Maintaining a Good CC Score question..

[RLewb]

I'm fairly new to using a credit card. I understand the whole "keep below 30% (which I believe is now more like 15-20% nowadays) of your limit" thing. Here is my question, and for ease of the math I will use easy numbers...

Say I have a $1000 limit. 30% of that is 300 dollars. So I should not spend more than that. Is this limit every time I pay it off? Or per month? i.e. If I spend $300, pay it off in the first two weeks of the month, then spend another $300 and pay it off in the next two weeks of the month, does it count as me spending %30 or %60?

The reason I ask is because I just recently got a raise, and the credit limit is far too low considering the new amount of money I am making. BUT, I have heard that asking them to up your limit can also temporarily lower your credit score (is there any truth to this / is it possible to do?). This would be bad if I plan on taking out loans/etc for cars or anything else any time soon.

Thanks for the help.

[BMEPhDinCO]

Hi RLewb,

The way it works is that, once a month, your balance will be reported to the credit companies. Thus, if you pay off the card in full BEFORE the balance is reported, you will have 0% of your limit reporting. The way you use the card during the month doesn't matter.

I recommend NEVER paying interest - that is, always pay your card in full. The amount reported will be on the "statement" as the amount you owe - thus, if you pay off in full before the balance is reported, but charge $300 the next day, your (for example) Transunion report will show $0 but you will owe $300.

If you spend $300 and pay it off every day, it would be fine - it's only the amount reported that matters.

As for getting a credit limit increase, depending on the company, they may do a "hard pull" of your report first, which would lower your score a few points, but the damage is very temporary. That said, you should still give your score 3-6 months to "heal" before applying for a loan after having a hard pull.

This is a great site for advice, but I also recommend you check out myfico.com, which is more specific for credit scores.

good luck!

[jpg7n16]

The reason I ask is because I just recently got a raise, and the credit limit is far too low considering the new amount of money I am making.

Sorry, how are those related? Just because you're making more doesn't mean you need a $20k credit line. You know - you're not required to spend every dollar you earn Keep your spending about the same, and save up the rest.

Just pay off the card every Saturday or every other Saturday. This will keep your average balance low enough.

You shouldn't be maxing out the card anyways, or likely shouldn't even use it for the majority of your purchases. Do you get good rewards?

This would be bad if I plan on taking out loans/etc for cars or anything else any time soon.

What loans are you planning on taking out?

What good does it do you to make a bunch more money, just to take out a bunch of debt and pay all your income to a car company??


I sense problems with your mindset about money and debt.

[snafu]

I have a different approach to managing CC. Know the cut-off date and payment due dates. To avoid paying interest pay the sum owning two business days in advance if due date,if you pay on-line. If you're paying the balance before billing dates, it doesn't advance your credit rating/FICO score.

[littleroc02us]

To difficult, just keep one card open and use it each month and pay it off. If you are looking to raise your cc score, just make payments to your debt, it's that easy. Also having a mortgage and making monthly payments and extra towards it is all you have to do. You guys are making this to hard. My wife and I have an excellent score.

[RLewb]

Sorry for the late response to people..

the reason me having a raise and wanting a higher credit limit applies (or at least I thought it did) was because I am already spending more money than my credit limit allows - it is just by debit. My point is that if I can spend it all on my credit and pay it back it may (or maybe it wont?) help my credit score more. e.g. say i am spending 30% at say 50$ each month plus $150 on my debit card.. I was under the impression that does less to help your credit score than spending 30% at say 200$ each month. Maybe that is incorrect but it is certainly the impression I was under.

So the general idea I got from everybody is this:

If I spend $50 one day, then pay it off the same day, then spend another $50 another 3 days later and pay it off in the same way as the first, it doesn't matter - what matters is how much I have spent at the time that it is reported. So if I am unsure of what day it gets reported I should carry a balance on the card of some percentage of the limit so that it doesn't say I have used "0%" of the limit when it is reported (which is a bad thing since not using the card lowers your score?) I just need to make sure that the days I pay off the card line up so that I don't have to pay interest.

Honestly I agree that this may just be too complicated and I should just spend my 30% and keep it until the end of the month and then pay it off then. I'm just mainly not trying to lower my score by using the card incorrectly is all, so this is prob the best option.

[maat55]

Don't bother worshipping the fico god, just pay your bills in full and on time, you will get a decent score with time.

[JoshuaHeckathorn]

Request a credit limit increase if you need one. It's really not that big of a deal. Your FICO scores may drop 5 points if they do a hard pull, but they'll bounce back within a few months.

Keep using 30% or less of your credit limit, always pay your bills on time and in full, and your FICO scores will continue to improve. Don't make things too complicated.

[AtoZ]

The damage to your credit report is short term and not a huge deal. The balance and repayment of the debt is what is most important.

[bjl584]

Simply don't carry a balance on your cards from month to month. Pay off the bill in full whenever you get your statement. The rest will take care of itself.