Anonymous asked in Business & FinanceCredit · 4 weeks ago

Staying close to Credit Limit?

If I have a $1500 credit limit and make a $1300 purchase but pay it off immediately, does that make me look bad? I will literally pay it off immediately 

2 Answers

  • 4 weeks ago

    Be careful about being near the limit because how much interest do they charge and what day do they apply it? If you can't work it out ring them and ask them to work it out for you. They don't give clear information on that unless you ask because they actually want you to be near the limit, think you're OK, then they can add the interest which sends you over the limit, then they can add their nasty charge. Work out or ask them what the real limit is, that is the amount you can go up to that can take interest being added and you stay under the limit.

  • 4 weeks ago

    No.  And paying it off immediately doesn't necessarily make you look good, either.

    If you have a $1500 limit, you're entitled to purchase any thing, or combination of things, up to $1500.  It doesn't make you look bad to do so.  Continuing to attempt to buy things after you've reached your limit will make you look bad, and failing to pay the minimum due on your monthly bill will make you look bad - but spending up to the limit does not.

    My impression is that the credit reporting agencies tend to give the highest scores to those who use about one third of their credit limit, and make monthly payments to remain at the one third mark, not going further into debt, but not decreasing the debt, either. Of course, that obligates you to pay interest each month.

    So - if what I've heard is true - then you have to choose between having a very high credit score, or saving money by paying off your card each month. If you're on a tight budget, avoiding interest payments when possible is the better approach.

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