When the little trolls with the green visors determine your credit score, a big factor in their abacus-shuffling is how much percent of your credit limit you’re using. However, it’s not just your total credit utilization, all of your credit limits added together and divided by how much of that you’ve tapped, but also how much of each credit line you’re using, the individual credit utilization. Say what?
You might be only using 10% of all your credit, but if that one $500 card is at $490, it’s going to adversely affect your credit score. Instead, it’s better to use no more than 25% of any individual credit line, says The Better Credit Blog. Of course, it’s great if you can be debt-free, but if you can’t, but you can still choose which credit lines to use, and you’re concerned about your credit score, try spreading the debt around so it doesn’t take up more than 25% on any one line.
Utilization: Maintaining The Right Credit Balance to Limit Ratio [The Better Credit Blog]