Credit card utilisation

james3012

I wonder if someone could help me regarding exactly what is meant by credit card utilisation percentages - various sites/advice boards say don't use more than x% etc as it looks as though you're dependent on credit.  I've just opened a British Airways Amex - so with my 4k credit limit, does the utilisation mean don't ever spend more than, say, 2k in a month, or does it mean don't carry a balance of more than 2k or whatever? (I will be paying it off in full regardless, but would like to be able to use it as much as humanly possible, for extra Avios points (airmiles).

many thanks

[Deleted User]

Utilisation is only a factor if you're not clearing the balance.

The more of your available credit you're using and not repaying, the greater the risk present to lenders.

cymruchris

It's interesting that I spend on my cards regularly - and have paid them off in full every single month without fail - yet the wonderful credit agencies are telling me on a monthly basis that my utilisation is too high - and that I have cards that are over 50 percent and I should consider reducing my reliance on credit - yet all I'm doing is spending and paying it back. I don't think the CRA's actually link balances to payments - and solely look at the snapshot balances to make their recommendations and comments. Others have often said that utilisation isn't a factor as long as you're paying off in full - it would be nice if the CRA's also supported this view with a little more clarity.

2e0arr

Ive never had any such message from a CC company ?

jimbo26

cymruchris said:

It's interesting that I spend on my cards regularly - and have paid them off in full every single month without fail - yet the wonderful credit agencies are telling me on a monthly basis that my utilisation is too high - and that I have cards that are over 50 percent and I should consider reducing my reliance on credit - yet all I'm doing is spending and paying it back. I don't think the CRA's actually link balances to payments - and solely look at the snapshot balances to make their recommendations and comments. Others have often said that utilisation isn't a factor as long as you're paying off in full - it would be nice if the CRA's also supported this view with a little more clarity.

I think what they provide consumers is quite crude. I only use them to look at what is recorded, and not their interpretation of the data. Clearscore even shows a different % of utilisation on the app than on their website!

cymruchris

2e0arr said:

Ive never had any such message from a CC company ?

It's not the CC company - it's the messages shown on the various CRA reports - usually in their 'What you're doing well' or 'What you need to improve' sections.

buzzbee20

If you spend £1000 on a credit limit of £1500 each month and pay off in full, your utilization will be high (66%) and will impact your score. 
However, if you spend £1000 on a credit limit of £5000 and pay off in full, your utilization will be low (20%) and will improve your score. 

Even though you have paid it off in full after your statement was produced, the snapshot of how much you spent is used to show how reliant on credit you were for that month.

Try to increase your limit or apply for a new card after 6 months but keep all cards open as the limit on each card adds up.  

[Deleted User]

If you're clearing in full, you're demonstrating that you're not reliant on credit.

Whether the CRA decides to drop a score or not will have no impact on how lenders view full balance payers.

cymruchris

Deleted_User said:

If you're clearing in full, you're demonstrating that you're not reliant on credit.

Whether the CRA decides to drop a score or not will have no impact on how lenders view full balance payers.

I agree with you - I'm confident the lenders would see it as a full balance paying account on an ongoing monthly basis - just wish the CRA's would build something into their magic software to recognise full balance payers, and stop telling us that our credit utilisation is bad.