How Credit Utilization Works
Credit Utilization is a ratio of your credit card balance to credit card limit. The higher the credit utilization, the lower your credit score will be. Even though you may be paying on time, every time, it can be alarming to a creditor that you are using too much of your available credit limit. For the highest credit score, credit utilization needs to be below 10% on accounts. On an account with a $500.00 credit limit should not have a higher balance than $50.00.
It may not always be feasible to keep a low balance on your credit card. You really need a higher credit score when you apply for credit. So a simple strategy is thirty days before you know you're going to apply for new credit, pay down your credit card balance to below 10% of the credit limit and do not use the card again until the lender has made a final decision on your application.
Get a Higher Credit Score
There are three main strategies in dealing with credit utilization issues on your credit cards while maintaining a higher credit score.
- Pay off charges as soon as you make them.
- all your credit card issuer and ask them when they report your account to the credit bureaus. Make your monthly payment 3-5 days before they report. This way when they report your balance you should have a zero or low balance reported every time.
- Call your credit card issuer and ask for a credit limit increase. This will lower your credit utilization keeping the same balance.
Continue Reading
Today, we’re releasing our third Snapshot of Complaints Received from Servicemembers, Veterans and their Families. The report details the data and trends from consumer complaints we’ve received from members of the military community since July 2011.
Here are just a few highlights:
- Debt collection complaints have continued to rise since our last report, and now make up 39 percent of total complaints. It is our largest category of complaints from the military community.
- Credit reporting remains a top category of concern. 72 percent of these complaints are about incorrect information on credit reports. This remains a significant issue for the military community, one that we highlighted earlier this year.
- Student loans are another concern. 49 percent of these complaints are about problems dealing with a lender or servicer. In these complaints, we continue to see long-standing trends, such as servicemembers complaining about not being provided their Servicemembers Civil Relief Act rights.
This year our report also highlights our outreach efforts that allowed us to connect with thousands of members of the military community, as well as three of our enforcement actions that recovered millions of dollars for affected consumers, primarily servicemembers, veterans, and their families. These figures represent the positive impact of the work we continue to do on behalf of those who serve.
Problems with account services
Basic account servicing stands out as a significant area of concern for servicemembers. Most consumers can call their financial institution, visit a branch, or connect online to try and get the help they need to maintain their account. Unfortunately, for military personnel and their families, the realities of military life, including deployments, frequent moves, and a high operational tempo, can sometimes make access to those services extremely challenging.
We found that servicemembers were often subject to a variety of account maintenance or penalty fees, as well as account-access restrictions, which were triggered due to aspects of their military service.
These problems raise concerns that financial institutions may not have a true understanding of the servicing needs of their military customers and may lack proper procedures and protections for them. Detailed examples of servicemember experiences can be found in Section II of the report.
Check out the snapshot to learn more.
We’re listening
As always, if you have a problem with a consumer financial product that you can’t resolve on your own; or if you know someone in that situation, please remember that you can submit a complaint online or by calling (855) 411-2372. We make your voice heard.
