How Much Should I Use My Credit Card To Have A Good Credit Score?


We are always looking for ways to raise your credit score. Thanks to a smart LearnVester’s comment (thanks Lavanya!), Credit Karma thought it would be helpful for you credit-savvy consumers out there to know how credit use affects your credit score.

Is it okay to rack up credit debt if you pay it off by the end of the month? How often should you use your credit card to improve your credit score? Should you stop using credit cards altogether?  Let’s dive in.

The Magic Number.

A significant component of your credit score is your credit utilization rate—the ratio of your total credit card balances to your total credit limits. Lenders pay attention to your credit utilization rate because it’s a reflection on whether you are responsible or risky in handling credit.

RELATED: 9 Ways to Raise Your Credit Score … Fast

For example, a credit utilization rate of 85% may reflect that you are credit desperate or financially unstable (after all, you are spending tons of money that you don’t have); a credit utilization rate of 0% may also have a negative impact since you need active credit management in order to build credit. The magic number for credit utilization rate happens to be under 30% for a good credit score (find out why here).

Credit Score Savvy Rules To Using Your Credit Card.

The #1 cardinal sin is thinking that not using credit cards at all will help your credit score. Credit cards are one of the best tools to build your credit, as they consistently demonstrate every month how responsible you are with credit. The key here is to use your credit cards the right way to benefit your score.

1. Consistently Manage Your Credit Utilization Rate.

Stay under 30% of your total available credit at all times during the month. Don’t rack up your credit use to 75% and promise to pay it off at the end of the month. Your credit score utilization rate is calculated as a snapshot at the time of scoring, so it may catch you at your peak credit use. Plus, letting yourself max out your credit card, even if you can pay it back, is a good way to practice a bad habit.

RELATED: LearnVest Checklist – Ways to Raise Your Credit Score and Keep Track of It

2. The Lower Your Credit Utilization Rate, The Better Your Score.

Lower credit utilization suggests to lenders that you manage credit responsibly by not being over your head in debt, even when you have available credit on hand. Remember that your credit utilization rate is relative to your total credit. If you have a $300 balance on each of your $500 limit credit cards, you are utilizing a big 60% of your credit—no good. If you are utilizing $2,000 each on two $10,000 cards, you are utilizing 20%—great. Know your credit limits and how much you are using.

3. Don’t Keep A Balance On Your Card!

A big, big misconception around credit cards is that you must carry debt from month to month in order to have good credit. No! We advocate using credit cards to build credit, but we definitely don’t encourage you to stay in debt. When your credit card statement comes in, the absolute best thing to do is to pay it off in full (having high credit utilization typically comes from people keeping debt on their card and piling more purchases month to month). Once you pay your credit card off, your credit utilization rate is now 0%, so continue to put small purchases on your card. Continue purchasing only what you can pay off at the end of the month and up to 30% of your total available credit.

The golden rule with credit cards? Only purchase what you can afford to pay back in full at the end of this month, not by next month or by next year. Do that, and your credit score and your credit card can coexist in financial peace—and that’s just good credit karma.

  • Lavanya Madhusudan

    Thanks so much for this great article, it’s very helpful! I just realized you actually read my comment on a previous post, it’s nice to know that readers’ comments and questions are read and replied to!

  • Lavanya Madhusudan

    Thanks so much for this great article, it’s very helpful! I just realized you actually read my comment on a previous post, it’s nice to know that readers’ comments and questions are read and replied to!

  • Smoojaz

    Love this article. Just paid off all credit cards and looking for a way to not loss my availible credit line.

  • Nicolettealger

    Good information, but did still not answer the question how often should I use my card?  I don’t use a credit card, but understand I may need to occassionally to help my credit score.  SHould I use it once a month for a tank of gas?  Or is once every six months sufficient?

    • TreyMosley

      Question was answered, Just not spoon fed, 30% is the magic number. That’s how often you should use it. Meaning it’s all relative, depending on your credit limits. It’s a simple math problem, you should use it however often it takes to accumulate debt 30% or less of your total credit limit. For example, if your limit is $1,000, then you use your card as often as it takes for you to accumulate $300 in charges (30% of your total $1,000 limit), then you stop, pay it off and rack up another $300 or less the following month, so on and so forth…

  • tiffjan

    My question is, if I pay off my balances every month in full, how would that help with my credit utilization? That would make it 0% and show that I’m not using the card.

  • Judah H

    I thought it was around 30% of the credit limit of the card, thanks for this information. :) Building my credit without going in over my head is a great habit.

  • FedoraMGTOW

    Great article! I’m a young man in my early twenties just now using my first credit card and there’s a lot of disinformation out there. I was under the impression that, for some reason, instead of paying off my purchases in full, a better way to establish credit was to pay in increments over the course of a few months. It didn’t really make sense to me, but that was the advice I was given so it’s all I had to go on. I was also told it was a good idea to keep my spending to no more than 50% of my credit line, but it turns out I should keep my balance under 30%. Very helpful indeed.

    • Johhny

      Hey I’m in my twenties too,
      Yes, stay below 30% at all times. Personally for me I stay below 25%. When you carry a balance you will incur “interest” charges, therefore a part of minimum payment will go towards that. So you’re actually making less than the minimum payment towards your credit card “debt.” If you can’t pay the balance in full pay more than the minimum payment that is required. It’s always ideal to pay more than the min’ payment because it will lower your utilization. I got my first credit card little over a year ago with a $1000 credit line. At first I thought I had to carry a balance to improve my credit score, but as long as you make on time payments and utilizing below 30% you are safe. On the other hand, keep your balances low, pay on time, and pay more than the minimum because if emergency comes up and you don’t want to make a dent in your savings all of a sudden that’s when a credit card is helpful. If used responsibly it can be a useful and a flexible tool. So with common sense, budgeting, and researching you can avoid less debt, lesser debt, or no debt. But my credit line has increased, I got another four credit cards (no more for me!), and I keep my balances VERY low on my other cards or don’t use them for a couple of months as long as they have ZERO balances.

  • Ada Alvarado

    can i use it once a year or twice?

  • Walker Cooper

    Very good advice