How much of my credit line should I use on my credit card account?

Guest: jason2004
Post subject: How much of my credit line should I use on my credit card account?
Posted: Thu Jan 13, 2005 4:45 pm

fotomaniak wrote:
Fess wrote:
Quote:
2) don't utilize more than 49% of your credit line on each card and don't utilize more than 49% of your total revolving credit limit.



thanks for responding, she has a secured mastercard with $500 limit.

When you say don't utilize more than 49% of the credit line on the card, she should not exceed $245 or so?


if her total credit limit is $500, then yes, $245 is 49% of the credit limit.

you also should try not to exceed 49% utilization on the cards where your mom will be an authorized user.

If you need to charge more than $245 per month then you can just make additional payments.
keep in mind that:
a) if you have negative balance(i.e. prepay) it will probably show up as positive balance on your credit report. I.e. if you have -$700 (a credit of 700) balance it'll show up at $700 which might look bad(and odd) considering you only have $500 credit line.
b) if you purchased something with a credit card and paid the balance off, a credit card might consider that by paying of the balance you agree that the charges are legit and you may loose your right to dispute.

so, I'd say, to avoid any complications, it's probably best to use the card to pay a couple of small recurring bills per month (i.e. phone and cable) so that the total amount will be less than 50% and there is no need to check the balance every day. To show more activity your mom can use the card for small purchases once in a while, but for the most part, card can be just kept in the drawer for now.


Where did you found 49%.
Recomennded is 15-20%

Jason
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Guest: Fess
Posted: Thu Jan 13, 2005 4:49 pm

fotomaniak

I understand fairly what you're saying.

I need to read up on FICO scoring to gain some confidence on this subject.

Thanks for the input

Regards
Fess

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Guest: NightStar
Board Monitor/ Administrator
Posted: Thu Jan 13, 2005 9:49 pm

I thnk step laddering down as need be is fine enough to set goals, like if you are on the hgih side, then worry first about getting ALL cards below 60% utilization, then once you have that down out of critical level, then shoot for below 40%, and go from there.

If there are multiple cards, then you want to bring them all down as best you can instead of just one, then moving to the next. Least scoring wise that would be the best approach.
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Guest: Fess
Posted: Fri Jan 14, 2005 8:25 am

Quote:
I thnk step laddering down as need be is fine enough to set goals, like if you are on the hgih side, then worry first about getting ALL cards below 60% utilization, then once you have that down out of critical level, then shoot for below 40%, and go from there


Well, I'm not over 60% on my card. But that just becasue I'm a careful spender.

Wasn't aware that it wasn't good to 'utilize' the limit on the card.

I've got some work to do in regards to getting some more cards and FICO research.

Thank for the input
Regards
Fess

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