For credit scoring, is credit utilization ratio on a continuum, or are there “tiers” (e.g. 30/50/70%)?
I’ve heard that people should optimally try to stay under 30% on their credit utilization ratio to maximize their credit score. And if not under 30%, then under 50%, etc. This implies that there are tiers, with actual cut-off points, and that the credit utilization ratio is NOT on a smooth continuum.
Are these just arbitrary numbers being thrown around, or are they based on actual features of the credit scoring system? For example, is there actually a larger difference between ratios of 49% and 51% than, say, 47% and 49%?
Please cite your source, if you have one. Thanks!