Credit Usage and 30% Rule

How does your credit impact your credit score? Today we will take a look at the credit utilization on your credit score. Credit experts recommend keeping your credit usage under 30%. If you use a credit monitoring service such as Credit Karma they constantly recommend keeping your credit usage under 30% to achieve a good or excellent score.

The three major credit score companies don’t have this as a die-hard rule. However, the lower the credit usage on your accounts the better your score can be. There are a number of other factors the credit companies use such as number of accounts, length of credit history, and one of the most important payment history. So always make sure you pay your bills on time. A derogatory mark on your credit can take years to correct itself back out.

Experian says the 30% rule is not a target but rather a maximum limit. Going over that amount can have a significant negative impact on your credit score.

The amount of credit you have open does impact your score but keep in mind that major negative influence which are missing payments, a number of inquiries on your credit report, opening a new account. Take these and a high utilization of your credit you will surely see a major negative impact on your credit.