Will My Credit Score Drop If I Exceed 10% Utilization Even If I Pay It Off Immediately?

Your credit score is an important number, because it tells lenders how trustworthy a borrower you are. The higher your score, the more likely you are to get approved to borrow money when you want or need to, whether in the form of a loan or a new credit card.

But there are different factors that can influence your credit score — for better and for worse. And one of those factors is credit utilization, which is a fancy way of describing your credit usage.

In this Reddit post, we have someone wondering if it’s bad to go above 10% utilization on their credit cards. They’re worried about their credit score dropping if they let their balances go too high.

It’s a good question to be asking, since credit score preservation is important. But the poster might have more leeway to use their spending limit than they think.

Why it’s best to keep your credit card balances to a minimum

The line of credit you get from your credit card issuers does not necessarily reflect the amount you can afford to spend. You might, for example, have three different credit cards, each with a $10,000 limit. But if your monthly paycheck is $5,000, you clearly can’t afford to be maxing out your credit cards month after month.

All told, the lower your credit card balances are, the more likely you are to be able to pay them in full every month. That could not only save you money on interest, but help protect or boost your credit score.

Credit utilization plays a role in calculating your credit score, and the lower it is, the better in that context. But that doesn’t mean you have to worry about using some of your available credit.

Here, the poster is worried about their utilization exceeding the 10% mark. But generally speaking, a credit utilization of 30% or less is considered favorable from a credit score perspective.

In other words, let’s say you have a $30,000 credit limit. If you charge $3,000 in expenses, you’re at 10% utilization. That shouldn’t harm your credit score, though.

Granted, if you don’t pay your $3,000 balance in full, and you then keep adding to it, you might eventually get to the point where your credit utilization creeps up into less favorable territory. But all told, you don’t have to assume your credit score will take a dive just because you’re using your credit cards. That’s what they’re there for. And if you keep paying your balances in full each month, you shouldn’t have a problem.

Be sure to track your credit card spending carefully

Even though you shouldn’t stress about using a portion of your credit limit, it’s important to keep tabs on your bills so you don’t wind up in over your head. One option is to set a weekly calendar reminder to check your credit card balances. If you see them getting too high, you can curb your spending until your billing cycle resets and you’ve managed to pay some of your balances off.

Also, pay attention to your credit cards’ interest rates. If you’re in an emergency situation and you have to carry a balance forward, aim to do so on the card with the lowest APR.

Finally, check your credit cards for automatic bills and make sure they’re expenses you should still be paying for. If you stopped going the gym months ago, you don’t want that recurring charge on your credit card every month. Paying attention to details like these could help you keep your credit utilization in great shape, which should help your credit score get to a good place or stay strong.

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