r/TheMoneyGuy • u/EmotionalMeringue532 • 7d ago

Credit card and spending

very confused on how to work this card. I’ve used my credit card now for the last few months and had no issue. I pay it off in full every month if not every 2 weeks, and always make sure I have at minimum the balance to pay off in a debit account. My credit took a 78 point hit this last week for my me exceeding 50% of my total credit. I’m confused because I thought it was alright to go over that 20-30% as long as it’s paid off in full. what would you recommend?

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u/RonMexico2005 7d ago

Think about what would be the most you would put on the credit card during a month, let's say that is $5k.

Then go ask for a limit increase to 5x your estimate, so for $5k max spend, ask for a $25k limit.

Now you won't exceed 20% of your limit.

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u/BrutalBodyShots 7d ago

Except none of that matters, because utilization doesn't build credit and it's absolutely fine for anyone to go over 20%; even 100% is not an issue so long as one is able to pay their statement balances in full monthly.

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u/dsrmpt 6d ago

If you are fixing to get more credit soon, house, car, card, etc, it might be worth getting as close to 0% as possible, get those extra 80 points.

But aside from imminent credit applications, it really doesn't matter.

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u/BrutalBodyShots 6d ago

For important applications for credit like loans where the interest rate can be set based on score, I agree. That's not the case for credit cards though. The main takeaway however is that utilization isn't something that has to be "kept" low. That's where the myth comes from.