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Regarding Credit Card Utilisation
Hello Everyone,
Is it really necessary to keep credit card utilisation below a certain percentage of the overall limit even if the credit is paid in full every month?
Thank you
Comments
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No.
Unless of course you get unnecessarily spooked by the nonsense that the CRAs continually send you.0 -
Each lender has its own underwriting algorithm that is a highly confidential corporate secret. Unless you can find someone who has worked on the algorithm of every major lender there is no way to give a universal answer and even if you found such a person the chances are that the one they worked on first is no longer the same as it was when they did work on it as these things are frequently being refined and updated.
The problem with lending is that many things are interlinked or give mixed messages, so in general you would say no, if you are clearing your balances each month then they won't care about the utilisation rates however lenders like to see that other lenders trust you and if you are saying that every month you are hitting 75% utilisation and can afford to pay it off in full that would suggest that your limit to income ratio is fairly low which itself may be a cause of concern as to why others arent trusting you with higher limits.
By comparison, I currently have 4 credit cards with a combined limit of nearly £100k and there is no way I could hit a high utilisation rate and afford to pay each month.
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it depends on how important your credit score is other than that no , but if you have a credit card with over 50% usange your credit score will take a hit
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In simple terms NO.
Credit Score is a meaning less figure, never seen by any lender, all lenders look at is your credit history (missed payments etc) & affordability.
All that is is CRA trying to spook you in to using the cards, so they can try & sell more.
Life in the slow lane0 -
Fortunately the credit score is a marketing gimmick with no real world application
Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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unless you want to take out a loan or credit card
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No lender sees the 'score' generated by the Credit Reference Agencies so it is pretty irrelevant.
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Where the made up score punted by the CRAs is of no relevance whatsoever. The only score that matters is the one based on top secret factors that the individual lender uses.
One of my CCs is sitting at 99.5% usage and will stay there until July 2027, my overall CC use though is 10% and only brought up from the previous 4% by that stooze. I just opened another credit card - Amazon BC for the £50 bribe - so it can't hurt that much
Never associate with idiots on their own level, because, being an intelligent man, you'll try to deal with them on their level - and on their level they'll beat you every time.
Being hated by idiots is the price you pay for not being one of them.
Jean Cocteau 1889-1963
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Lenders take the data on your file and put it through their own scoring systems which you will never see. The CRA number you see is not only never used by, it's not even seen by lenders, it plays no part in any decision
Sam Vimes' Boots Theory of Socioeconomic Unfairness:
People are rich because they spend less money. A poor man buys $10 boots that last a season or two before he's walking in wet shoes and has to buy another pair. A rich man buys $50 boots that are made better and give him 10 years of dry feet. The poor man has spent $100 over those 10 years and still has wet feet.
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