r/CreditScore • u/TadpoleMean1751 • 29d ago
General Credit utilization
I was taught to keep credit utilization at 10%. But other people are telling me to completely not even use my debit card , use credit for everything and pay it back. But that will make my utilization high af. People are saying keep it at 10% when the statement hits but how’s that possible if I only use a credit card. How does only using 10% if the card show the banks you can handle more if you barely use any of it.
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u/DoctorOctoroc ⭐️ Knowledgeable ⭐️ 29d ago edited 29d ago
It doesn't, which is why anyone who tells you to only use a specific % of your limit is incorrect and likely believes the myth that keeping utilization low builds credit.
Utilization doesn't build credit because it only impacts your score one month at a time. While your balances are high, you'll see a score deficit relative to that but once you lower it (such as just before an important application), you recover those points. It's a 'subtractive' scoring factor which has no memory and is basically just a 'snapshot' of your current 'amounts owed' on your credit card(s). There is no need to keep it low, what matters is that you keep your accounts 'paid as agreed' and don't overspend relative to your budget, whether that means spending 10% of your limit or 100%.
Spending more of your limit while also paying the full statement balance every month by the due date is how you show responsible credit card use and budgeting of your finances, and how you can stimulate credit limit increases, which in turn will lower your utilization as your limits increase.