Hi, I've been doing this for the last year and am still not sure if it can be a bad thing since I will be applying for mortgage soon. Basically I travel a lot for work and I book all my flights, hotels, car rentals, meals, etc on my personal Visa card since I earn lots of Aeroplan points. Most travelers at my company do this. I get reimbursed by my work and pay off my card. The Visa is paid in full every month but the monthly charges can be anywhere from $2,000 to $14,000. I also use it for personal use. I also have one MasterCard with no balance, and a car loan in good standing (owing 18k from a high of 26k), and a cell phone account in good standing. That is all my credit right now. I've read that having high monthly CC charges can be a negative for my credit score, even if paid in full. Is this true and to what extent? I'm obviously not tranferring it to a different account every month. I'd appreciate any insight into this. Thanks! MB
Credit scores are probably also affected by your debt to limits comparisons. You should NOT charge all your travel expenses on one card, but split them up among all your cards. If for example a 3 day hotel stay ends up being $300, don't charge the $300 on one card but divide it evenly between several cards.
Creditnet recently posted a weekly tip about this topic: Will too much credit affect my credit score? Also, we have a credit card FAQ on credit utilization.
Try to get the credit limit on the card you use raised so that you aren't using more than 50% of your available credit. Alternatively, make several payments during the month so that the balance that appears on your credit report (usually reported around your statement closing, but not always) is less than 50% of available credit.
Thanks for the responses. It looks like what I should do then is to try to increase the limits on both my credit cards and still use the Visa for work. Loyalty points are a really good mechanism to make people use one card over another I'm seeing now; I just don't want to use the other card unless I really need to... From the quick reading I've done it looks as though the credit system doesn't really care about individual credit entries so much as the average. So if I have CCa and CCb, each with $10,000 limits, and CCa has a $7,000 balance one month and no balance for CCb, that is 35% credit utilization. I imagine asking for limit increases will affect my score negatively in the short term but it's probably better than having a higher credit utilization in the long run. Does that seem about right? Also as Hedwig suggests I should try to keep some cash reserves to keep the balance lower during the month. Cheers, MB
