Does it Really Matter If You Charge to the Limit?

[mja]

Hello Forum,

You all have taught me some really wonderful lessons!  I have a question about credit cards.  Does it really matter if you charge your cards to the limit if you PIF every month? Will charging to the limit have a negative impact on my credit score even though I am not carrying a balance?  Please let me know. Thanks!

[ryanbush]

Yes, if your cards show MAXED out on your statement, it will negatively affect your score

best way to do it if you're worried about your score is to pay in full before you statement date.

only really matters if you plan on apping for something though

[mja]

I just received a ch. 7 discharge in August.  I am trying to rebuild my credit, I already did the credit bureau clean up and so far I have 1 secured credit card and a new car loan.  The secured card limit is low ($300) so I know I'll max it out every month but I plan to always PIF so I wanted to see what impact it would have on my credit score.  If I understand you correctly, you believe that as long as I PIF before my statement date, I should be OK?

[jsucool76]

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@mja wrote:

I just received a ch. 7 discharge in August.  I am trying to rebuild my credit, I already did the credit bureau clean up and so far I have 1 secured credit card and a new car loan.  The secured card limit is low ($300) so I know I'll max it out every month but I plan to always PIF so I wanted to see what impact it would have on my credit score.  If I understand you correctly, you believe that as long as I PIF before my statement date, I should be OK?

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That should do it, although some lenders get upset if you go up to the limit. 

If you pay before your statement date, then your balance you had (probably something like $299) won't post to your reports,but rather a $0 balance will report since when your statement cuts you won't have a balance. 

[maiden_girl]

If you charge to the limit or over the limit (MAX) out...it will report on your CR as a high balance..Definitely do not recommend.

[espnjunkie]

Generally it's not a good idea to max out your credit card(s) each month, even if you do pay in full. Make multiple payments a month if you can until you can get higher limits.

[Anonymous]

If you let your statement cut with a balance that's more than 90% of your credit limit, your FICO score will take a big hit.  Actually, anything more than 10% causes some damage.  Ideally, one card reports <10% and all the others report $0 balance.  Of course, since utilization is super easy to manipulate if you pay-in-full all the time, the only time to worry about it is right before applying for new credit.

Also, going right to the limit can spook lenders.  It depends on the lender though, what your limit is, and how much history you have with the lender.  If you've had a $500 Cap One card for 10 years and always pay-in-full, going to your limit will be no issue.  If you just get a new card with a $10,000 limit, ringing that up right to the limit is more likely to be an issue.

[Wolf3]

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@mja wrote:

I just received a ch. 7 discharge in August.  I am trying to rebuild my credit, I already did the credit bureau clean up and so far I have 1 secured credit card and a new car loan.  The secured card limit is low ($300) so I know I'll max it out every month but I plan to always PIF so I wanted to see what impact it would have on my credit score.  If I understand you correctly, you believe that as long as I PIF before my statement date, I should be OK?

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Your score is very low due to fresh BK so I don't see how this matters at all.

[LS2982]

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@mja wrote:

Hello Forum,

You all have taught me some really wonderful lessons!  I have a question about credit cards.  Does it really matter if you charge your cards to the limit if you PIF every month? Will charging to the limit have a negative impact on my credit score even though I am not carrying a balance?  Please let me know. Thanks!

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If you charge it to its limit and it reports, YES.

You need to find out the statement closing date of the account and always PIF at least 1 business day BEFORE that date to be safe. Doing that is just fine.

[mja]

It matters because I am trying to build the score.  I know getting a credit card helps but I've read on these forums that how you use it could help or hurt so I wanted to see how to help myself.