Intentionally taking on large card balance?

[Anonymous]

I've recently signed up for my first credit card. I have a good, steady job, and haven't had any adverse credit events. My score is currently low, however, due to a lack of credit history. I'm using my card for small daily purchases, and paying off the full balance each month. The card reports to all three agencies each month. I've not yet had a balance more than 25% of the credit limit.

Here's my question: I've been saving for a big ticket item for awhile now, that is close to 90% of my credit limit. I have the option to pay cash if I so choose. ASSUMING I DON'T GO OVER MY LIMIT OR MISS A PAYMENT, is it a good idea to go almost to my credit limit, then pay off the full balance? By good idea I mean, will credit agencies look on this positively, or negatively?

[Anonymous]

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@Anonymous wrote:
I've recently signed up for my first credit card. I have a good, steady job, and haven't had any adverse credit events. My score is currently low, however, due to a lack of credit history. I'm using my card for small daily purchases, and paying off the full balance each month. The card reports to all three agencies each month. I've not yet had a balance more than 25% of the credit limit.

Here's my question: I've been saving for a big ticket item for awhile now, that is close to 90% of my credit limit. I have the option to pay cash if I so choose. ASSUMING I DON'T GO OVER MY LIMIT OR MISS A PAYMENT, is it a good idea to go almost to my credit limit, then pay off the full balance? By good idea I mean, will credit agencies look on this positively, or negatively?

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If you pay off the full balance in the first month it won't hurt your credit score

[Anonymous]

Thank you. Is it a GOOD idea though? As in, will it HELP my credit to demonstrate I can pay off such a large balance quickly?

[gdale6]

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@Anonymous wrote:
Thank you. Is it a GOOD idea though? As in, will it HELP my credit to demonstrate I can pay off such a large balance quickly?

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It will look good in underwriters eyes. Welcome to My Fico

[skigirl916]

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@Anonymous wrote:
Thank you. Is it a GOOD idea though? As in, will it HELP my credit to demonstrate I can pay off such a large balance quickly?

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I don't think so.

Use it heavily, but don't go up to the limit. Otherwise, it looks like you NEED the card... NEEDing credit makes you look risky.

The only people who'd see that you paid it off quickly will be the bank the card comes from. To all other lenders, they'll see your high balance (ever reported on the card) and compare that to your limit. Bad.

[SunriseEarth]

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@Anonymous wrote:
I've recently signed up for my first credit card. I have a good, steady job, and haven't had any adverse credit events. My score is currently low, however, due to a lack of credit history. I'm using my card for small daily purchases, and paying off the full balance each month. The card reports to all three agencies each month. I've not yet had a balance more than 25% of the credit limit.

Here's my question: I've been saving for a big ticket item for awhile now, that is close to 90% of my credit limit. I have the option to pay cash if I so choose. ASSUMING I DON'T GO OVER MY LIMIT OR MISS A PAYMENT, is it a good idea to go almost to my credit limit, then pay off the full balance? By good idea I mean, will credit agencies look on this positively, or negatively?

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Cards around 90% UTIL are effectively maxed out in FICO terms.   if you use that much of your CL, I'd suggest paying down significantly before the statement closes.

Does your CC have rewards or some other incentive to use it instead of a cash payment?

[Anonymous]

It is neither good nor bad, although it could provide leverage for a credit limit increase if you talk to the CCC before you get the card, explain that you have a big purchase that you're going to make, and state that you would like to put it on their card, but need a CLI to do so. Long term, however, it shouldn't matter, even if you let the statement cut the first month with the 90% balance. As long as you PIF, your utilization will go back down, you won't pay interest, and your CCC won't care. Where people are saying you'll take a hit is when the statement cuts, your score will drop because it is effectively maxed out; however, as soon as you pay it off, it will go back to exactly where it was before. Utilization has no memory. 

[JSS3]

Max it out then pay it back!

This demostrates1.)you need a higher limit and 2.) you easily have the funds available to pay off whatever you run up.

[Anonymous]

I don't think that's true. Every TL to on my report lists the previous high balance regardless of what the current balance is.

[Creditaddict]

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@Anonymous wrote:
I don't think that's true. Every TL to on my report lists the previous high balance regardless of what the current balance is.

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and that is a good thing if your balance is no where near that now!