Want to keep your credit utilization in check? We’ve got some savvy tips for you

Hey, credit-savvy folks! Let’s talk about how to keep your credit utilization in check, because trust me, it’s a big deal. 

Your credit score controls a lot of aspects of your financial life, like snagging low interest rates and getting approved for awesome opportunities. 

Now, we all know payment history is important, but don’t sleep on the second most influential factor: your credit utilization ratio. 

I’ll break it down for you and give you some killer tips to keep it low, so buckle up!

So, what the heck is a credit utilization ratio? 

It’s basically the percentage of your credit that you’re actually using, particularly on your credit cards. You can find it by dividing your card balance by the credit limit and multiplying by 100.

For example, if you have a $1,000 limit and a $250 balance, your credit utilization rate would be 25%. Easy peasy.

Now, here’s the juicy part. 

Your overall utilization rate and the rate for each card can impact your credit score. Even if you have a small balance on one card, maxing out another can still mess with your score. 

And when it comes to the almighty FICO Score, which is used by 90% of top lenders, credit utilization rate makes up a hefty 30% of your score. Yikes!

What are the best ways to manage credit utilization?

But fear not, my friends. I’ve got some killer tips to help you manage your credit utilization rate like a champ:

• Pay off your purchases the same day: Don’t be a slacker and wait until the end of the month to pay off your credit card expenses. Be smart and pay for them the day you make the purchase. It’s like using your credit card as a debit card, but with extra perks. This means lower credit usage and no interest on your purchases. Plus, those sweet credit card rewards.

• Make multiple payments in the same month: This one’s for the go-getters who get paid more than once a month. Whenever that paycheck hits your bank account, be a responsible rockstar and pay off your credit card balance. By making multiple payments during the billing cycle, you can reduce your credit utilization ratio. So, pay early and pay often!

• Ask for a credit limit increase: Sometimes, all it takes is a simple ask. Pick up the phone and call your credit card company to request a credit limit increase. If they say yes, your available credit jumps up. This means a lower utilization rate, as long as you don’t go on a spending spree. Just be aware that they might do a hard inquiry on your credit, which can temporarily lower your score. But the benefits usually outweigh the damage.

Now, here’s the secret sauce. 

The best way to increase your chances of getting that limit increase is to have a solid track record of making payments on time. Show those credit card companies that you mean business!

• Divide and conquer: Crush big expenses with multiple Credit Cards: Got a major purchase coming up? Don’t stress, just grab a few credit cards and conquer it! You see, your credit utilization ratio is all about the total amount of credit you use compared to what’s available on each card. So, if you’re about to splurge (not recommended), consider spreading the cost across multiple cards.

And hey, while you’re at it, why not get a shiny new card with a 0% APR? That means you can buy now and pay later without any irritating interest rates attached. 

Plus, you’ll be pumping up your overall credit score, which helps decrease your utilization ratio. 

• Don’t let old credit cards collect dust: You know that one credit card gathering dust in your wallet? Well, think twice before tossing it! Closing that account can actually harm your credit score. It’s like removing a slice of your credit pie, and I want you to have the whole pie!

Instead, keep those old cards active by using them for small charges. Maybe pay for your Netflix subscription or other monthly bills with them. Set up automatic payments and forget about it – your cards stay active and your utilization ratio stays low.

Your Credit Score is Counting On You

Keeping your credit utilization ratio low is like a secret weapon for boosting your credit score. Whether you need to tweak your payment schedule or make a call to your credit card company, it’s vital to keep an eye on your credit score. 

Remember, your utilization ratio can change in a flash, so make it a habit to regularly check your credit and stay on top of your game. Your credit score will thank you!

So, there you have it, my fellow credit warriors.

 By mastering your credit utilization ratio, you can unlock a world of financial opportunities.

So go out there, pay off those purchases like a boss, make multiple payments, and don’t be afraid to ask for a credit limit increase. Your credit score will thank you.