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One of the biggest mistakes people make when trying to be ‘responsible’ with their credit is using too much of it. Most people believe that if they use their credit cards to the max and pay it off at the end of the month, this helps build credit. This is not true. This actually looks as if you’re overusing your credit, thus it’s not building it.
This is called credit utilization percentage and it’s one of the largest factors when it comes to maintaining and improving your credit score. For example, if you have a $1000 credit card and you charge 400 on that $1000 credit card, your credit card utilization rate is 40%. This is considered really high and will hurt your credit. The best thing to do is not overuse your credit. Also, do not close cards that you aren’t using any longer. Keeping them open gives you a higher availability of credit, meaning lower utilization rate.