credit card utilization and credit score
Debunking Credit Myths: Myth #8, Canceling Old Credit Cards Improves My Credit Score
What does “credit card utilization” mean on my credit score?
My credit score keeps going down because of my “credit card utilization”. I have no idea what that means and what I’m doing to cause it to keep going down because of it.
It says “Credit card utilization is defined as your total credit card balances divided by your total credit card limits. ”
So what could I be doing wrong? What should I be doing to make it better?
In simple words, Credit card utilization means that ‘How often you use your credit card, in comparision to the credit limit you have’ For example if you credit utilization is 40% then it means you are using $400 of your $1000 credit limit.
According to FICO, the consumers who have the highest scores in the country (760 and above) have an aggregate utilization of 7%.