Another way to increase
your credit card utilization ratio is to open a new account.
The credit card utilization ratio influences credit scores and has a simple calculation.
Going by our formula, the credit utilization ratios for cards 1, 2 and 3 will be 20 %, 40 % and 20.83 % while the overall
credit cards utilization ratio is 22.07 %.
The credit utilization of each card is as follows: Card 1, 0 %; Card 2, 30 % and Card 3, 29 % while the overall
credit cards utilization ratio is 18.5 %.
Some people may even be more specific by calling
it credit card utilization ratio.
By standard, it is expected that
your credit card utilization ratio should not be more than 30 %.
While it is important to pay attention to
the credit card utilization ratio, it is more important that you are careful about the balance you carry on your card in relation to the total credits available to you.
If you have time to play around with your balance for at least 60 days prior to a loan to try to reach the perfect 1 %
credit card utilization ratio - go for it!
The biggest positive impact it will have is to bring up your credit score by reducing
your credit card utilization ratio.
Paying only the minimum payment can lead to
your credit card utilization ratio increasing, which will lower your credit score.
Plus, paying off your cards reduces
your credit card utilization ratio, which can practically boost you credit score overnight.
You don't want to close the card as
your credit card utilization ratio will take a hit.
This lowers
your credit card utilization ratio and helps maintain a good credit score.