Spend almost 100% of your available credit

Krisko

Hi,

I understand that I shouldn't use more than 50% of the credit available to me, but can lenders see the how much of my available credit I have used in the past?

If they don't, is there a problem spending almost all of your available credit every month, get as much points/cashback as possible and then pay in full?

And when you eventually are applying for new credit you make sure to not spend more than 50% the previous month?

Thank you

Money-Saving-King

Not quite sure what you're on about. The more simple rule is if you want to pay off the balance in full to earn cashback etc don't spend more than you can afford. It's got nothing to do with potential credit limits etc.

You get a credit card to earn benefits and stay in complete control. If you don't know how much you should spend of the limit then that's not complete control so you shouldn't apply.

redpete

Money-Saving-King wrote: »

Not quite sure what you're on about.

They are on about not damaging the credit rating that a potential lender will give them (or not damaging the far less relevant credit score that a Credit Rating Agency might give them).

Spending and paying off within a month should have no affect on either but I don't know whether or not it does.

planteria

Krisko wrote: »

I understand that I shouldn't use more than 50% of the credit available to me...

where do you understand this from?

Krisko

planteria wrote: »

where do you understand this from?

This forum. I've read that you shouldn't spend more than about 50% of the credit available to you, but that may only apply if you won't be paying in full?

Thank you

SnowTiger

Krisko wrote: »

Hi,

I understand that I shouldn't use more than 50% of the credit available to me, but can lenders see the how much of my available credit I have used in the past?

If they don't, is there a problem spending almost all of your available credit every month, get as much points/cashback as possible and then pay in full?

And when you eventually are applying for new credit you make sure to not spend more than 50% the previous month?

Yes, potential lenders can see a history of your credit limit and how much you've spent and paid each month.

Is spending more than 50% of your available credit every month and paying it off a bad thing? If I was a lender I'd see it as someone who's handling the credit they have available well.

Before the credit crash, it was common for credit card companies to automatically increase limits when customers approached them... or breached them!

Krisko

SnowTiger wrote: »

Is spending more than 50% of your available credit every month and paying it off a bad thing? If I was a lender I'd see it as someone who's handling the credit they have available well.

That makes sense to me, but I'm sure I've read on this forum that you shouldn't use more than 50% (ideally 30%) of you're available credit. Is that just if you intend to carry a balance?

SnowTiger

Krisko wrote: »

That makes sense to me, but I'm sure I've read on this forum that you shouldn't use more than 50% (ideally 30%) of you're available credit. Is that just if you intend to carry a balance?

There's lots of nonsense posted here and regurgitated. :rotfl:

zagfles

Krisko wrote: »

Hi,

I understand that I shouldn't use more than 50% of the credit available to me, but can lenders see the how much of my available credit I have used in the past?

If they don't, is there a problem spending almost all of your available credit every month, get as much points/cashback as possible and then pay in full?

And when you eventually are applying for new credit you make sure to not spend more than 50% the previous month?

Thank you

What you might have read is that you should have a credit limit of about twice what you intend to spend per month. That's because your credit limit is not a monthly spending limit (as you seem to be assuming above?), it's the most you can have outstanding at any time. This includes previous statement balance and all spending in the current statement period.

If you pay your statements in full on the due date, which is usually 25 days or so after the statement date, just before paying you'll have almost two months of spending owed on the card.

Krisko

zagfles wrote: »

What you might have read is that you should have a credit limit of about twice what you intend to spend per month. That's because your credit limit is not a monthly spending limit (as you seem to be assuming above?), it's the most you can have outstanding at any time. This includes previous statement balance and all spending in the current statement period.

If you pay your statements in full on the due date, which is usually 25 days or so after the statement date, just before paying you'll have almost two months of spending owed on the card.

I should have said previous "period", thank you.

YoungTrafford

I think this is another of the unknowns in the credit game.

One lender may apply more weight to how much of your available credit you use, so running 90-100% and paying off in full may look bad.

Another lender may look more at how much you pay off... So if they see you can pay off 90% of your credit regularly, you can obviously afford that amount monthly, so they may see it as a good thing.

A third lender may look at both and theorise that you will use your new card in the same way, and maybe you will put yourself in a position whereby you stop paying off in full and so join the band of customers that they really want, those that can pay but also incur interest.

Most lenders would see high debt usage and minimum payments as a potentially bad risk as that person can obviously not afford much more debt.

I think the responsible lenders out there would see you as a potentially good customer as you can pay your bills, despite their size, but who can tell? It's a competitive market, and different companies have a different set of customers that they would like.