“I’ve been told the lower the percentage used monthly while paying it off in full the better it’ll be for my credit”: Confused about how much credit to use? I have two cards and want to boost my score fast. How can I optimize my spending?

Hey Money Minder,

So here’s the deal – I know I should be using my credit cards each month but not too much. But how little is too little? Like, should I be splurging 50 cents or closer to $10 to boost my credit score?

I accidentally ended up with 2 cards – a $1k secured one and a $500 rewards card. Should I use both or just stick to one to build up my credit ASAP and get my deposit back in 6 months?

By the way, I’m just a broke college student who spends most of my money on groceries. I don’t want to max out my cards and end up drowning in debt, but I realized I could’ve been racking up rewards for years if I’d used credit instead of debit.

Cheers,
Budget Guru

Response from THE MONEY MINDER:

Hello There,

Congratulations on taking the initiative to build your credit and improve your financial standing as a college student. It’s great that you’re thinking about how to use your credit cards strategically to benefit your credit score.

In terms of how much to spend on your credit cards each month to optimize your credit score, the key is finding a balance. While using your credit cards and paying them off in full each month is beneficial, using too little or too much can potentially impact your credit score. Spending a small amount, such as 50 cents, may not have a significant impact on your credit utilization ratio, which is an important factor in your credit score. Aim to use your cards for essential purchases like groceries, but avoid maxing them out or carrying a balance.

Since you have two credit cards, you have the opportunity to manage them strategically. Using both cards responsibly can help you build a positive credit history. Consider using your secured card more frequently as it typically reports to credit bureaus and helps improve your credit faster. However, using your rewards card for specific purchases or as a backup is also a good idea.

Remember, the key is to use your credit cards responsibly, pay them off in full each month, and keep your credit utilization low. By doing so, you’ll be on the right track to improving your credit score and achieving your financial goals. All the best from THE MONEY MINDER!