Used to think credit card utilization didn't matter much

For years I just paid my balance in full and figured that was enough. Never really looked at my utilization ratio at all. Then six months ago I applied for a car loan and got denied because my score was 40 points lower than I thought. The lender actually told me I was using 85% of my available credit even though I paid everything off every month. The problem was the statement balance was high when they checked. So now I make two payments a month. One right after big purchases and one before the statement closes. Keeps my utilization under 10% and my score jumped 35 points in two months. Has anyone else gotten tripped up by this timing thing? What tricks do you use to keep that ratio low?

3 comments

3 Comments

william_harris22d ago

Man, that timing thing got me too! I actually had a similar wake up call a few years back when I was shopping for a mortgage. I thought I was doing everything right by paying off my cards every month, but the loan officer pulled my report and said I looked like a risk because my utilization was sky high. Turns out I was using the card for work expenses and paying it off in one lump sum, but the statement was already cut by then. I started doing what you do now, but I also added a little trick where I just request a credit limit increase every six months or so. That way my available credit goes up and my utilization naturally drops even if I spend the same amount. Its not a magic bullet but it helped me bump up a bit more. Took me a while to figure out how those little timing gaps actually work.

wendy13121d ago

I dunno, I think requesting credit limit increases too often can backfire because some lenders do a hard pull and that dings your score temporarily lol. Plus if you're not careful with the extra room it's just tempting to spend more which defeats the purpose.

robins8321d ago

Right? That hard pull thing got me too, I swear some people don't realize how much those little dings add up if you're not careful. And yeah, the temptation part is real, I've seen friends get that extra room and just treat it like free money until they're in over their heads. It's nice to have a bigger cushion for utilization, but you gotta have the discipline to not blow through it, you know?