Don’t max out your credit card! Be careful if the quota usage rate exceeds the warning line of 1

Use credit cards rationally, control the credit limit and pay on time, and accumulate a good credit record. (Drawing by this newspaper)

[Financial Channel/Comprehensive Report] Experian, a US credit reporting agency, reminds that when the utilization rate of a credit card limit exceeds 30%, it may begin to affect your credit score; it is also important to note that some negative credit records may remain on the credit report for up to 7 years. Experts suggest that if you want to maintain good credit, it is best to control the credit card limit below 30%, and even lower than 10% for high-scoring groups.

Credit Utilization refers to the ratio of the cardholder's used credit limit to the total available limit. It is also one of the important factors affecting credit scores, and it is one of the few items that can be adjusted in a short period of time.

Experian pointed out that some negative credit records may remain on the credit report for up to 7 years, but many credit scoring models mainly refer to the utilization rate of the most recent return. Therefore, as long as you pay off part of the credit card debt and reduce the utilization rate, you have the opportunity to improve your credit score quickly.

Experian emphasizes that the lower the utilization rate of your credit card limit, the better it is for your credit score. Experts generally recommend keeping it below 30%, and consumers with the highest credit scores often have utilization rates below 10%. In other words, if you want to control the usage rate of a credit card with a limit of 100,000 yuan below 10%, the balance on the account should not exceed 10,000 yuan.

Why does the amount of credit card swiped affect your credit score? Because the credit scoring model will refer to the latest credit card balance and limit reported in the credit report. If a large amount of credit is used over a long period of time, it may be considered a higher credit risk, which may affect the score even if there are no late payments.

Experian suggests that cardholders can reduce the amount of credit card swiped, or pay in advance before the bill settlement date to reduce the book balance reported by the bank, or consider applying for a higher credit limit.

In addition, there is no need to rush to cancel credit cards that are infrequently used, because closing the account may reduce the total available limit, which in turn will push up the overall usage rate. However, if the card has an annual fee or other costs, you should still weigh whether it's worth keeping.