Get credit **score** out of your head. Think about credit **history** instead. Utilization is not worth worrying about as it has no history so it doesn't matter over time at all and only helps you if you are literally applying to something right now.
Spend as much as you want, as long as you can afford to pay it off in its entirety every month.
In my humble opinion, you should keep your utilization at no more than 30%. So, no more than a $150 balance by statement close.
Here is some more advice I hope you'll read: https://www.npr.org/2020/11/09/933053299/tricks-to-improve-your-credit-score
Your credit score is more important, in the long run, than whatever relatively small amount of cash back you'd be getting.
Utilization is the amount you let report on your statement date. Not how much you use during the month. You have a $500 limit you can spend $500 three times that month just pay it down when you get close to 500 and spend on it again just make sure when your statement rolls around it's either paid off to zero or a small amount like 1 to 3% of your credit limit. Which would be 5-15 dollars left to report
This is not how credit cards are designed to be used and this approach is only beneficial in the 30-45 days leading up to an important app where optimized scores are crucial. What you are suggesting if implemented at all times (constant low utilization / tiny statement balances) will hinder profile growth since the system is not set up to be used the way you describe.
With Discover, they definitely want to see you using your limit to get credit limit increases. So, high usage and low utilization works. A lot of people get usage and utilization confused. They are are two different things and accomplished two different things. And when FICO 10T comes out that previous utilization over the last couple of years is going to matter.
F10T looks at the utilization "trend" over 24 months. If the trajectory is flat or downward, F10T doesn't take issue. It's if the trajectory is upward that it will impose a penalty. You can possess perfect 850 scores on F10/F10T with 5 figures of reported revolving debt - what matters is that the utilization "trend" over those previous \~24 months is flat or downward.
This is precisely why it's important to NOT micromanage utilization and try to "keep utilization low" as it will force one to continue doing that indefinitely in order for F10T to not penalize you. The better approach is to allow natural statement balances to report, even if they're high. High statement balances result in the greatest CLI success, all other things being equal. On the same relative reported balances over 24 months, utilization trajectory would actually be downward when CLIs are granted, as on the same balances when the denominator (TCL) increases it lowers utilization percentage. This is exactly why people should pay their credit cards the way they're intended to be paid (the way the system is designed) as it will allow the system to self-correct and will create no issues at all if F10T ever gains traction.
I have seen the denial reason account balances are too high compared to credit limits. So doesn't that mean if you're reporting high balances every month, it looks like you're overextended
It depends on your overall profile and whether or not you're paying your statement balances in full every month. If you have a strong profile and are always paying your statement balances in full, you render utilization irrelevant from a risk perspective. You are known as a strict Transactor and elevated balances are not problematic. It's those that DON'T pay their statement balances in full, that is, carry balances that are seen as an elevated risk. They are known as Revolvers and the odds of them defaulting are far greater do to presumably being overextended as you said.
So really, it comes down to overall profile and how you pay your cards monthly.
But, in the case of a weaker profile or simply someone that wants to optimize their profile/scores, they can pay their balances down 30-45 days out from an app and "fix" utilization at any given time. There is zero reason to "keep utilization low" at all times as it will only hinder profile growth.
Get credit **score** out of your head. Think about credit **history** instead. Utilization is not worth worrying about as it has no history so it doesn't matter over time at all and only helps you if you are literally applying to something right now. Spend as much as you want, as long as you can afford to pay it off in its entirety every month.
Exactly right above.
In my humble opinion, you should keep your utilization at no more than 30%. So, no more than a $150 balance by statement close. Here is some more advice I hope you'll read: https://www.npr.org/2020/11/09/933053299/tricks-to-improve-your-credit-score Your credit score is more important, in the long run, than whatever relatively small amount of cash back you'd be getting.
Don't worry about your credit score and utilization until you are trying to get a new credit card or another loan.
Unless you are paying it off in full, don't max it out.
Utilization is the amount you let report on your statement date. Not how much you use during the month. You have a $500 limit you can spend $500 three times that month just pay it down when you get close to 500 and spend on it again just make sure when your statement rolls around it's either paid off to zero or a small amount like 1 to 3% of your credit limit. Which would be 5-15 dollars left to report
This is not how credit cards are designed to be used and this approach is only beneficial in the 30-45 days leading up to an important app where optimized scores are crucial. What you are suggesting if implemented at all times (constant low utilization / tiny statement balances) will hinder profile growth since the system is not set up to be used the way you describe.
With Discover, they definitely want to see you using your limit to get credit limit increases. So, high usage and low utilization works. A lot of people get usage and utilization confused. They are are two different things and accomplished two different things. And when FICO 10T comes out that previous utilization over the last couple of years is going to matter.
F10T looks at the utilization "trend" over 24 months. If the trajectory is flat or downward, F10T doesn't take issue. It's if the trajectory is upward that it will impose a penalty. You can possess perfect 850 scores on F10/F10T with 5 figures of reported revolving debt - what matters is that the utilization "trend" over those previous \~24 months is flat or downward. This is precisely why it's important to NOT micromanage utilization and try to "keep utilization low" as it will force one to continue doing that indefinitely in order for F10T to not penalize you. The better approach is to allow natural statement balances to report, even if they're high. High statement balances result in the greatest CLI success, all other things being equal. On the same relative reported balances over 24 months, utilization trajectory would actually be downward when CLIs are granted, as on the same balances when the denominator (TCL) increases it lowers utilization percentage. This is exactly why people should pay their credit cards the way they're intended to be paid (the way the system is designed) as it will allow the system to self-correct and will create no issues at all if F10T ever gains traction.
I have seen the denial reason account balances are too high compared to credit limits. So doesn't that mean if you're reporting high balances every month, it looks like you're overextended
It depends on your overall profile and whether or not you're paying your statement balances in full every month. If you have a strong profile and are always paying your statement balances in full, you render utilization irrelevant from a risk perspective. You are known as a strict Transactor and elevated balances are not problematic. It's those that DON'T pay their statement balances in full, that is, carry balances that are seen as an elevated risk. They are known as Revolvers and the odds of them defaulting are far greater do to presumably being overextended as you said. So really, it comes down to overall profile and how you pay your cards monthly. But, in the case of a weaker profile or simply someone that wants to optimize their profile/scores, they can pay their balances down 30-45 days out from an app and "fix" utilization at any given time. There is zero reason to "keep utilization low" at all times as it will only hinder profile growth.