Money Girl answers 8 frequently asked questions about credit cards and gives tips to maintain and build credit.
Another factor that’s used to calculate your credit scores is the length of time that you’ve had credit accounts. So, I don’t recommend closing a card that you’ve had for more than 5 years. You might just use it to make a small purchase from time to time that you pay off in full, just to keep it active.
Credit Card Question #8: Sundarapandian asks, “I want to buy airline tickets for $4,500, but my credit card only has a credit limit of $5,000. So the charge would exceed 30% of my available credit limit. If I pay if off right away, would it still hurt my credit?”
Answer: Paying off a big credit card charge quickly can help you avoid a high utilization ratio and protect your credit. The amount used in the calculation is generally your previous month’s statement balance.
The idea is that if you pay off the balance before the statement’s monthly closing date, it couldn’t be reported to the credit agencies. So, I definitely recommend that you pay off a big credit card purchase as soon as possible, instead of waiting until the statement due date.
Also, when a card offers you a higher credit limit, always take it. Having more available credit relative to your balances will cut your utilization ratio and raise your credit.
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