Is individual credit utilization or total credit utilization more important?
When your credit utilization is reported to the credit bureaus, your credit utilization grade is calculated based on your total credit utilization (ie the balance of all of your credit cards divided by the total credit limit of all of your credit accounts). The lower total credit utilization you have, ideally under 30%, then the better your credit utilization grade is which should have a positive impact your credit score.
Although the total utilization is what is used by the bureaus, individual utilization is still extremely important as it allows you to have better control over your total credit utilization. See the graphic below as an example.
If you have a card with a high balance, a good way to decrease your individual credit utilization is to sign up for a balance transfer card (ie. card used to transfer an amount owed on one credit account with a lower interest rate, fewer penalties or benefits, such as rewards points or travel miles). This will increase your total credit limit which will decrease your total credit utilization!
If you’re ready to start building credit, Curu is here to help!
Sign up for Curu at curu.app or download on iPhone.
Once you sign up, Curu will automatically find the best credit card(s) for you using CardMatch™. From there, Curu will make sure you’re on the best path to credit score success by notifying you of any opportunities to properly build and improve your credit score.
If you have any credit related questions or want help with signing up for your first credit card, reach out to our customer success team at support@curucredit.com!
