Love everybody and welcome back to the channel. Today's video is going to be about credit utilization. What is it I get? This question a lot. I want to talk about a lot of different things.

I want to talk about credit utilization as far as the definition of it. The percentage credit utilization has, as far as an effect on your credit score and total also difference between like a credit card in a charge card when it comes to credit utilization and how it's calculated. So that's going to be a really good video, because I get this question a lot and it really depends on the situation. So, let's get right up to this video make sure you smash that like subscribe button, if we know this videos gon na be good other videos that give you guys a good lets go right into this video, alright.

So welcome back to the channel. So, first for people who don't know with credit utilization is let's get right into exactly what it is. Let's give you guys the definition, so I'm not going to give you like an official definition, but I'm gon na kind of just make it as simple as sweet as possible. It's pretty much the amount that you owe lenders in total.

For a specific you know it's all lender or in total all your lenders versus the amount that you have outstanding. So let's break it up even simpler. So let's say I have a credit amount total through all of my cards, not just one but all of the credit cards. I have numbers just one credit cards and it's just one, but let's say I have 10, so total I have in total.

If you add three thousand say one cards, three thousand one cards, seven thousand limit one cards, five thousand limit - let's just say it adds up right. I just said - adds up to fifty thousand dollars and credit available for me to use at any given time. It's going to be, and let's say I've only spent through all of that. I already have two thousand dollars.

I've spent okay, so it's gon na be the amount which is two thousand versus the amount that I have to use. Okay, that's pretty much of credit utilization is just taking the amount that you actually have spent versus the amount that you have in total. So what we're going to do, for you in this instance, is we're gon na do some quick, math and stuff like that. So, let's create that's pretty much your credit utilization, it's really short and sweet, alright.

So what I'm gon na do at this point, I'm gon na give you guys a screen shot of the calculator I'm gon na use right now with you guys. So let's say I have fifty thousand dollars right and what that $ 50,000. I've only spent two thousand dollars. Okay, so typically credit utilization.

It comes and a lot of the experts say you want to be under 30 percent, so no more than 30 percent total that you've used out of all your money. So, like I said, if I got fifty thousand dollars right there and I'm showing you no more than 30 percent the easiest way to calculate that is, if I got fifty thousand dollars, I'm going to multiply that I'm gon na take that 30 %. Give you a little math class right here. I'm gon na put point three: zero: that's going to equivalent to 30 %, okay! So a $ 50,000 times 0.3 0.2 spend no more than fifteen or have a balanced total of no more than $ 15,000.

Through. All of my cars now that's extremely high, but that's because this person, right here in this situation, has $ 50,000 to use. You'll, see the difference between somebody who has 50,000, where it's just somebody who has let's say 10,000 right, so we're going to do 10,000 times. Point but I just did divide my bad: let's try it again so times: 0.3.

0.9. Any given time versus the person. 1 50,000 can only spend 15. Ok, so that's a big difference.

It's both 30 %, but depending on the amount of money that you have or don't have available to you, it's going to make a difference of how much you should spend our shipment. Now again, 30 % is with experts use I'm more. So I want to be better than the average. Let's do like.

Let's really challenge yourself, that's try to be as low as possible. So what I always tell people friends family. You know people ask some questions on YouTube. Let's try to do 20 % because we want to be better than the average right we want to have better than average credit.

So, let's say if you have $ 50,000 to use total times 0.2 NT only what you guys spend in the morning 10,000 at any. Given time that's extremely high, so that's kind of lower that down to some, maybe so typically, you know I've seen, let's just do 10,000 for the example, so this is pretty easy, no more than $ 2,000 at a time to spend that's how it's calculated. Okay, just pretty much it 20 % is my tool that I use again. 20 % is what I do when I first started getting my credit, that's what I did.

It was 20 %, it wasn't a 30 %. Sometimes it was 1 %. Sometimes it was 0 %, the lower the percentage that you're using is the better okay, 30 %. Don't get stuck up on that, especially when you're just starting to build just as low as you can 5 % 1 % 1.25 ounces, whatever you want, but anything closer to zero is better, but I'm recommending no more than 20 %.

If you want to be the average ok, 30 % - okay, it's not gon na hurt you, but I want you to do like 20 and lower as close to zero as possible. If you can do zero than perfect all right. So that's what you want to do. That's our credit utilization is calculated, it's not all of the credit.

It's not it's, not just one credit card, that's calculated for utilization, it's the total of reviving credit that you have each month and it gives you that percentage. That's that now, when it comes to the credit, the credit chart, the FICO score tried I'm using this. This is courtesy of other lenders network for what I'm looking at right here, just kind of putting it out there that this is not my chart. That I made is this copyrighted? This is you know this? Is them okay, so I'm gon na put their name right there, but when it comes to this pretty much, what you're gon na do is you're gon na see the chart.

Now, typically, you got thirty. Five percent 30 percent, 10 percent, 15 percent and 10 percent, okay amounts, old or aka credit utilization is going to be amount sold. Okay, so that pretty much is the second highest factor on your credit score. So that means you really got to be like.

On top of this, this is not like a credit inquiry where you can, you know, do as many increases you want to, and it's like one of the smallest. You know like 10 percent. Okay, that's not you know. 10 percent versus the 30 percent is big.

Okay, so after you know obviously pay ministries, most important credit utilization is second, that's 30 percent of your FICO score. So you really want to make sure you know. Credit. Realization is one of your top priorities as far as, obviously you want to make sure you pay your bills on time, but you also to make sure you those are never too high, because that has a 30 % of the hundred percent of your score.

Okay. So that's really really big just make sure you are again under that 20 % closer to zero as possible, and if we're not there, let's do it exactly what we got ta do to get there and there seems to be some type of confusion. Typically, when it comes to how charge cards versus credit cards affect credit utilization, okay, so a traditional credit card gives you a limit every month of revolving credit. Okay, and you know what that limit is every month right, so you know hey.

I have a $ 1,000 credit limit. I don't want to spend no more because of what my still told you no more than $ 200 per month when it in any given time, okay or 300 or closer to zero, whatever one you want to do. Okay, so that's a traditional credit card. You know what your limit is every month, it's a thousand and you know typically, you really don't want to get anywhere close to a thousand.

Obviously, but you can't go over a thousand most of the time charge cards which are now only American Express cards. You have the image Platinum, the Amex gold, Amex green. These cards give you a no preset spinning limit, and it does not mean that you haven't eliminate amount of credit. You can go with your Amex platinum card and go spin, something for a million dollars now based on you know, certain circumstances, and you know factors that American Express maybe uses which state what they are.

I don't know if you're somebody who spins in Maine every every day or every month or something you may be able to pull that off, but for a little more people like myself, I can't just go swipe and spin a million okay. So it's no, no preset! Spinning limit does not mean no limit at all. It does sound cool, though, when you can, you know like hey. I think the most is that I could use when I press the button on the Amex.

That was about fifty thousand any given time. So, just to know that I can spend fifty thousand today it's pretty awesome, but I got to pay it back and I'm out in the next next month or so. That's the downside right, so the charge card credit utilization does not affect it and the reason it does not affect it's not recorded to credit bureaus, because there is no preset spinning limit, which is a plus for a max Platinum Card or any any any Amex charge Card, that's actually a pro, because there is no limit. The Amex cannot report.

You know the credit limit right, so they can't give you a credit utilization rate. It's going to always be zero and anything times. Zero is gon na be zero. So that's where the really pro, as far as having the charge card is again, because there is no preset spending limit aka, no credit, realization, it's gon na be affected, so you can really spend some money on here.

Rack up your points and just know that your credit musician is not going to be reported now your your highest balance, if I'm not mistaken, is reported your highest. So you know you obviously want to make sure you're still being responsible, obviously paying on time, but credit utilization when it comes to charge cards does not exist because there has to be a credit limit for them to do the math on. If you have no credit limit zero times, zero is going to be zero. So hopefully that answered your question as far as credit ization again, you want to stay no more than the 20 % if you want to be regular 30 % 20 %.

But my ideal is the lower you can be 2-0 is the best American Express charge cards to platinum, the gold, the green, the centaurian, those don't apply to credit utilization. If you check like apps like Credit Karma and things like that, you can actually see nothing is being reported for credit utilization for those because they have no credit limit to go off. Of that makes sense. So if you find this, video helpful definitely give me a thumbs up.

I really wanted to break this down because I get this question all the time from families, family, friends and a whole bunch of people on YouTube. So hopefully that really cleared the air with that. If you have any suggestions, you need tips or anything. Let me know but make sure you like share and subscribe, have a good one.