Credit Repair

Is 731 A Good Credit Score – Credit Card Usage And How It Affects Your Credit Score

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Is 731 A Good Credit Score – Whats The Best?

Credit scores can be so mysterious because what goes into building up your credit score sometimes can feel really hidden and we can be actively working on our credit, but it feels like it’s getting nowhere because we don’t know what’s going on.

00:00 Intro
0:08 Why credit scores are mysterious
0:26 Credit utilization – how much credit you’re using
0:39 The more credit you use, the lower your score
0:56 How much your score is impacted
1:22 Example of credit utilization
2:46 30% rule
3:03 10% rule
3:45 Best way to manage your credit card
4:20 Why pay off credit card and leave a SMALL BALANCE

So one of the biggest things that impacts your credit score is your credit usage or what’s called your credit utilization.

Basically this is how much credit you are using compared to how much of a limit you have.

So does your credit card have a $5,000 limit? If so, how much of that are you using?

The more credit you use, the more your score will decrease.

Credit utilization impacts your score by 30%.

In other words, credit utilization has a 30% influence on your credit score.

So let’s run through an example here.

You’re using $750 out of the thousand dollars that you’re allowed to use. Now to a credit card company, you’re using a pretty high percentage of debt compared to the limit they gave you.

Creditors see this as a bad thing because this means you have less available to you and you’re getting close to the limit that you’ve been approved for.

And so what ends up happening is anything above 30% usage actually starts to harm your credit score.

So what we want to do to bring the credit score up higher is we want to get that usage down to below 30%. So let’s say you start working on paying this off and you get this down to below 30%.

So if you get that debt below 30%, your credit score is going to start increasing because 30% is one of the statistical markers that’s going to help increase your credit score.

Let’s say you continue to pay off this credit card debt, and now we’re at 10% usage and below. At this point, your credit score will start increasing even more. So utilization and your credit score work sequentially.

So when you’re above 30% your credit score is going to drop down a little bit. When you’re below 30% it’s going to start to increase a little bit.

When you drop below 10%, it’s going to increase even more. So what you want to do when you’re managing your credit card is get this debt as low as possible without getting to zero.

So you want to keep a little bit on your credit report, um, but you want to get that below 10% that way your credit score benefits. And what this shows the creditors is that you have a lot of credit available to you, but you don’t have to use it.

This is their indicator for how you’re using debt effectively. Now, the question is “what’s the best way to manage your credit card using moving forward and making sure you use your utilization correctly?”

What we want to do is make sure that your credit card has one use.

If you’re really good at budgeting, you might be able to take a credit card and have multiple uses out of it. But we want it to be a one use here.

So what you might do is you might take this card and you say, “this card is only for gas.” Then you’re going to pay off that balance every month except for a few dollars.

You want to pay off your credit card regularly that way you don’t collect interest every single month, but you don’t want to bring that all the way down to zero.

And the reason why is because your credit card is only going to report once a month. Now when it reports, we don’t want it to report zero because then it’s going to seem like there’s nothing on your credit card and that your credit card’s not being used.

We want to make sure there’s a few dollars on there. So what’s being reported is that you are using credit. And then also you want to make sure that what you’re spending on your credit card fits in your budget.

So as soon as I spend that money on my credit card, I have that money earmarked for when that statement comes due, I’m going to pay it off immediately.

That way I always have the money there. It’s never a surprise. And then I’m able to track what’s in my bank account and what’s on the credit card at the same time.

So just to recap, keep your credit card balances (i.e. your utilization) below 30% if you can, and then continue to work to pay that down to get below 10% to help build your score up.

Hey, my name is Kyle and I’m a Mortgage Advisor serving Tennessee, Florida, and Ohio. My goal is to help you get a crystal-clear home loan that helps you win the house you love. If you’re ready to create your home-buying plan, you can reach me through any of the ways below:

https://winthehouseyoulove.com/

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NMLS# 1701021
Motto Mortgage Alliance
https://www.winthehouseyoulove.com/
8900 N. Dixie Dr.
Dayton, OH 45414
Equal Housing Opportunity

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33 Comments

  1. Win The House You Love
    July 24, 2021 at 12:52 pm

    Timestamps:
    0:08 Why credit scores are mysterious
    0:26 Credit utilization – how much credit you're using
    0:39 The more credit you use, the lower your score
    0:56 How much your score is impacted
    1:22 Example of credit utilization
    2:46 30% rule
    3:03 10% rule
    3:45 Best way to manage your credit card
    4:20 Why pay off credit card and leave a SMALL balance

  2. Leighann Krut
    July 24, 2021 at 12:52 pm

    very informative. enjoyed this video

  3. Islam Explained
    July 24, 2021 at 12:52 pm

    Excellent video, watching from England.

  4. Bar
    July 24, 2021 at 12:52 pm

    So this month I used 31% of limit. It dropped my score by 64 points! I had the money and paid it off a week later. On the next update it only went back up by 3 points. What's with that? Will it go back to normal soon or take a long time or is the free score not accurate because it's not caught up to the zero dollar balance yet? Thank you.

  5. Jonathan Roberts
    July 24, 2021 at 12:52 pm

    Hey Kyle, wondering if this means each card should have a 30%or lower balance or can I utilize 30% of all my cards on a single card to pay less in interest?

  6. Treyjohn18
    July 24, 2021 at 12:52 pm

    Im so confused, I thought that if you leave even a few dollars unpaid on your credit card going into the next month, that you would be slapped with a late fee.
    So, If Im spending $300 out of a $1000 limit per month, I want to make sure to pay of all of it EXCEPT for say, $8-$5? And then pay off that in the following month?

    great video BTW!!!

  7. Love DC
    July 24, 2021 at 12:52 pm

    Thank you so much for this video.. very informational. ❤️

  8. Lawrence Ayala
    July 24, 2021 at 12:52 pm

    Very informative! Thanks! I was going to pay it all off.

  9. complexgrafix
    July 24, 2021 at 12:52 pm

    What if u pay off your your 30% before the due date?

  10. Josh Thoms
    July 24, 2021 at 12:52 pm

    Coming late to this channel! Great stuff. I am rebuilding and had a few boosts already, trying to push now for over 700. That being said I only have a secured credit card, I have been putting money on it, to seem like I have a big limit, but I have not used it yet. Is this a mistake? If I put $100/paycheck on it, should I use it for 10 bucks? Any help would be great. Thanks

  11. Michelle Price
    July 24, 2021 at 12:52 pm

    I only used 2% of my credit card (one purchase). Why did my score go down 5 points because of that??

  12. Joseph Gonzalez
    July 24, 2021 at 12:52 pm

    👍

  13. The Gaming Chef
    July 24, 2021 at 12:52 pm

    Earlier this year I got a Credit card from my bank. I had to start with a 300 dollar card because I just couldnt get approved for a regular credit card. I had to put down 300 to get it. Its totally worth it…When I loved in Houston Texas I went to get a car…Dude said I wasnt approved, but that I didnt have bad credit, I just didnt have any credit. I paid Cash for everything. But with that card in 8 months I incresed my credit score by 100 points. I make my payments on time, or as they said, before the due date. I had actually been experimenting…I almost maxed out my card then we'll before the due date I paid like 285 of it and my score increased 54 points couple days ago…Thats if course along with the increase throughout the year. Like they said you want to use it here an there. Make small purchases, like a meal at mcdonalds or some gas etc. Then soon as the charge hits your card pay it off.

  14. Compton Alleyne
    July 24, 2021 at 12:52 pm

    I use my credit between 1% and 5% but still negative points

  15. Bryan De Jesus
    July 24, 2021 at 12:52 pm

    What if i wanna increase my credit limit? Im hearing if u max out ur credit limit but pay it off before the statement date ur forcing the credit Bureau to increase it u are using it alot but paying it off at the same time? Is that a good idea?

  16. iDellz
    July 24, 2021 at 12:52 pm

    So what happens when you pay it off, does the score go back to normal or do I have to build it back up? I dropped 50 points from 690

  17. Rury Castillo
    July 24, 2021 at 12:52 pm

    Let me see if I understand: if I have a credit card with a line of credit of $500 dollars, I will have to spend $50 (10%) and pay back around $30-$40 a month? I just wanted to clarify.

  18. Dora Calderon
    July 24, 2021 at 12:52 pm

    Question: so when my payment for my credit card comes in it would be better to not pay the full amount of what’s due ? Or did I misunderstand. Thanks 🙏

  19. Connor Harris
    July 24, 2021 at 12:52 pm

    I have gone almost 6 months at 0% usage on my credit card and once I used it to purchase Gas (which was roughly 1.5% of the credit amount) my score dropped FIFTY points. 2 months later I’m still struggling trying to get it up. Nothing has changed other than debts being paid off ON TIME. Any ideas as to why this is happening?

  20. Francita007 K
    July 24, 2021 at 12:52 pm

    Great video. Just subscribed

  21. daniel motion
    July 24, 2021 at 12:52 pm

    Thanks man. I will try this.

  22. Tee Anthony
    July 24, 2021 at 12:52 pm

    The volume on this video sucks

  23. Dine
    July 24, 2021 at 12:52 pm

    Something I love about your videos that make it different than the others is how you use the side to visualize details also no editing. Very great and helpful 🙂

  24. Mchelle Gilchrist
    July 24, 2021 at 12:52 pm

    If I leave a balance won’t there be interest attached to the balance?

  25. 392GLRY
    July 24, 2021 at 12:52 pm

    Im at 661, just turned 19, recently got two secured cards. My question here is : “ Are they going off of how much much the statement balance is or how much available credit is left at the end of the statement? Ive been using my credit paying them off shortly, and keeping a balance on there to ensure that Im improving my credit during the payment cycle.”

  26. Soledad James
    July 24, 2021 at 12:52 pm

    So, how would mortgage lenders view those who have maybe maxed out credit cards before, but have never been late and have been paying more than the minimum? Would you want to wait until you’ve had some time of managing credit better in order to qualify for a home loan? For instance, the last time you maxed out your cards was a year ago…

  27. steve v
    July 24, 2021 at 12:52 pm

    I went a few months unaware of the 2 different due dates on my credit card.

  28. Shaquille Smith
    July 24, 2021 at 12:52 pm

    Good info bro my credit dropped 17 points cause I put a 23% usage rate on my credit card . I did a credit simulation on credit karma they said if I paid the whole thing off my credit would drop even more . This helped alot I will just pay these off slowly while keeping a balance. And try to now swipe as much this month lol 🤝

  29. T Garrett
    July 24, 2021 at 12:52 pm

    Does how much i use on my credit cards throughout the month over 30% matter or just what utilization % is reported to the credit bureaus ? My over all average for all my cards is 7% combined

  30. True Crime with Yolanda
    July 24, 2021 at 12:52 pm

    I want buy a house this year , I ‘m close to 580 but still need to bluff my credit scores. When I do I will call you to apply for FHA loan. Soon.

  31. Libbie Roach
    July 24, 2021 at 12:52 pm

    Very informative channel! Love it. I work at a mortgage company.

  32. Siman Shrestha
    July 24, 2021 at 12:52 pm

    Should I aim to keep my usage under 30% for each credit card or for my total available credit combined from all my credit cards?

  33. The Wong Mindset
    July 24, 2021 at 12:52 pm

    Nice. I usually pay it down to 0. Will probably leave a little somethin on there from now on.