When is ten percent credit utilization recommended?

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When is ten percent credit utilization recommended?

Postby 432521 » Sun May 06, 2012 8:56 pm

So I am pretty new to the credit game and was wondering if someone could help me out a little. I have been reading around these past couple of days and this utilization thing keeps on popping up.

So my longest standing credit line is my Wells Fargo college cash back card and I have had it for a little over a year now. The thing is my limit is 1.500 and I usually spend around 200-300 sometimes a little more. Is that a good amount to be charging on this card? People say to only use 10% and I don't really understand why.

I also keep on reading something along the lines of having 0 balance statements is a good thing, so does that mean I should pay my bill before my statement comes in? Like I usually get my statement through WellsFargo.com on like the 22 or 23 of the month. Should I pay it before then and get a billing statement that is 0 dollars instead of my usual 200-300?
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Postby BCF » Sun May 06, 2012 10:57 pm

credit utilization is a factor in your score. Unlike the other factors, like age of accounts or on time payment, it has a temporary effect. So, when you plan to apply for a credit card, it is better to payoff your credit cards before closing date so the utilization would be zero. If you are not going to apply for a credit card next month you shouldn't worry about it.
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Postby Maximilian » Mon May 07, 2012 10:36 am

The 10% credit utilization applies if:
1. You want to carry a balance
2. You want to pay your bill 'after' the statement closing date. (cycle closing)

For instance, I have a Wells Fargo account with $10K credit limit. I charge between $8-9K/month of my business expenses on this card , BUT I pay the balance in full before the cycle is closed. So long as you pay your balance in full and/or only carry a 10% balance before the closing of cycle, you're good.

You should call your bank and find out what date your cycle closes. Some banks like Wells Fargo don't have a definite closing date. You have to call every month to find out. For example mine closes sometime between 10th to 14th of each month. That said, some banks have a definite closing date, which again varies from one card member to another. With Bank of America my closing date is 10th of each month. Therefore I pay my bill in full before those dates.


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Postby Money card » Tue May 08, 2012 9:46 pm

So since you're in college, I would suggest saving money and only spending when you have to.

For example if someone in your family is celebrating a birthday, that's a reason to go shopping at your local mall. You might want to buy mom a gift for mothers day, take mom out to dinner that's fine.

If the 300.00 is necessary then that's fine, but I just wouldn't spend to spend, I would spend if there's a reason to.

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Postby DavidNY » Wed May 09, 2012 9:56 am

The statement closing date does not necessarily coincide with the monthly reporting date.

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Postby danpass » Mon May 14, 2012 10:15 pm

In my experience my cards report on the statement closing or within 3 days of it. So if you have 100,000,000,000 in total limits and rack them all up BUT pay off each one a couple of days before the statement closing date, then leave a buffer (say 3 days of 0.00 utilization) you'll very likely show 0% utilization.

In terms of credit score the balance only matters when the card reports to the credit bureaus.

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