Did you know... if you have a $10,000 limit on a credit card, are utilizing $1,000 each month, are paying the card off, and are putting the $1,000 right back on, you are hurting your credit score?

Why?

It is all about utilization, and when you pay it off and put it on, it hurts your credit score.

Try this instead.

If you have a balance of $1,000, pay it off. Then try only putting $300 on the card each month.  You can pay off the $300 balance each month and improve your score.

How does this work?

When you make this change, you have used $1,000 of your credit, and now you are using $300. You are now at 30% of the $1,000 and have a 30% utilization.

It does not matter about the $10,000 limit – the limit has never been fully utilized. Your credit is dependent on your usage and utilization.

If you are thinking of buying a home, it is critical that you have the highest credit score possible to get the lowest interest rate available. The best way to improve your score is to talk to one of our mortgage specialists. We can look at your credit and let you know how to improve your score.

For more tips, check out 3 things you can do to improve your credit scores.