What Percentage Should You Keep Your Credit Card Balance

Keep a high score while still using your card your credit utilization ratio the amount you owe versus your total available credit comprises 30 percent of your credit score and is the second most important factor after on time bill payments. Your debt to credit limit ratio accounts for 30 percent of your credit score so charging less on your credit cards each month is one way to raise your score. The debt you carry on a credit card in proportion to the balance is called a utilization rate and credit bureaus respond more favorably to people with low utilization rates.

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However your credit score should improve if you lower your credit ratios on your four credit cards.

What percentage should you keep your credit card balance. Your credit utilization the percentage of your credit limit that you re using is one of the most important factors in determining your credit scores. For instance if you have a 10 000 spending limit on your visa keep your visa credit card balance below 3 000 at all times even if you pay your bill in full each month. Making payments if you want a credit card company to report a 0 balance to the credit bureaus you need to pay off the balance before the statement date rather than the due date for your payment. It s good for your credit score in reality there is absolutely no need for you to carry a balance on a credit card and it is not a good way to build a strong credit history.

The best utilization rate is 30 percent meaning you re not carrying a balance of more than 30 percent of your credit limit on one card or in total. Here s why it s important and how you could do it. Carrying a balance can in fact hurt both your credit score and your. So if you have a 900 limit on one credit card and spend 450 during one billing cycle your credit utilization ratio on that card would be 50 percent.

For more details see credit limit tricks. Best credit cards for fair credit you should pay attention to your credit utilization on each individual account and across all your credit cards. I am using about 40 of the available credit on two of the cards and approximately 80 on the other two. Keeping the balance well below a credit limit is a good sign that you consistently manage debt well and can improve credit scores.

For example that means your credit card balance should always be below 300 on a credit card with a 1 000 limit. You ve heard you should keep your credit card utilization under 30. All four cards have a total balance of about 3 500. Having become familiar with many of the inner workings of the fico scoring formula over the years i can tell you that a credit utilization percentage threshold is more like the sliding scale you describe than a hard and fast rule where as you say being one point over the magic number sends your score off a cliff.

With credit scoring it s important to understand that mathematical. You should carry a balance on a credit card they announce in authoritative voices. Lower balances will improve a credit score. If you want to improve and maintain a good credit score it s more reasonable to keep your balance at or below 30 of your credit limit.

I have four credit cards.