Say NO To 0 Balance!

You’ve worked hard to pay down your credit cards to 30% utilization, but now what?

We touched on credit utilization in previous weeks, but it’s important to talk about since it accounts for 30% OF YOUR CREDIT SCORE!

Your goal, when paying down credit card debt is NOT A ZERO BALANCE! Similar to closing your credit cards, having a zero balance does not prove your ability to handle revolving credit to the credit bureaus. While it will not hurt your credit score, it will also not improve it. If your end goal is to IMPROVE your credit score, having a zero balance is not the answer.

While your initial goal is to get to 30% or below utilization, your ultimate goal, according to Money Tender, is to reach 8% credit utilization. Having 8% of your credit in use shows the credit bureaus the perfect balance of credit responsibility. 

                                            (Credit Limit) X 8% = (MAX Utilization)
                                                   $2,000      X 8% = $160

So while your INITIAL GOAL is 30% or below, your ULTIMATE GOAL is 8% utilization to see the most improvement in your credit score. 

To learn more about how your credit utilization could be affecting your home purchase COMMENT DOWN BELOW! 
Justice Roberts Loan Officer

Justice Roberts

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