How Much Credit Limit Should I Use?
Many people are confused and or misinformed when it comes to how much of your credit limit you should be using.
You have to remember, there is a big difference between the REPORTED Usage, and the ACTUAL Usage.
Reported Usage is the actual balance on the Credit Card Reporting Date.
Actual Usage is the total amount of spend on the card for the given statement cycle.
You can have a credit card with a $1,000 Credit Limit and max that thing out every week, pay it off to ZERO and max it out again the following week.
That will essentially give you a 400% Utilization Factor... which would tank your credit score... however, if on the REPORTING Date, you have that card paid down to only 1-3%, you will actually be helping your credit score.
Many people think that you can not use more than 30% of your credit limit, when in reality, you can use as much as you need to as long as you pay it off every week, and or make sure your monthly payments are always made before the due date.
To maximize your CREDIT SCORE, you want to make sure you REPORT no more than 1-3% on your Utilization factor, even if you are actually using significantly more than that.
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