Credit and Debit Cards
Improving Your Credit Rating

Is maintaining the recommended 30 to 35 percent credit usage on a credit card more beneficial to your credit score than paying it off in full each month?


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You should always pay your bill off in full. And when you do use your credit card, you should charge no more than 30 to 35% of your available credit. For example, let's say all of your credit cards combined total $10000 in available credit. At any one time, you should have no more than $3000 or so charged on these cards (that would be 30% of $10000). And you should only charge this amount if you can pay the balance of each card in full every month; otherwise, you'll pay interest, effectively making everything you bought more expensive. (Would you pay $10 for a McDonald's hamburger? Probably not--but if you put the bill on your credit card and don't pay it off, that's effectively what you're doing.) In other words, the idea isn't to keep a revolving balance on your cards. Your credit score benefits when you pay your bills on time and when you don't use very much of your available credit--both of these strategies show lenders that you are responsible with credit and don't live beyond your means.