CREDIT UTILIZATION WHAT IT IS AND HOW YOU CAN USE IT TO BOOST YOUR CREDIT SCORE QUICKLY

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CREDIT UTILIZATION WHAT IT IS AND HOW YOU CAN USE
IT TO BOOST YOUR CREDIT SCORE QUICKLY

• Many of us have numerous credit cards, but what
  role do they play in our credit score?  They are
  useful tools in many ways.  Credit cards can be
  used to help us pay for things instead of having
  to carry cash with us, big purchases, or in
  emergencies.  The key to using credit cards is
  they must be used responsibly to build your
  credit. Otherwise, they can hurt your credit
  score.
• The credit limit and the amount of credit that is
  used on the credit card is called credit
  utilization.  Your credit utilization is worth
  30 of your FICO score and up to 192.5 points. 
  It has a massive impact on your credit score. 

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Credit Utilization What is it?

• Credit utilization is the amount of available
  credit that is being used.  If your credit
  utilization is low, it is raising your credit
  score.  By only using a small portion of the
  credit available, it shows that credit is being
  used responsibly and is seen as a positive
  indication of responsible credit usage.
• The credit utilization rate is calculated using
  revolving credit.  Credit cards are examples of
  revolving credit.  This type of credit does not
  have an end date, and the amount owed per month
  fluctuates according to the amount charged.  It
  is not a fixed amount every month.  Credit
  accounts that are not used to calculate
  utilization are categorized as installment
  credit.  Examples of installment credit are home
  and car loans.  Installment credit has a set end
  date and a specific amount every month until the
  obligation is paid in full.
• To calculate credit utilization, divide the
  credit limit of the credit card by the balance on
  the credit card. 

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Credit Utilization Examples

• Bad Example Capital One Visa has a 1,000
  credit limit, and 900 has been charged on the
  card.  The utilization of this card is 90 and is
  hurting the credit score.
• Good Example Capital One Visa has a 1,000
  credit limit, and 290 has been used on the
  card.  The utilization on this card is 29 and is
  boosting the score because the usage is below 30
• Best Example Capital One Visa has a 1,000
  credit limit, and 20 has been used on the card. 
  The utilization on this card is 2 and is provide
  a more significant boost to the credit score.

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Credit Utilization and How it Affects a Credit
Score
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• A FICO (Fair Issac Corporation) credit score
  ranges from 300 to 850.  There are 5 parts to a
  FICO score. 
• Payment history 35 of the credit score
• Credit utilization 30 of the credit score
• Age of credit 15 of the credit score
• Mix of credit 10 of the credit score
• New credit inquiries 10 of the credit score

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Ways to Improve Credit Utilization

• It is vital to do everything possible to increase
  a low credit score.  A low credit score can hurt
  you and cause credit denial, higher interest
  rates, higher insurance rates, and not being able
  to qualify for certain types of employment. A
  quick way to improve a poor credit score is to
  lower credit utilization. 
• Pay Down the Balance on Your Credit Cards
• One of the most important steps you can take in
  improving your credit score is paying down your
  credit cards.  Come up with a plan on how much
  extra you can pay off every month.  Start with
  the smallest balance card and work your way up to
  the card with the highest balance. If you stick
  to this plan, your credit score will improve.

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• Another option, if your credit is good, is to
  apply for a personal loan with low-interest
  rates.  You could use the loan to pay off all
  your high-interest credit cards.  This would
  allow you to pay less money on interest and more
  money towards the balance.  If you do take this
  option, you must be very disciplined and use all
  the available credit you now have on the credit
  cards.  This would not help your credit score. 
• Call and Ask for an Increase on Credit Cards
• Getting an increase in the credit limit of a
  credit card will improve the utilization ratio of
  that account.  As an example, a credit card with
  a 1,000 credit limit and 900 has 90
  utilization, but if the credit card limit is
  raised to 5,000, the utilization drops to 18. 
  The drop in the utilization rate will improve the
  credit score fast.

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• The only downside is when a credit increase is
  requested, and it causes a hard pull, also known
  as an inquiry on the credit report. A hard
  inquiry can cause your credit score to drop
  slightly.  Only use this strategy if all your
  accounts are in good standing with no recent late
  payments.  If your accounts are not the credit
  increase will not be given, and you will have an
  inquiry on your credit report.  The credit card
  increase request will cause your score to drop,
  and the situation will be worse than it was.
• A good rule to follow before asking for a credit
  increase is to order a copy of your free annual
  report at annualcreditreport.com.  The credit
  reports from annualcreditreport.com do not
  provide a score but give the details on each
  account reporting on Experian, TransUnion, and
  Equifax.  This will allow you to review all your
  reporting accounts.  Make sure that all the
  information is correct, belongs to you, and has
  no recent late payments before requesting a
  credit increase. 

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Keep Your Cards Open

• If you have paid your credit cards down to zero,
  you may think about closing them so that you
  never have to worry about paying down that debt
  again.  DONT DO IT!  Closing accounts will hurt
  your score. 
• Its also really important to use your credit card
  accounts. Sometimes creditors will close accounts
  that have no activity.  Do not let that happen. 
  Use them once a quarter for a small item and pay
  them off.

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• If you still have questions about your credit,
  give us a call. We are credit score improvement
  specialists.  Give us a call and see how we can
  help you improve your credit score [phone].

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Contact us

• Address - 3409 Chandler Pkwy Bellingham, WA 98226
  
• Phone -  360-312-7164
• Email - info_at_whatcomcreditrestoration.com
• Website - https//whatcomcreditrestoration.com/