Credit utilization beginner

Submitted by Mr_shiftteam t3_yikquk in personalfinance

Hello I am about to get my first credit card and want to be sure about everything.

Say I use 30% of the card, but pay off the balance in full on or before the due date, would that mean the utilization is 0%? Or would it still be 30% for the month

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t-poke t1_iuj4vcx wrote

Utilization does not matter in the long run. Use the card as much as you want. Pay the statement balance before the due date. Simple as that.

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barrycarter t1_iuj5u0j wrote

Replying to t-poke (#396,525)

This statement is incorrect. Your credit score looks at utilization: how much credit you're using divided by how much credit you have available.

Even if you pay off your card monthly, the utilization is calculated at the time your credit report is pulled, so it's not always 0% even if you pay completely every month

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t-poke t1_iuj69ib wrote

Replying to barrycarter (#396,827)

Utilization has no memory. Your utilization in October won't mean a thing in November.

If you're not planning on applying for anything, then you don't need to worry about it. If you plan on applying for something, then pay down to zero right before your statement cuts so a zero balance is reported.

But the idea that you need to stay under 30% every month is completely false.

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DeluxeXL t1_iuj6mwx wrote

Replying to barrycarter (#396,827)

> This statement is incorrect. Your credit score looks at utilization: how much credit you're using divided by how much credit you have available.

Keyword "in the long run"

Unlike payment history and age of accounts, utilization is not a buildable component of credit scores because it gets reset by newer utilization data every month. The currently used FICO models do not look at past utilizations.

Most credit card companies report the statement balance as the utilization for that month. Some report the current balance on a fixed day of month. If you have to fine tune your utilization, look up the AZEO strategy.

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LOGICpremium t1_iujblhd wrote

I would suggest to just not max out your card and pay off your card at a schedule, for example I pay off mine every 2 weeks

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