maiden_girl wrote:
GoldenloveNY wrote:I have a Discover More card that I just opened up 2 weeks ago. My credit limit is 1,000. However, after going through my monthly budget, I spend around $1,500. Should I use the card up to my limit, PIF, then continue using my card? Will I continue to earn cash back?
No. Stop.
Discover will less likely extend you any more credit if you appear maxed out. They can even decrease your credit limit if you max out every month. Even if you PIF.
I'm not sure why you would say that. Both of my Discover More auto-CLIs were granted after I maxed out my card and only paid the minimum every month.
SwampSystems wrote:
maiden_girl wrote:
GoldenloveNY wrote:I have a Discover More card that I just opened up 2 weeks ago. My credit limit is 1,000. However, after going through my monthly budget, I spend around $1,500. Should I use the card up to my limit, PIF, then continue using my card? Will I continue to earn cash back?
No. Stop.
Discover will less likely extend you any more credit if you appear maxed out. They can even decrease your credit limit if you max out every month. Even if you PIF.
I'm not sure why you would say that. Both of my Discover More auto-CLIs were granted after I maxed out my card and only paid the minimum every month.
Not certain I'd advocate only paying the minimum, but I agree that maxxing a tradeline isn't itself a problem. Lenders really don't care about a line that's maxxed in a given month, it's when that tradeline stays maxxed with a minimum payment month after month where they start getting edgy... and worse when your other revolving balances are also increasing.
I know the economic times are wonky, but the more you use a card, the more you demonstrate your financial ability and the more likely you are to receive CLI's with pretty much any lender in my opinion with few exceptions (*cough* C1).
Personally I run everything through a rewards card, at first was my BOFA 1-2-3 secured, and now my Zync (since the bulk of my spending is restaurants anyway), it not only demonstrates what I can reliably pay off, but also what my spend is, which helps not only with the lender in question, but every other lender as well. I don't see any downside to maxxing a card if you're PIFing, the only possible issue is one's FICO if you let that balance report, but that's easy enough to manage and since FICO has no memory on the revolving utilization calculation, so you can always fix that next month.
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You can max the card out and PIF as many times per month as you want. The creditor will actually see that you have a steady stream of income and simply need a larger line of credit. They will grant you a nice increase in 6 months. The only problem will be that it is likely reporting high utilization, this is only a problem if you are actively seeking new credit. Down the road when you seek new credit, just make sure the card is paid down to around 5% for a month before you apply for the new credit account.
+1 I agree. This is what I have been doing since I have been rebuilding my credit and it has worked wonder for me with both getting new CC and CLI. I don't think the creditor really care about it as long as you pay them back.
Not only do they not care. They get a huge amount of merchant fee's from the charges you make. So they like it, and are glad to extend you more credit.
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