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safe credit utilization


Your credit utilization ratio should be 30% or less, and the lower you can get it, the better it is for your credit score.


1. Pay off your balances more than once a month.

2. Request a higher credit limit.

3. Avoid closing credit cards.

Pay off your balances more than once a month.
Instead of waiting for the due date to pay off your credit card balance, consider paying regular bills during the billing cycle.
Card issuers report your statement balance to the credit bureaus approximately once per billing cycle to the credit bureaus - Equifax, Experian and TransUnion. Offices use your reported balance to calculate CUR.

It's hard to know exactly when your card issuer(s) will report your balance, but if you make regular payments to the card, the bureaus are more likely to see a lower amount. Some people pay off their cards as soon as they are used, but you can pay bi-monthly or weekly if that's easier.

You can also call your card issuer and ask when they report to the credit bureaus, especially if you're trying to manage multiple credit cards. Not all card issuers follow the same reporting schedule. Another option is to sign up to receive balance text or email messages from your credit card.

Consider using credit cards with user-friendly apps that allow you to manage your payments from anywhere.

Request a higher credit limit.

Low balances and high credit limits are a recipe for low utilization. Consider calling your card issuer and increasing your credit limit if you regularly use more than 30% of your total limit. Increasing your total credit makes it easier to stay under the 30% threshold, giving you a little more breathing room for your monthly expenses. Just make sure you're confident you can stick to your budget. a higher threshold provides an additional opportunity to overspend. Pay at least part of your credit card balance before calling to show you are financially responsible. (This is not absolutely necessary, but it will help your case.)

Your approval is not guaranteed, but you have the best chance of being approved if these two factors are true: 1. You have at least good credit (661-780). 2. Your income has increased since you applied for a credit card. Checking the points above is of course not a guarantee, but a good score and income will increase your chances of getting additional credit. If you have just opened a new credit card, you may have to wait at least three months before applying for a credit limit increase. Some card issuers, such as Citi, require a six-month wait between requests for credit limit increases.

So if you have a card like the Citi® Double Cash Card, technically you can only request a higher limit twice a year. Before you apply for a higher credit limit, be aware that it can lead to a complicated investigation if your card issuer takes your credit information in the verification process. Hard inquiries temporarily because of your credit score.

Avoid closing your credit cards.

Think twice before closing your credit card accounts—especially your oldest account. When you delete your credit card, you also delete its credit limit from your total available amount. This often results in an increase in your utilization rate and therefore an immediate negative impact on your credit score. Although your score will likely drop initially after closing a credit card, keep paying your other credit card bills on time and your score will recover in a few months.

The only two caveats to avoid closing credit card accounts are if you are paying an annual fee on a credit card that is no longer profitable or your credit card has a high interest rate. Before closing your account, check how your credit score would be affected using an online score simulator like Capital One's CreditWise®. This free service allows you to see how certain actions, such as closing a credit card or paying off a balance, may affect your credit report.

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