Best Time To Spend On Your Credit Card & How Much To Spend (INCREASE YOUR CREDIT SCORE)

Summary

In this video, financial expert Sasha advises on optimizing credit card usage for a better credit score. Key tips include spending soon after monthly payments, aiming for a 30% credit utilization, and paying off balances in full. Sasha, with extensive experience in credit card services, clarifies misconceptions about credit scoring and emphasizes the importance of responsible borrowing and repayment to build credit.

Takeaways

• 💳 Use your credit card right after your monthly payment is due to start a new credit cycle.
• 📈 Aim for a credit utilization ratio of around 30% to optimize your credit score.
• 🚫 Avoid maxing out your credit card as high utilization can signal financial stress.
• 🌐 The advice applies globally, not just in the US, but the specifics can vary by country.
• 🔒 Always pay your credit card balance in full each month to demonstrate responsible borrowing.
• 📅 The exact date of credit card data submission to credit agencies isn't critical for your score.
• 💡 Consistency in credit card usage is key to maintaining a good credit profile.
• 💡 Keeping utilization below 50% at all times simplifies credit management.
• 💼 If building credit is your goal, consider setting up regular automatic payments.
• 🔗 Link your credit card to a subscription or regular purchase to automate spending and payments.

Q & A

What is the best time to use your credit card for optimal credit score improvement?

The best time to use your credit card is as soon as possible after your monthly payment is made, preferably putting most of your monthly spending on that credit card at that point.

Why is it important to pay off your credit card in full each month?

Paying off your credit card in full each month helps improve your credit score by showing credit card companies that you can responsibly borrow money and pay it back, which is crucial for future credit assessments.

What is utilization in the context of credit cards?

Utilization refers to the proportion of your balance relative to your total credit limit. It's an important factor in credit assessments, with optimal utilization typically being around 30% in the US.

Why is it advised to keep utilization below 80 percent?

Keeping utilization below 80 percent helps avoid the appearance of financial stress or potential debt problems, which can negatively impact your credit score.

What is the significance of the credit card cycle?

The credit card cycle runs from one monthly statement to the next and is significant because it determines when your spending is recorded and how it affects your credit score.

Why should you set up an automatic payment for your credit card?

Setting up an automatic payment helps ensure that you never miss a payment, which is beneficial for maintaining a good credit score as missing a payment can be very damaging.

How does the timing of your credit card spending affect your credit score?

The timing of your credit card spending is important because it affects your balance at various reporting dates, which are used to calculate your utilization ratio and other credit score factors.

What is the recommended strategy for spending on your credit card if your credit limit is high?

Even with a high credit limit, you don't need to build a high balance to have good credit. Spending less and maintaining a balance around 30-40% of your credit limit is advisable.

Why is it suggested to spend on your credit card the day your automatic payment is made?

Spending on your credit card the day your automatic payment is made ensures that your balance is temporarily high right after the payment clears, keeping your utilization ratio in the optimal zone.

What are two important tips for managing credit card spending to build credit?

Two important tips are to keep your utilization below 50% at all times and to consider setting up a regular monthly payment that comes out automatically on the right day.

Why is it beneficial to have a consistent credit card spending and repayment pattern?

A consistent spending and repayment pattern makes it easier to manage your credit utilization ratio and ensures that your credit score is positively impacted by showing responsible borrowing and repayment habits.