Knowing when your credit card bills are due is important, but is that really all you should know?
Being able to time purchases around reporting dates can save you points on your score. Your credit card balances play a part in the algorithm of the Credit Score models. An ideal percentage of usage is around 10% of the available credit limit. This is what I like to call the “sweet spot”. When you do this it will give you the optimal advantage to the credit card game.
Lets say you have 2 cards, each has a limit of $2,500. 1 card has a balance of $0, and one is maxed out. Even though only one of your cards is maxed out, and the others are empty you can see a considerable drop in your score. The reason is that the algorithm wants to see that the utilization of all your accounts is being used properly. Properly meaning not over 30% utilization. In addition, not using your accounts regularly can cause some lenders to close your account due to inactivity as well. This is generally a period of a great length of time such as 6 months to a year.
The biggest point here is that utilizing your credit cards properly can be detrimental to your ability to gaining higher credit limits from your existing lenders and also new credit card lenders. Currently anything from your animal vet bill to your dental work can be placed on a credit card. So being stuck at a small limit can hinder your ability to keep those scores high. Higher card limits means more flexibility in regards to how much you can spend on your credit cards without majorly impacting your credit scores.