The amount of debt you owe contributes about 30%, when calculating your credit score. You should keep your credit card utilization ratio at 35%, even if you make timely payments. The reason being that by the time you pay off the balance(and the account shows $0 balance), may be the creditor has already reported to the credit bureaus. On your credit report the same account may show a remaining balance of $ 3000.
This is because you will not know, when your creditor is going to report to the bureaus. If he reports before you have paid off, the credit card utilization ratio will be reported as high. A higher credit utilization ratio will lower your credit score.
If you want the maximim score you need to pay it off. Anything above 95% lowers your score.
Sorry, that was kinda unclear. I mean that you should not use more than 90-95% of the limit.
Hi LT,
The amount of debt you owe contributes about 30%, when calculating your credit score. You should keep your credit card utilization ratio at 35%, even if you make timely payments. The reason being that by the time you pay off the balance(and the account shows $0 balance), may be the creditor has already reported to the credit bureaus. On your credit report the same account may show a remaining balance of $ 3000.
This is because you will not know, when your creditor is going to report to the bureaus. If he reports before you have paid off, the credit card utilization ratio will be reported as high. A higher credit utilization ratio will lower your credit score.