other words, don't let a temporary change to your score affect your decision to buy something you need.

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