Is it true that spending only up to 1/2 your credit limit looks better? Why/ why not.?

Answer 1

Goodness NO!!! that would be a debt ratio of available credit of 50% - that would drop your fico score WAY WAY down.....

you want to strive for revolving credit used at about 10 - 15% of AVAILABLE credit......so if you have a $1,000 credit line w/ visa and $1,000 w/ Mastercard and you carry a $500 balance on each card - that's BAD BAD - 50% use of available credit is not good on paper......

it's a tricky balance to maintain that percentage, plus your income must support the total credit lines you have....

If you make $20K/year and have $5,000 credit line.....that pushes you past the 10% credit to income ratio.....

Just never carry a balance and when they automatically increase your credit line - call and tell them no thanks.

Answer 2

Better in eyes of what?

From the credit company's point of view, the best customers are those who spend up to the credit limit and the one who makes minimum payment (not more). That's because you will give them the maximum revenue by interest payments.

From the credit REPORTING agencies point of view, the best customers are who uses credit and pays them off every months. That shows you are spending within your means and you have very low or none running liabilities.

If you have a history of keeping balance, it'll show up as your liability so your credit rating will suffer and so as your financial health.

I've never heard of the percentage rule you mentioned.

Answer 3

When looking at your credit information, banks look to see how far you extend yourself. If you are keeping a balance that is close to your limit, it shows that you could potentially get yourself in trouble with your credit.

If you spend only half the amount, it shows restraint and demonstrates to a creditor that you use your credit wisely and are therefore a better risk.

Answer 4

Yes it does look better, because it shows that you don't need to use all the credit that you were rewarded. And I think it's even lower than 1/2, like maybe a third.

Answer 5

that is extra acceptable to apply 2. in simple terms be positive to not in any respect exceed 30% of your credit reduce in any given month and pay in complete earlier the due date. this may do 2 issues, first that is going to set up a pay heritage and second that is going to save your debt to credit ratio low. those 2 issues on my own make up sixty 5% of your credit status. next you'll favor to verify some installment credit like a vehicle, domicile, boat, fixtures or own loan. upon getting made a minimal of 12 funds in this you'd be nicely on your thanks to having both an concepts-blowing credit status and profile. i look at credit daily and see people each and each month with seven-hundred ratings that would nnot purchase a vehicle because their score is made from 1 million mastercard with a $500.00 reduce paid 15-situations and 2 pupil loans. even as this produces an concepts-blowing score it doe's not teach the willingness or the flexibility to actual pay all of us.

Answer 6

Your credit rating is based on available credit. If you have a charge card that has a $5000 limit, and you've used $2500, you have $2500 available credit. If you use $4000, you only have $1000 available credit, and you're credit rating is lower. Make sense?

Answer 7

Don't use more then 1/3 of your revolving credit and you will get the best credit score.

Answer 8

Yes. It shows that you aren't spending more than you make & you control your spending, You look like a good "risk" & thus be given even more credit & a higher score.

Answer 9

I have heard you should only have 1/4 of your revolving credit used. And its best to pay down and then charge something to show activity.

Answer 10

You can spend more, just keep the balances below 50%. If new creditor comes along and looks at your report they would not want to see that you are maxed out and only paying the minimum. They would not want to extend more debt.