Credit is a gift that you have to balance carefully. Use too little and it takes too long to build a positive credit profile, use too much and it can really limit your credit potential. Finding the balance can be simple if you listen to some expert advice and it can pay off dramatically in the end.
The Magic Number for Revolving Lines is 30%
Credit reporting agencies use formulas based on percentages to figure out what your creditworthiness is. Part of that formula is focused on how much credit you have at any given time. It is important that you are only utilizing 30% of your overall available credit as revolving lines. If you are a few percentage points over it likely will not affect your score but if you are above 50% you may be faced with some problems.
Understanding What 30% Means
Having a good understanding of what 30% of your revolving credit means will help you to manage your credit profile better. A good example is as follows:
- A $10,000 balance on a $30,000 revolving line is a 30% utilization!
In other words, your revolving credit line does not have to be 30% of your debt, you have to be sure (and this is true with all your debt) that you are only using 30% of what is available!
Where You Should NOT Be!
Keeping your credit profile stellar does take some work, like on time payments and not using all the credit that you have available. It is okay if you go up a few percentage points here and there but you NEVER want to get to the 90% point or above. Using 90% or more of your available credit sends the wrong signals and can actually wind up killing your credit!
We Have the Information
While most experts recommend the 30% rule, you may be able to take it up to 45% and still stay well in the range of a positive credit profile. We have talked with underwriters about what they need when it comes to credit worthiness and they have provided us with some tips. Our world-class underwriters have leaked a top secret piece of information in what specifically they are looking for: All Revolving Lines must be below 45% Credit Utilization. We can provide you with the information you need to protect your credit worthiness!