Why did affect my credit score?
The utilization rate is an important indicator of credit risk. A person who constantly takes all the money you can, (your credit limit) is much more likely to have trouble paying that money suddenly that a person using your credit cards sparingly.
How will it affect my credit score?
Since there are dozens of different credit scoring models, is difficult to estimate exactly how credit utilization affect your credit score. However, there is a strong correlation between the rate of use of a consumer credit card and your credit score. With the exception of consumers who maintain their use of credit cards at 0 percent, which keep your utilization rate low on average, have a higher score than constantly to limit their credit cards.
Although it is an important factor in calculating your credit score, it is important to remember that not only focus on this aspect of your credit score. Keep the big picture in mind.
It is also important to note that the high credit utilization in a single credit card negatively affect consumers with little credit history and only one more card than it will be one person with multiple credit cards and a long history and excellent.
How I can reduce the use of credit?
There are three easy ways to lower your credit utilization.
1.La easiest way is to make credit card payments more than once a month, so that your balance never gets too high.
2.Si have more than one credit card, another good way to reduce its use is to use several cards each month. This will lead to various credit cards with low use instead of one with a high utilization.
3.For Finally, you can try to increase your available credit. If your income has increased, if you had an amazing credit history, or if you have little debt, it does not hurt to ask for a credit limit increase. Just remember that this can sometimes result in a hard inquiry on your credit. If you have excellent credit, open a secured credit card and adding to your security deposit over time.
You do not have to carry a balance on your credit card each month to demonstrate the use of credit cards. Even if you pay your credit card balances in full each month, just for using your card is sufficient to show activity.
We recommend keeping the use of credit cards below 30 percent on each card and collectively. This shows credit and financial lenders that you know how to spend responsibly and will help your credit score.
However, creditors are also concerned about the total amount of your available credit, so if you have a low credit limit, do not worry if your credit card utilization rate is slightly higher than recommended.
Although high credit utilization can be detrimental to credit scores, keeping credit utilization to 0 percent, not recommended either. Creditors want to see people using their credit, but are able to manage responsibly.