You should use less than 30% of a $500 credit card limit each month in order to avoid damage to your credit score. Having a balance of $150 or less when your monthly statement closes will show that you are responsible about keeping your credit utilization low.
If you want to go beyond just avoiding credit score damage and instead improve your credit score as quickly as possible, the best way to do that is to charge around 1% to 10% of your credit limit each month, then pay it off in full by the due date.
How Much of a $500 Credit Card You Should Use
- Rule of thumb: Less than $150 (30% of credit limit)
- Ideal usage: $5 to $50 (1% to 10% of credit limit)
- Safest option: You can use 0% of your credit limit and still have it improve your credit score. Your score will improve more slowly than it would if you charged a small amount each month and paid the bill in full by the due date, though.
Regardless of how much you use your credit card in a month, what really matters is how much of your credit limit is still available when your monthly statement closes, as that’s when the card’s issuer reports your balance to the credit bureaus. The balance divided by your credit limit then multiplied by 100 is your utilization percentage. Your credit score will take into account both your utilization on each credit account and your overall utilization between all your credit accounts.
Once you receive your credit card statement each month, it’s best for your credit score if you pay your full remaining balance on time and in full, if possible. This will help keep your utilization low the next month.
To get graded on your credit utilization as well as receive personalized advice on how to improve, you can join WalletHub for free and check out the Credit Analysis portion of your account.
This answer was first published on 07/24/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
FAQs
You should use less than 30% of a $500 credit card limit each month in order to avoid damage to your credit score. Having a balance of $150 or less when your monthly statement closes will show that you are responsible about keeping your credit utilization low.
How much should you use on a $500 credit card? ›
$500 — When you have a credit limit of $500, ideally your balance is $150 or less. $1,000 —If your credit line is $1,000, this means you should aim for a balance of $300 or less to maintain your credit utilization.
What's the minimum payment on a $500 credit card? ›
Percentage method: Some credit card issuers calculate the minimum payment as a percentage of your outstanding balance. This percentage typically falls within the range of 1% to 3% but can vary. For example, if your outstanding balance is $500 and the minimum payment percentage is 2%, your minimum payment would be $10.
What is 30% of 500 credit? ›
Answer: 30% of 500 is 150.
= 150.
What percent of my credit limit should I use? ›
Most credit experts advise keeping your credit utilization below 30 percent, especially if you want to maintain a good credit score. This means if you have $10,000 in available credit, your outstanding balances should not exceed $3,000.
Should I pay off my credit card in full or leave a small balance? ›
Bottom line. If you have a credit card balance, it's typically best to pay it off in full if you can. Carrying a balance can lead to expensive interest charges and growing debt.
Is having zero credit utilization bad? ›
While a 0% utilization is certainly better than having a high CUR, it's not as good as something in the single digits. Depending on the scoring model used, some experts recommend aiming to keep your credit utilization rate at 10% (or below) as a healthy goal to get the best credit score.
Is it bad to have a lot of credit cards with zero balance? ›
However, multiple accounts may be difficult to track, resulting in missed payments that lower your credit score. You must decide what you can manage and what will make you appear most desirable. Having too many cards with a zero balance will not improve your credit score. In fact, it can actually hurt it.
How to go from 500 to 650 credit score? ›
- 1. Make On-Time Payments. ...
- Pay Down Revolving Account Balances. ...
- Don't Close Your Oldest Account. ...
- Diversify the Types of Credit You Have. ...
- Limit New Credit Applications. ...
- Dispute Inaccurate Information on Your Credit Report. ...
- Become an Authorized User.
The value of 70% of 500 is 350.
Late or missed payments can cause your credit score to decline. The impact can vary depending on your credit score — the higher your score, the more likely you are to see a steep drop. Late or missed payments can also stay on your credit report for several years, which is why it is extremely important to avoid them.
What happens if I use 90% of my credit card? ›
Helps keep Credit UtiliSation Ratio Low: If you have one single card and use 90% of the credit limit, it will naturally bring down the credit utilization score.
Does credit card utilization matter if you pay it off? ›
Does credit utilization matter if you pay in full? If you always pay your credit card issuer in full each month and you never carry debt from one month to the next, your utilization rate shouldn't matter much in the long-term.
What does a credit limit of $500 mean? ›
A credit limit is the maximum amount of money a lender will allow you to spend on a credit card or a line of credit.
How much should I use on a 400 credit card? ›
You should use less than 30% of a $400 credit card limit each month in order to avoid damage to your credit score. Having a balance of $120 or less when your monthly statement closes will show that you are responsible about keeping your credit utilization low.
What is 10 percent of the 500 credit limit? ›
A very easy way to calculate your credit usage for any account on your credit report with a credit limit listed is to calculate 10 percent of the credit limit then multiply that number by three. Here's an example: if your credit limit is $500, take 10 percent of $500 which is $50.
How much should I use on a $300 credit card limit? ›
You should try to spend $90 or less on a credit card with a $300 limit, then pay the bill in full by the due date. The rule of thumb is to keep your credit utilization ratio below 30%, and credit utilization is calculated by dividing your statement balance by your credit limit and multiplying by 100.
