Utilisation Ratio

sultanoflondon

Hi team,

Don’t think I’ve seen a consensus answer to this: how much of your limit should you use on a given card (0% on purchases, or Balance Transfer, or Money Transfer)? I’ve heard 50%, a third, or even the full 90-95%.

Assume that don’t want to decimate my credit score, and that I will need to apply for new cards within the next 6-12 months.

Cheers & Merry Christmas all!

MyRealNameToo

sultanoflondon said:

Hi team,

Don’t think I’ve seen a consensus answer to this: how much of your limit should you use on a given card (0% on purchases, or Balance Transfer, or Money Transfer)? I’ve heard 50%, a third, or even the full 90-95%.

Assume that don’t want to decimate my credit score, and that I will need to apply for new cards within the next 6-12 months.

Cheers & Merry Christmas all!

Lenders dont see credit scores, they're something made up by the Marketing Department of the CRAs, but instead get your credit history and make their own decisions based on that. Each firm can come up with whatever logic they feel is right and so there is a no single universal answer and hence when the same person applies to multiple lenders they get different responses. 

Some may not consider anything on a 0% balance, others may consider it. Certainly from an affordability perspective they should be considering your currently available capacity and how affordable it would be for you if you went on a splurge. They may also see a recent increase in outstanding balances more of a worry than an older one that you have been steadily paying down. 

Historically, especially when they predominately issued charge cards, AmEx used to be one that disliked standing balances whereas clearly MBNA have a more liberal approach given the size of the limit they provided to me with an outstanding balance. 

kempiejon

In my stable cards of I have some with zero balances, biding their time for a repeat offer, others 90% occasionally a touch more as when I'm using the CC's capital, interest free and for my own furtherment I want to use as much as possible. And all amounts in between, I have a pair spending cards that I clear every month, 3 with stoozed balances and another handful with zero.
As mentioned I doubt there's a rule as to what is best, it's history of good payment management and whatever risks and customer profils the issuer is looking at.