Does using your credit card more increase your credit score?

Does Using Your Credit Card More Increase Your Credit Score?

Many people believe that using their credit card more will increase their credit score. However, this is not necessarily true. In fact, using your credit card too much can actually hurt your score.

One of the most important factors that determines your credit score is your credit utilization ratio. This is the amount of credit you are using compared to the amount of credit you have available. A high credit utilization ratio can indicate to lenders that you are overextending yourself and may be at risk of defaulting on your debts.

For example, if you have a credit card with a $1,000 limit and you have a balance of $900, your credit utilization ratio is 90%. This is considered to be a high credit utilization ratio and could negatively impact your credit score.

On the other hand, if you have a balance of $100, your credit utilization ratio is only 10%. This is considered to be a low credit utilization ratio and will not hurt your credit score.

So, how much should you use your credit card? Experts recommend keeping your credit utilization ratio below 30%. This means that if you have a credit card with a $1,000 limit, you should keep your balance below $300.

Using your credit card more can also help you build a longer credit history, which is another important factor that determines your credit score. However, it is important to use your credit card responsibly and avoid carrying a high balance.