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Which one is better for credit score: use and charge the card a lot or keep money on them and don't spend much?

Personal Finance & Money Asked on July 10, 2021

If we have a credit card with 1000, 2000, 5000 of dollars, is it a good idea to use it daily like spend 30%-50% of the money per day and recharging the card at the same day just to increase the credit score faster?
Or it’s better to keep money into the card all the time and just spend like 30% at the weekends and recharging them agan at the same day?

Which scenario is better to build credit score ASAP?

One Answer

There is nothing in your credit score that is based on frequent use and repayment of your credit cards. In other words, using a card and then paying it off the same day or next day has no more effect on your credit score than paying it by the due date, with only one exception: The due date of your credit card payments and the date on which your bank reports your account to the bureau have NOTHING to do with each other. So, if you run up a high balance, expecting to pay it off by the due date, it's entirely possible the bank will report your account to the bureau before then, in which case your score would be negatively (but only temporarily) affected by a high utilization rate.

You can't run up your credit score by using your cards more often - you can only hurt your score by having high utilization rates reported. Based on your plan, let's say you run your cards up over the weekend with a plan to pay them off on Monday or Tuesday, and somehow it turns out your bank runs a bureau reporting cycle in between then? Your report will show a high utilization rate and your score will come down.

The GOOD news is, your score will recover once you pay the balances down again. But what you're trying to do achieves nothing. Better to have cards with reasonably high limits and very low balances, preferably under 10-15%, if not 0%.

Answered by RiverNet on July 10, 2021

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