Is it true that if you leave less than %30 of your credit limit on your credit cards that your fico score will go down compared to above %30?
It is the CC companies that perpetuate those rumors of improve your score by carrying a balanceRather than trying to "game the system" - just pay the cards off, whenever possible.peace & FICOt
From Clarkhoward.com:To build up your credit score...Always pay your bills on time and pay down the total amount you owe.(accounts for 35 percent of your score)If you forget all else after reading this, remember this one! This is the single most important rule for having a good credit score.Keep a low credit utilization rate.(accounts for 30 percent of your score)Let's say you have a credit card with a $10,000 limit. If you're carrying a balance month-to-month of $3,000, you're only using 30 percent of the total limit. But if your credit limit is suddenly dropped to $3,000, then suddenly you're using 100 percent of what's available to you. That's yet another reason to always pay down credit card debt as quickly as possible. You always want to stay at credit utilization of 30 percent or less.When you pay off a credit card, don't close the account. (accounts for 15 percent of your score)Doing so only reduces your available credit and drives your score down. You want to have between four to six lines of credit. Be sure to use them twice a year -- even if it's just for a dollar store purchase -- and pay them off right away. That will keep them active in your credit mix.The remaining 20% of your credit score is comprised of what types of credit make up your credit mix (10%) and how much new credit you have in your life and how quickly you took it on (10%).http://www.clarkhoward.com/news/clark-howard/personal-financ...FuskieWho believes your statement is correct, he just hasn't heard it expressed that way before...
Is it true that if you leave less than %30 of your credit limit on your credit cards that your fico score will go down compared to above %30? Yes, but that isn't the entire story. The higher the credit usage percentage for both overall and individual accounts, the lower your FICO score. 70% usage is one level. It isn't the only level. As usage increases from 10% to 20% to 50% and beyond, your credit score decreases. The best goal is to not carry credit card debt. Pay it off each billing period, and you don't have to worry. If you apply for a mortgage or major credit, switch to paying the balance before it is billed.
Is it true that if you leave less than %30 of your credit limit on your credit cards that your fico score will go down compared to above %30?As always, with credit scores, the answer is "It depends". In general, the less of your credit limits you utilize, the higher your score will be. There are often 'break-points' where your score can increase/decrease by several points depending on where you fall. However, where the break-points for you can be different than where they are for someone else, depending on your individual credit histories. The break-points can also be different depending on whether you are looking at your overall utilization percentage or the utilization of each individual credit line. The rule of thumb to get the highest credit score is to keep credit utilization, both overall, and for each individual credit line, below 10%.If you are interested in seeing how your particular score will react to lower/higher balances being reported, you can use the credit simulator at www.creditkarma.com You will need to register so that the site can access your credit report information. Then look for the "credit score simulator" page. Under the "payments" category, there is a scale where you can increase/decrease your balances, and see score estimates based on different balances being reported for your current credit limits.AJ
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