Do Not Use Up Your Card’s Capacity.
The possibility that you will pay the money you borrowed is estimated by your credit score. There are some factors that make people to always default based on credit their obligation. One is high loan and credit card balances.
It may be very hard for you to pay when you have a high balance on your credit and this shows that you spend too much. A high utilization reduces your credit score and notified future lenders that you may default in your payments.
Steps On How To Manage Your Credit Utilization Percentage.
For you to manage your credit utilization percentage, you are to do the following:
First, Keep an eye on your balance by setting up a balance alert, which tells you, when you have gone beyond a certain limit.
Secondly, try to have a reduced your balance on many cards, do not allow a balance which uses more than 30% of your limit on a card, and this can be achieved by sharing your monthly purchase charge over a different credit card. But, this may not work always since some credit scoring model is also interested in your overall usage.
Thirdly, know when your credit card issuer reports information to the credit bureaus and the date of your monthly payments. If your account is high at the time your issuer submitted your account information to the credit bureaus, E.g some days before the end of the billing cycle. Therefore, your credit utilization will be high.
So, be sure your balance is low by the date your billing cycles ends or your account statement closes. You can use the current copy of your billing statement to estimate when your next account statement closes.
You Can Request an increase for your credit card limit
Also, request an increase for your credit card limit from your credit card company. E.g. when you have a card with a $5000 limit and you have spent $ 2,500, you will be having a utilization rate of 50%.
Whenever you have a change in your income, you can contact your card issuer and request for an increased limit. This change in your credit card leaves you at only 10% utilization that can cause a great change to your credit score. But, the credit bureaus may reject your request for additional credit.
However, if your current job does not pay much or you have some late payments, your credit card issuer may lower your credit. That is, reducing your cards balance to lower your credit utilization to 30% or less utilization, particularly if your reduced credit limit is near or exactly at your credit card balance.
See that you pay your credit cards twice each month if you are looking for the most reduced-maintenance method to leave your utilization low. So, if are using the card for the whole month, a mid-month payment may help you to make payment for your cards back down, to a level that stays below the 30% threshold.
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