According to my bank it’s best to use less than 10% of my limit, good if I use less than 30% and bad if I use more than 60%.
Because of this my credit score goes down if I use up more of my limit, even if I pay in full every month.
In my understanding someone who shows that he/she can pay back 100% of a bigger amount is more creditworthy than someone who demonstrated he/she can pay back 100% of a lesser amount. But the credit rating somehow sees this the exact opposite way.
So why is it bad to actually use your credit line, even if you pay back everything right away?
In: Economics
Even if you do pay it completely off every month, using the majority of your available credit indicates a “reliance” on credit.
This means that a bank considering extending you would see it as a risk to give you another loan, as it *could* result in you overextending your buying power. That’s why holding a high balance is detrimental.
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