Page 100 - Credit Matrix: The Path to Financial Liberation Red Contract

Hack #5: The Zero-Percent Utilization Boost**

**Overview of the Strategy**

Hack #5, termed "The Zero-Percent Utilization Boost," revolves around a strategic
approach to credit card use and payment that can have a profound impact on
your credit score. The core of this hack lies in utilizing your credit card for daily
expenses while ensuring the balance is paid off multiple times within the billing
cycle. This approach maintains a zero or near-zero credit utilization rate, a key
factor in credit scoring algorithms.

**Step-by-Step Breakdown**

1. **Credit Card Selection**: Choose a credit card for everyday purchases. This
card should ideally have no annual fee and a grace period that allows you to pay
off your balance without incurring interest charges.

2. **Regular Usage for Daily Expenses**: Use this credit card for routine expenses
such as groceries, gas, and other daily necessities. The goal is to integrate the
card into your regular spending, replacing cash or debit card usage.

3. **Monitoring Expenses**: Keep track of your spending on the card. This can be
done through the credit card's online banking app or a personal finance
management tool. Monitoring ensures you remain aware of your spending and do
not exceed your ability to pay off the balance.

4. **Multiple Payments Within Billing Cycle**: Instead of waiting for the billing
statement to pay off your credit card balance, make multiple payments
throughout the billing cycle. For example, if your billing cycle is monthly, you can
pay off the balance weekly or even after each significant purchase.

5. **Maintaining Zero or Near-Zero Utilization**: By paying off the card frequently,
you ensure that your credit utilization rate – the ratio of your credit card balance
to your credit limit – remains at or near zero. Credit utilization is a major factor in
credit score calculations, and a lower rate is generally better for your score.

6. **Credit Bureau Reporting**: Credit card companies typically report to the
credit bureaus once per month, often at the end of the billing cycle. By keeping
your balance low throughout the cycle, the reported balance – and thus your
utilization rate – remains low, positively affecting your credit score.