Credit utilization is basically the Goldilocks of the credit world. Not too high, not too low, but just right. It’s the percentage of credit used compared to their total available credit. And it makes up a whopping 30% of FICO credit scores! That’s more than a quarter of the pie, so we can’t ignore it.

The Magic Numbers: 10% vs. 30%:

– 10% Utilization: This is the gold standard, the sweet spot. Keeping utilization around 10% shows clients are able to borrow money on a consistent basis and pay it back regularly.

– 30% Utilization: This is the upper limit. Anything above this and this becomes a whole other situation. Keeping it under this limit shows that while you use credit, you aren’t maxing out cards and living on borrowed money.

Additionally, transaction history is key as well. If you don’t use credit cards regularly, then the history eventually goes away. But you do NOT need to carry a balance. Use it once a month and pay off in full is the best plan of action.

Just a helpful tip to improve your credit scores!