Tag Archive for: what is credit usage

Make real estate leverage easy or hard… Your score, your choice.

Leverage is the secret to successful real estate investing. What they say is true: it takes money to make money.

The cheaper, easier, and faster your real estate leverage, the more you’ll enjoy investing.

The number one factor in how cheap, easy, and fast real estate leverage is? Your credit score. Let’s go over how that works.

How Credit Score Impacts Real Estate Leverage

A good credit score will help you find an affordable loan – even if your experience or income is limited. The better the score, the more doors will open for you.

Barriers fall away as your credit score rises. The loan you get with a 780 score is much simpler and cheaper than the one you’d get with a 640 score.

  • Cheaper money means you’ll make bigger profits with your deals.
  • Easier money means less paperwork and hoops to jump through.
  • Faster money allows you to take advantage of good deals when they pop up.

To succeed in real estate investing, you want all three working for your leverage.

Credit Usage vs Real Estate Leverage

Good investors pay their bills on time every month, keep a mix of credit, and practice other good habits that make up their credit score.

One of the most common obstacles that keeps good investors from the best money sources, however, is credit usage.

Credit usage is a percentage that says how much of your credit limit you’re using. Many investors use their personal credit cards to cover the costs of their investment properties. But this usage lowers personal credit scores and raises the cost of doing business.

Poor credit usage is a hidden enemy sabotaging many investors’ careers.

Winning Against Usage

If you’re in this real estate leverage game to win, then you need to understand the rules to win.

Rule #1: Keep your credit score up and your cost of funds down

One way to do this is to get credit cards off your personal name and into your business name. This allows you to continue using credit cards for projects, but they won’t impact your score in a negative way.

Keeping your credit score safe allows you to obtain cheaper, easier, and faster funding not only for your business but the rest of your life, too. Don’t let your investing business drive up your cost of living.

Where To Go From Here

If you want to learn more about how to obtain business credit cards you can find some great information on our blog.

Check out other real estate leverage information on our YouTube channel.

You can always send us an email anytime with questions about your credit and real estate investing loans at Info@TheCashFlowCompany.com.


Your credit card usage percentage is NOT the amount of debt you owe.

Usage is a percentage based on the amount of credit you have used compared to the amount available. It is not based on the amount of debt you owe.

Two people with the same job, age, gender, etc., can have the same amount of debt, but their credit scores can be completely different.

How does it work?

How Credit Card Usage Percentage Works

Let’s take these two similar people and break down their credit:

  • They both owe $1,000 on credit cards
  • Person A has a credit limit of $1,200
  • Person B has a credit limit of $5,000

It doesn’t matter that they owe the same amount. What matters is that what they owe in relation to their limit.


  • Person A has a credit usage of 83.33% ($1,000 owe/$1,200 limit)
  • Person B has a credit usage of 20% ($1,000 owe/$5,000 limit)

They owe the same amount, but Person A’s usage of 83.33% will negatively impact their score. Meanwhile, Person B’s 20% credit usage percentage will positively impact their score.

How to Avoid the Risks of a High Credit Usage Percentage

So if you can only use 20% of your credit limit before hurting your score… What’s the point of having a credit card at all?

As a real estate investor, the best way to help your score is move your credit card debt to a business card.

The second helpful step is to call your credit card company and ask them to raise your limits. This one trick will automatically raise your score (and lower your usage percentage!).

Other Credit Tips

Check out these other tips to quickly raise your credit score on our YouTube channel.

Send us an email anytime with questions about your credit and real estate investing loans at Info@TheCashFlowCompany.com.


Your credit score is key to gaining leverage. But usage is key to your score. So what is credit usage?

In simple terms, usage is the amount you have outstanding on your credit cards (and loans) compared to the maximum credit limit the banks have granted you.

Still confusing? Let’s break down exactly how credit usage works.

What Is Credit Usage?

Let’s look at an example with easy-to-follow numbers: 

  • You have a credit card with a limit of $2,000 and a balance of $1,000. (Aka, you’ve put $1,000 worth of purchases on this card. You’re allowed to put up to $2,000 on it.)
  • This means your credit usage is 50% ($1,000/$2,000). So you’ve borrowed 50% of the amount you’re allowed to borrow.

How Does Usage Impact Credit Score?

The higher your usage, the lower your credit score.

In other words, the higher your balances compared to your available credit, the worse your credit score.

If you put a lot of purchases on a credit card, or take a lot from a HELOC or other line of credit, compared to how much of that credit you can use up, then it will negatively impact your score.

What is the Best Usage for Your Credit Score?

Ideal usage is 20% or less. However, ideal usage is not 0%.

You should always use some credit, but never all. To get ideal usage on our example credit card with a $2,000 limit, you should keep around $400 on the card.

Does Credit Usage Matter to Investors?

Usage is the number one factor that holds back real estate investors from getting affordable loans. That’s because usage makes up 30% of what determines your credit score.

Note: Credit usage is not the only factor in your credit score. 35% of your score is determined by how you make (or do not make) your payments. If you’re paying late, or not making payments at all, then you will not have a good score or find affordable loans.

What Is Credit Usage? – How to Learn More

Concerned about your credit? Want to learn more about your credit score and your investing career?

Check out our YouTube videos about credit.

Send us an email anytime with questions about your credit and real estate investing loans at Info@TheCashFlowCompany.com.