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I am buiding my credit history and now I have points; 741 equifax and 714 experian.
I have two credit cards which are usbank(limit : $6,000) and amex(limit : $5,000)
1) Do you think that my credit limit is normal based on my credit score? do I need to request for increasing the credit limit?
2) I usually make payment with credit card instead of debit card since spending with cash reward card give me 1% money back.
The following was my pattern using credit card
I spend $4000 out of $5000 credit limit in a month, and I pay off them when the statement balance is up.
I believed that no matter how much I use with the card, it's fine if I pay off all the balance as soon as the balance is shown up.
I didn't know that it had been counted as revoling account balance.
I recently figured out that the behavior (mostly paying with credit card) have effected badly on my credit history.
Because the revolving account balance used to be high.
Anyway now I know that I need to reduce revolving account balance.
but I am wondering, what if I pay off money before the statement balance is up?
(Revolivng account balance means "current balance" or "statement balance"?)
for example,
lets say, fico suggests me to use only $1,000 out of $5,000 credit limit.
I spend $3,000 in a month, and pay off $2,000 before statement balance updated.
Then my revolving money is $1,000 or still $3,000?
This is about "bulding credit history" and "getting reward money".
I spend $2,000~4,000 with credit cards in a month, and this gives me back 20~40 bucks for every month.
If my behavior is really not good for credit history, then I am willing to control my usage between credit card and debit card, because "bulding credit history" is much more important.
However, if revolving account balace means statement balance, I can get both benefits by paying off the money exceeding fico suggestion ($2,000 in the case of above example) before statement balance is up, right?
Thanks!
If you want to optimize scores, I would pay all or most of your balance off before the statement date.
This is especially true for low-CL cards, for example one with a $250 CL. If that card has a reported balance of $240, then it's got 96% utilization, and that will hurt your score.
Beyond scoring, it's possible to suffer adverse action from other creditors if you appear to be maxed out.
@khs8727 wrote:I am buiding my credit history and now I have points; 741 equifax and 714 experian.
I have two credit cards which are usbank(limit : $6,000) and amex(limit : $5,000)
1) Do you think that my credit limit is normal based on my credit score? do I need to request for increasing the credit limit?
2) I usually make payment with credit card instead of debit card since spending with cash reward card give me 1% money back.
The following was my pattern using credit card
I spend $4000 out of $5000 credit limit in a month, and I pay off them when the statement balance is up.
I believed that no matter how much I use with the card, it's fine if I pay off all the balance as soon as the balance is shown up.
I didn't know that it had been counted as revoling account balance.
I recently figured out that the behavior (mostly paying with credit card) have effected badly on my credit history.
Because the revolving account balance used to be high.
Anyway now I know that I need to reduce revolving account balance.
but I am wondering, what if I pay off money before the statement balance is up?
(Revolivng account balance means "current balance" or "statement balance"?)
for example,
lets say, fico suggests me to use only $1,000 out of $5,000 credit limit.
I spend $3,000 in a month, and pay off $2,000 before statement balance updated.
Then my revolving money is $1,000 or still $3,000?
This is about "bulding credit history" and "getting reward money".
I spend $2,000~4,000 with credit cards in a month, and this gives me back 20~40 bucks for every month.
If my behavior is really not good for credit history, then I am willing to control my usage between credit card and debit card, because "bulding credit history" is much more important.
However, if revolving account balace means statement balance, I can get both benefits by paying off the money exceeding fico suggestion ($2,000 in the case of above example) before statement balance is up, right?
Thanks!
The red is correct. If you spent $3000 on a $5000 CL, but paid $2000 prior to statement close, your UTIL would be 20% ($1000/$5000).
For ideal FICO scoring, UTIL on all CCs and each CC should be <10%. Also, less than 1/2 of your CCs should have a balance. So if you only have the 2 CCs, I would recommend paying US Bank to <$600 prior to statement close and PIF on the AMEX prior to statement close.
I think you're doing quite well but to maximize FICO scores you can pay before the cc cpmpany reports to the credit bureaus, if possible.
They usually rpeport to the credit bureau 3 - 5 days after the statement cuts. You can either pay the balance in full or pay most of it, and let them report a smaller balance. It's the reporting that's the problem. You're handling your accounts just fine.
I do that with Amex & CSP every month, I pay the balance off before they report and they report ZERO! I have other cards with balances reporting, so there's always usage.
You're building credit history by just having open accounts. You're also building good credit history by paying on time. Unless you want to app for something and need to maximize your scores, don't worry about utilization. Spend what you can afford and don't sweat the details. FICO scoring does not have memory of past utilization.
But with that said, considering your current monthly spend, you probably could use higher limits.
Thanks for all replies above.
All of them were helpful to me!
@watch44 wrote:
But with that said, considering your current monthly spend, you probably could use higher limits.
+1. Your CLs are largely dependent on scores, income, and usage.
OP, I would agree that, with your spend, you may need higher CLs. I'd highly suggest reading the AMEX 61 day CLI sticky thread under "Helpful Threads"