My understanding is that having 0% credit utilization is slightly worse for your credit rating than having 1%-10% credit utilization. That doesn't mean that you should only pay the minimum. My approach is to regularly pay them down to a $10 balance; it's possible this is pointless because it's rounded down to 0% in their calculations anyway, I'm not sure.
If you carry a $10 balance, you're probably giving up the free float. Since I pay the card off each month, I get between 31 and 61 days of free float on purchases. If I don't pay it off in a given month, finance charges accrue from the date the charge is posted.
As to having utilization on the card, normal usage is enough to ensure that there is always a balance due on the card anyway. (If you spend money on the card regularly, the payment you send in August is for things you bought in July and by the time it posts, you have more August charges on the card, meaning the balance is only ever zero if you do a massive return or if you have a multi-week spending embargo hit at just the time the credit company pulls your report.)
> If you carry a $10 balance, you're probably giving up the free float.
Not sure what the mechanics are behind the scenes, but I keep an eye out for interest charges and I haven't seen any for years.
> meaning the balance is only ever zero if you do a massive return or if you have a multi-week spending embargo hit at just the time the credit company pulls your report.
I think I implemented the $10 policy because I wasn't using my cards very much at the time. Your system makes the most sense for anyone who uses their card regularly.
Your credit card utilization is a snapshot at a random day in the month. I pay off all my CCs in full every month, every credit report I have seen of myself show 1-90% utilization of all of my credit cards.
(The 90% is my Target Redcard with a $300 limit, pretty easy to max that puppy out... in fact its bad for my credit to even use, as the 90% utilization makes me look in trouble, but it can be hard to pass up 5% savings..)
Hah they actually told me "we are not giving credit card increases at this time" for like 3 years. Then they finally sold the business. Then I think I got a bump to 1000? Which still means if I buy an electronic device, I hit 50% utilization pretty quick.
That is simply not true. There are many factors influencing your credit score in the US, however as far as credit utilization goes, the lower the better. Your credit score is based on how much unused credit you have.
Your bank may not want to increase the limit on a credit card you never use, but that's about it. If you want a high credit score, get the highest limit you can, always pay it off, keep it around for a long time, and never miss a payment for over a month. You also want multiple lenders (a single credit card won't, or multiple ones from the same bank won't cut it).
