You May Be Getting the 30% Credit Utilization Rule Wrong - How it Works & How to Improve It
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- Опубліковано 18 жов 2024
- What is the 30% credit utilization rule? Are you only supposed to use 30% of your credit card?
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Hello Guys! Welcome and In this video, I will discuss The golden 30% Credit Utilization Rule for Credit Cards.
Using no more than 30% of your credit limits is a guideline, not a rule - and using less is better for your score. Many credit experts say you should keep your credit utilization ratio the percentage of your total credit that you use below 30% to maintain a good or excellent credit score.
The 30% level is not a target, but rather is a maximum limit. Exceeding that level will have a significantly negative impact on credit scores. The lower a person’s utilization rate, the better from a scoring standpoint.
Credit utilization is a major factor in your credit score, so it pays to keep an eye on it. It’s commonly said that you should aim to use less than 30% of your available credit, and that’s a good rule to follow. But there’s really no magical utilization rate cutoff for every scoring model.
Using less of your available credit is generally best for your credit scores because using a large amount of your available credit could mean you’ll have trouble repaying that debt. If you want to keep your scores healthy and your credit reports in good shape, you should try to use as little of your credit as possible.
But the right utilization rate for you might depend on a number of factors, including the state of your credit reports in general, the number of credit accounts you use, and your overall financial health.
Keeping up with what percentage of your credit limits you're using is easier than you may think.
To know more please watch the full video and feel free to use the comment box to share your curiosity and thoughts. We love hearing from you.
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your the only person who didn’t over complicate this, you made this more simpler i appreciate it
Thank you Family, I appreciate the feedback 🙏🏿
Thank you so much for the advice.. I’m on my way to good credit 🎉
You're welcome. I'm glad I could be of some help to you.
Basic information, but im glad you're helping people
Bro, those rabbits🤣🤣🤣...nice!
😅
This was really good. Thanks for talking about the individual card of 30 percent not just the total. Awesome!!! Thank you!!!
Thanks for the feedback family. I truly appreciate that🙌🏿💖🙌🏿
Thank you! I am 28 and just got my first credit card (cash rewards) and I’m learning a lot by watching you. I wish I would have found you prior to adding my daughters to it though. The bank lady said that it would help them also and so I did. Not realizing that after in the future if and when I take them off it is as if they never had none.
What you want to do is use the time when they turn 18 to apply for all of their credit needs while their Credit Score is high.
Apply for;
1) Revolving Checking Line of Credit
2) 2 Credit Cards
3) Do those with a bank and with a Credit Union
4) Once they get approve then you may remove them from your Credit
Awesome Job, I just liked and subscribed 👍🏿
Thank you Toochie and welcome to the family!!
I like how you say credit cards!!! This is a great example, it is based on individual and total usage.
☺☺
@@MoneyMelJr I would like to do a collab with you regarding utilization. Please let me know if you are interested?
@@MAJORCHANGEGROUP Yes, I'm interested. That sounds great! Let's put it together.
@@MoneyMelJr Yay!!!
Thank You so much 😊. You don’t know how many questions you have answered for me. New subscriber, by the way!!!
Welcome to the family Sharika
Whats the best way to pay it back ...minimum payment or pay it off and use the 30% again ?
Pay it off, then use the 30% again.
You actually can use however much you like. Just pay it off when it's due.
Very well explained Mel you the man. Hopefully everyone got the point which was transfer at least $2501 of that $4,000 card over to one of the other higher balance cards cards to drop all accounts back below 30% if you believe it will register on your statement.
🙌🏿💯🙌🏿💯🙌🏿
Thank You Money Mel. First time listening to this information
Exsactly the info I wanted! Thank you
You're welcome family. I'm glad I could be of some value.
Is there any benefit to having let’s say 1% carry over into the next billing cycle as opposed to having it all paid off every billing cycle?
That changes from company to company.
With dealing specifically with your Credit Score. The lower your debt usage the more points you receive for that category.
@@MoneyMelJr gotcha. Thank you that helps a lot. I'll just continue to pay off all my debt each billing cycle to grow my credit score. Its been working for me so far.
No problem Bryce, that's what family is for.
You taught that really well teacher!!! Thanks for the information. I definitely thought the 30% rule applied to the overall, but I guess to maximize the points it is looked at individually to. However, since that’s the case why are other cards recommended to lower your credit card utilization?
1) Other cards are recommended to lower your overall utilization because it raises your overall available credit.
2) Even though your overall credit will be raised. Your credit score points won't be maximized if your individual cards are above 30%.
The information, personality, and dialect gets a like from me.
Thank Family
Big dog I just got my first credit card 3 months ago, I was swiping the hell out of it not knowing nothing with a 500 credit limit, but I stayed on top of paying it off in the 30 days .... What's ya thoughts or any advice, I prolly went up 30 points in 3 months
1) Congratulations on the new card.
2) Just make sure you NEVER miss a payment or have a late payment over 30 days.
3) If possible NEVER allow the statement balance to be over 30%.
4) If possible don't allow the statement balance to go over 9%
@@MoneyMelJr preciate you bro 🤝🏿 keep elevating and enlightening the people💯
Thank you family! That means a lot to me 🙌🏿💯🙌🏿
Great breakdown. Thank you!
You're welcome Family!!
Hi, great video! I have questions tho. I just applied for my first credit card and my limit is 500. If I spend more than 150 (which is my current 30%) will my credit go down? Or If I spend let’s say 50% which is 250 and on the monthly bill i pay the full 250 will my credit be good? And lastly can I spend 30% or just below and pay it early, and then do the same without hurting my credit?
Hello (Family) Juanmi!
1) Congratulations on getting your first Credit Card!
2) If you spend more than $150 (30%) no, your Credit Score will not go down.
3) You can max out your credit card just as long as you don't carry over a balance that's higher than 30%. The lower the better.
4) You can always pay your bill early. Just remember to not use your card again until after the statement close.
Excellent video! Rules is the rules
Formula is they game.
Here’s my advice. Pay if off regardless if you go over your credit utilization. However if you want your credit score higher because you are going to apply another loan.
Money talks formula works.
yeah, I just made a big purchase on an intro 0%apr credit card but it put me at a 70% utilization for that card. I made a big payment so now its down to 30%. I wish I could get higher limits but I dont make enough money to qualify for them yet.
It all takes time. In the mean time let's try to keep that utilization under 9% during balance time.
Lets say i used more than 30% or 80% when the due date or before i pay it in full
Ifbit goes after your due date and carry over to the next month, it will report negatively on your report.
@@MoneyMelJr you meant that whatever amount i dont pay before the due date it will report to the creditor right altough i heard people often say that you can max it out your card but before the due date make sure is under 30%
Only the balance remaining after your statement closes will report. No balance you may have had before the due date will report if you pay it off.
Oh k thank you 🙏🏽
No problem, that's what family is for.
Thank you. I just had a mental block when trying to figure out how to get my cards to thirty percent.
No problem! We're family, I'm always here for you🙌🙌✨✨🙌🙌
@@MoneyMelJr so you realistically wanna be under 30% on all cards that way your under 30 total and individually
That's is 100% Correct Richy. 🙌🏿💯🙌🏿
Thanks bro for the correct information well appreciated
No problem Family! Thanks for being apart of the team.
Hey my man, I appreciate the video and what you doing for us credit noobs, I do have a question for you though.. will spending OVER 30% of your credit card/cards usage but paying it ALL off before your bill is due, still hurt your credit, from where you spent over 30% but had it all payed off or even below 30% before your bill is due? Or should you ALWAYS keep your cards under 30% at all times?
1) No, that will not hurt your credit.
2) You can actually max your card out and pay it all off on your due date and still have excellent credit.
So explicit 👌🏽👌🏽👌🏽✊🏽✊🏽✊🏽👏🏽👏🏽👏🏽🙏🏾🙏🏾🙏🏾
Thank you family. I truly appreciate your feedback 🙏🏿💯🙏🏿
so let’s say I spend 50% and when when it comes time to pay I can pay 30% and leave a 20% balance on my statement?
Yes
Hey first time credit card user. My limit is 1000 and already used 70 percent. My statement date is the 25th of this month and due date is July 20th. Should I put back money before my statement date to make my utilization use at 20-30%
Thanks for the content! After the 30% utilization is reached, does that mean you shouldn't use the rest of the credited funds? Does the 30% rule apply per month or per year?
Also if you're approved for 1,500 and you use 30% of that for the month leaving your balance at 1,050, would the 30% utilization rate be on the initial 1,500 or the current 1,050 balance?
Thanks for your help!
Don't go over 30% per billing cycle
What that means is that you can max the card out. But when it comes time to pay your bill make sure you pay it to at least 30%
@@MoneyMelJr hey bro If I have 300 in my capital one spending limit. So your saying I can use the 300 in full and pay it down to 30 % by my due date? How do I multiply or divide the 300 into 30 % to get the percentage I would need to pay by my due date?
@@FelonWitADream
Total: $300
Times: 0.30 (30%)
Equal: The highest amount you can carry over. (Answer= $90)
@@MoneyMelJr hey man I got 1.9k limit in my chase card. This is my first time applying. Was wondering if you can explain a bit more on what you said to Frankie Garcia about spending the full amount but paying a % back ?
Also does this affect your credit…spending all your limit or more than 30% ?
So to summarize everything. If I use one credit card and my limit is 500? I should aim at spending less than 150. That in some way proves I'm don't that dependent on the card. That's some good advice there. You earned yourself a sub!!
Thanks for becoming apart of the Family Wolf.
Keep I'm mind, you can spend whatever you want on the card. You can even max it out, but don't carry over more than 30% balance on your statement.
The 30% is pertaining to your statement balance not how much you can spend on the card.
@@MoneyMelJr ohhh gotcha. So if you have a 500 credit you can use it all.. if you can pay that by the due date that's perfect and if you cant make sure to pay enough so you don't carry over 150 to your statement. Correct?
You are 100% Correct 🎉😎🎉
@@MoneyMelJr so my payment due date is on the 17th and the statement date is on the 23rd. I went over the 30%, if I pay the full amount at the end of the month will I be fine? Or do I have to pay a little bit of it now to get it below 30% then pay it in full at the end of the month?
1) If you can pay your balance in full pay it in full on the due date.
2) Then do not use it again until the 24th (after the statement close)
So are we suppose to keep using the credit card as long as it is under 30% and pay it off the next day and keep using it multiple times a month or use to one time a month under 30% and pay it off
You can use it as much as you like. Just make sure when you pay the balance that you don't leave more than 30% on your card. Also do not use your card again until your statement reports.
I am very new at this credit stuff and I’ve recently been using my new credit card from capital one and I accidentally spend over 30% I did not know about this what’s gonna happen? 😳
Don't worry, nothing is wrong with spending over 30% on your card. Just pay your balance down to at least 9% on the due date.
Oh ok thank you ! I got worried lol
Would using 100% of a credit card with 0% APR for the first 15 months hurt your credit more over getting a personal loan? If you are going to pay the card off within that 15 month period you’d save money over the loan. But how badly would that affect your credit carrying that balance for such a long period? Is it smarter to just get the loan and pay the fees/ interest?
If you're going to need credit it's best to choose the personal loan. If you wont need to use any credit within that 15 month period then it doesn't matter witch one you choose.
1) For credit score purposes it will harm your credit more if you max out your card for 15 months.
2) Check what your credit history age will be if you add another credit account if you open that new loan. That also can harm you if the age is less that 5 to 9 years.
Thanks bro, you explained this better than Anybody
You're welcome LeBron
Just reading through message and came upon yours again. Thanks for the love, I appreciate you family!
Replayer HERE 💕
I want to know what bob does to pay 19 k in a month or two.
Cloud Engineer
What's up my man great video I just got my second credit card about a week ago what I planned on doing is the same as my other credit card I'm gonna keep them right below the 30% limit on each one like you stated in the video but since I'm new to this I have a cpl questions so my one credit card is a $6000 limit so 1800 is 30% the new one is $3000 so $900 would be 30% on that one let's say I rack up just about 30% on a card or say both of em in like 2 weeks and the bills aren't due for another 2-2.5 weeks will it be better if i pay it off soon as i hit right about that 30% limit or wait like a week-10 days before every time it's due then pay them off? will that help as well? Thank you too my man i appreciate your help and final question if i continuously pay em off right at just about the 30% limit will it help to get more credit cards if I'm gonna do the same on all of them ?
Thanks!
-Dylan
Hey Dylan! I hope you had a good day today.
Just as long as you have them at 30% or less by the time you pay on the due date.
Just remember this. When the due date is due pay the bill and don't use it again until after the statement has closed. You can find the statement date by calling your credit provider or looking in your card app.
Also the 30% rule only applies to the balance not to how much you can spend.
I appreciate it bro thank you! So for example right now I have no debt that I owe besides my credit cards of course and I'm just trying to boost my score as quickly as possible so right now my one credit cards almost to the 30% limit ($900, $3000 limit) that one shows the bill is due October 2nd with a minimum payment of $35 due on that date 13 days from now, I was gonna pay it off in full today concidering I'm at like 27-28% of the limit. So would you recommend waiting a little longer or go ahead and pay it off in full today and don't use it again till the next cycle starts in 13 days?
Also let's say for one of my cards I pay off in full early then when the new cycle starts I spend 30% of the credit cards limit in terms of boosting my credit score faster would it be a pro or a con to pay it off in full soon as it hits between 28-30% ? Thank you again by the way boss I really appreciate it
Always pro to pat your card to 0%-3%
Hi! I have a question. So most cards offer a bonus of some sort when you spend a certain amount within a certain time of getting the card. For me I got the start well Fargo card (I’m young). My limit on it is 1000$ and I need to spend 1000$ in the first three months to get 200$ bonus. That’s 33.33% a month for my first three months of owning a card. How badly will that hurt my score?
Hey little cousin (Family) congratulations on your new card!
1) You can spend whatever you want on the card. Just make sure that you pay it off so that the balance doesn't carry over.
2) So if you spend $1,000 in the first month make sure that you completely pay that $1,000 off or to at least $90 (which is 9%).
I hope that help you out lil cuz. If you have anymore questions just come back through. That's what family is for. Talk to you later Ryan!
Damn they look at each individual card what's the point in having multiple??? If he can't max 1 card out while still being under 30% total
So stay under 30% individually for each card??? That prolly averages out to under 10% total for all cards....so scratch the 30% total rule and stay under 10% total is what I got from the video
Only if you're trying to maximize your credit score. If you're not trying to maximize your credit score then it doesn't matter. Just don't be late on your bill.
Hi, im a first time credit user, I just got a credit card with a $3000 limit, I used about 23% of it & still lost points. I’m left a little bit confused, what could the reason be if I used less than 30% & How can I avoid this in the future? 😊
1) It's something else that dropped your Credit Score and not your Credit Usage.
2) From the sound of it, it could be a combination of these.
A) Credit Inquiry
B) Credit History.
3) Check those out and let me know what they look like.👌🏿
The 15% level seems to make a difference for me. I personally stay below 5% at close date and never carry a balance by due date. If I stay below 15% none of my credit scores change much. If I go above that my vantage score drops a good bit. FICO seems more stable.
@carltonbanks5470 That's good that you found a strategy that works for you. Keep up the great work family 🙏🏿🔥🙏🏿💯
I get bob won't gain points but will he drop points ...thnx for the info
He just won't get the maximum points.
You're welcome family.
Im starting to build my credit I applied for capital one credit card and I was approved with $150 credit. Can I spend 120 and won’t hurt my credit ?
You can spend the whole $150. Just as long as you don't leave over a 9% balance on it. 9% is about $14 .
I have a question for the community. I have a 2% cash back card with a limit of only $500 I'm rebuilding. If I use it and pay it every week. Can I use more than the 30% rule if I have it below it every month when it reports or could I still hurt my credit that way. I want to keep building but I would like to get that 2% back on more purchases
Yes you can do that. Just make sure it's paid in full on the due date. Then don't spend again until your statement reports (close).
@@MoneyMelJr Awesome thank you! 😀🤑
You're welcome Family
That’s what I figured earlier👍
So I have navy federal, & I have a 500 credit limit. My balance was $300 but my statement said $173. I paid the balance in full, will that affect my credit score? & should I only pay the statement balance?
Paying the balance is good.
Having the balance higher than the statement just mean that you made purchases outside of your statement date.
@@MoneyMelJr okay thank you!!
@@MyLifeAsTaija No problem, that's what Family is for🙌🙌
Just applied for a Credit card, and i was approved for a 1000$ for my first credit card ever with no debt. (Patelco Credit Union) i used 600$ of it not knowing about the 30% rule. Does that hurt me in the long run, or long as i pay it back in full before the due date, will i be fine?
Hey KB!! Welcome to the family, that's great to hear family 🙌🏿🔥🙌🏿
As long as you pay it back in full by the due date the 30% rule doesn't apply to you. It only applies when you hold a balance on your card.
@@MoneyMelJr okay good lol had me a little nervous at first but no problem man I highly appreciate the video and the response. You have a good one. 🤘🏾🤘🏾
💪🏾💯💪🏾
Ah shi i just spent more than 50% of my card what should i do? Its my first month too
1) Make sure you pay it off on your Due Date.
2) If you cannot do that pay it down to 9% at least.
So you’re saying Bob’s usage still matters EVEN IF HE PAYS IT OFF at the end of the month?
Yes
Let me try to be a little clearer. Activity matters to the Credit Card companies. Usage matters to the Credit bureau.
I only have one credit card, limit is 4000. 30% of that is $1300. Will that hurt me?
No, that will not hurt you. Anything over 30% will hurt you.
if you have a balance and they say pay 30%, lest say on $5000 balance that would be $50 -$150 , if i pay 15% on the 5000 balance would that make the Minimum Payments $25-$125🤔
So you want the 80% to be under 30% with that credit holder alone? So you can get more points?
To maximize the points all should be under 30% not just the total of everything together.
If you max out one of your cards for one month and it gets reported to the credit bureau and it makes your score go down 50 points. If you continue after that only doing 15% to 20% how long will it take to recover the points that went down from the one time using over 30%?
It will take 30 to 45 days to recover from the last report.
Did that help you?
@@MoneyMelJr I'll let you know in 30 to 45 days.
Bob should do a balance transfer from Chase to his BOA or chase card of around 3K. The. He can get all three under 30% and his score can go up.
Balance transfers aren't always a good idea. When you do a Balance transfer you lower your credit history. Credit history is more important that Credit usage, do to the fact it's harder to fluctuate.
So my question is this. If I keep a 0% credit utilization for months on end, why is it that the credit card company isn’t increasing my limit? I thought I was doing good
Each company has their own rules. But they want to see you using the card.
Each category only has a certain amount of points that they can add to your Credit Score. Maybe you're maxing out that ctagory.
I know better, so I'm going to do better 💯
That's dope!!🙌🏿🔥🙌🏿
Ballin Bob!!!! Simplified well.. 💪🏾
😅😅😂
I credit card limit is 200 but they sent me another card for 2k with a different card but i wanted to keep the same one
You mean a completely separate credit line or just a new card with a higher Credit Limit?
You sound like u from the dmv.
I am LOL🤣
Damn, Bob can pay off 4 grand in a month, sheesh.
LOL
I use 15-19% of my credit card limit and my score still goes down. Lol. Pay it on time and even make bigger payments to pay it off sooner. Kinda silly.
That means their is something else besides your credit cards that's causing it. How many credit accounts do you have?
@@MoneyMelJr only have one credit card and it's new.
So you don't own any other lines of Credit?
@@MoneyMelJr No, just one credit card.
@@rollingindough1998 Contact me on Instagram. I'd like to hear more about this
Bob is a financial fool for being $19K in debt. Follow Dave Ramsey
Everyone isn't on the same path.
Great info!!!!! Question on paying down a maxed out credit card. For example $1,000 credit limit. Balances of $799. To bring that down to be 29% I would have to make a payment of $509. Am I on the right mindset? @moneymeljr
Yes, you're on the right track