Is staying under 20% of your credit limit the fastest way to build credit?
My friend, who is a finance major, says if you pay your credit card bill on time every month it builds your credit. But he also said it builds it up even more so if you stay in the bottom 20% of your credit limit. For example my limit is $500, so if I stay $100 or less a moth, and pay it on time, it will build my credit fastest?
Utilization is calculated at the time the report is pulled. If you stay below 20% (10% for spotless credit) then you are always getting the maximum points for utilization. Even if you max out a card(not a good idea), you can get these points back by paying in full and waiting until the account is updated with the bureaus.
That makes sense, but at the same time, they will also look at how often you use it and what you use it for. My old personal AMEX card was only ever used for small items if i was traveling so i never really put more than $500 on it.
My business card from AMEX was around $2000 when i opened it for my small business but they soon put it up because I would order something, and pay it off in a few days. Even after getting my bill, i always paid in full 4-5day after i got the bill. They kept putting my limit up and up because i was spending and paying more and more on it.
Depends a lot on “how” you use the card.
nothing happens fast with credit