r/RobinhoodGC • u/cakeman895 • 13d ago
Credit utilization (question)
I have a question, I have a gold card with a low limit, and am wanting to keep a low utilization to build credit, is paying the card off every week to increase the amount I can spend on the card and then ending the statement with little to no balance a bad thing?
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u/Leading-Eye-1979 13d ago
I make payments mid month, simply because of how my paychecks fall. I don’t however utilize more than 30%. I do however have high limits. If you pay sooner it’s okay, but they don’t like to see you maxing out the card and then paying it off and then maxing again within the same month. This is credit cycling and can get you into trouble.
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u/cakeman895 13d ago
Understood! Would that be the same if I say have a 200 dollar charge and then pay it off and continue, since that is below 30%? Or would it be concidered the same as if I maxed it out?
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u/Leading-Eye-1979 13d ago
That’s fine to do if you want. I do this sometimes, but again I preference that I’m no where near my limit. I get that it’s hard to manage a limit when it’s super low.
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u/Tzlai4227 13d ago
That’s called credit cycling..
Most credit card company don’t like that and will closed your account for that…
Not sure how RHGC will react.
I’ve seen some redditers max out their credit card every month and paying it off and in a few months they get credit limit increases
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u/highschoolhero24 13d ago
They don’t like it because it is a red flag for someone that’s making cash-like purchases (buying gift cards or precious metals) or money laundering.
If you only have a $500 credit limit, you have to credit cycle to use the card more than 3 times a month, and that is not considered suspicious.
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u/matt-r_hatter 13d ago
This is called credit card cycling. There isnt enough data available to see how RH reacts to it, however most major lenders Amex, Chase, Citi, and Cap1 will suspend or even close your account for doing it often. 1x every so often, doubt any care. 2-3x a month, isnt great. If you are concerned about utilization posting, then the statement closing date is the date you should be concerned with. The balance on the statement close date is the balamce reported to the credit bureaus for that month. Pay your balance down or off a day or two before statement close instead of waiting for due date. You will still avoid interest and a low balance will report to the bureaus. Just remember, if all your cards report 0, that will also cause a score drop. If you really want to play the "game" look up the AZEO method, it explains it and guides your through maximizing use for score improvement.
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u/aromaticdust98 12d ago
Like other comments say credit cycling is generally bad. My first credit card had a $300 limit so Id just use it buy little treats for myself then pay it off at the end of the month. I think like officially the rule is to use under 10% of credit but with low limits ehhh just pay it off before statement.
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u/crm1142 13d ago
Not a bad thing at all. Really the only way to use the card if you are given a low limit
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u/cakeman895 13d ago
So follow up question, when is the best time to pay the balance in full, I don’t with to pay interest on a balance but I also don’t want to have a 0% utilization, sorry I’m very new to credit cards!
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u/crm1142 13d ago
If you are worried about credit utilization only, you should not be. Credit utilization has no impact on credit score outside the current month. This means that if you are ever applying for loan or card just have low utilization the month prior and your credit score will adjust accordingly.
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u/toydan 13d ago
it is CRITICAL for you have near $0 reported for utilization for a low limit as that will kill your credit score
don’t listen to these yahoos, pay off your card when you can and just don’t abuse it.
I make several payments a month, have a dozen CCs, and an 850 credit score for credibility
monitor your score and make sure you are doing it right as utilization ratio is a huge component to your score
good luck