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[quote=Anonymous][quote=Anonymous][quote=Anonymous]OP here.  So, 9:13, what you're saying is that doing the smart thing - paying off you're balance every month - can come back and bite you?
How does that even make sense?
Is it because lenders want people that will have to pay interest?[/quote]

Not 913, but yeah, sort of. In industry parlance, people who pay off their ccs every month are known, ironically, as "deadbeats." Because even though the cc gets a swipe fee for every transaction, they're not really earning anything off the consumer.

That doesn't affect your credit score, mind you. But, yeah, some creditors don't like it.[/quote]

Yes, this poster is definitely wrong.  CC companies make a ton of money from vendor transaction fees.  On the swipe fee, for every time your card is swiped, the CC company will make between 3-6% of the transaction fee (with a minimum fee per transaction for smaller transactions) paid by the vendor.  So, they are quite happy to have users who use the credit card for many transactions and pay it off every month.  That is their core revenue.  Having users who use the credit card frequently and carry a balance is just icing on the cake for them as that is additional profit.  This is why AmEx, which is a charge card, not a credit card (users are not expected to carry a balance from month-to-month) and the many credit cards that offer cash back perks are still profitable.  They make a ton of money from many, many small transactions.  This is why many small businesses put a dollar minimum on using credit cards, because they still have to pay the minimum swipe fee and it isn't cost effective for small transactions.

And regularly using the credit card and paying it off is an excellent way to improve your credit rating.  Just holding a credit card and not using it does not actually make that much difference on your credit rating.  Using and paying off the credit does help.  So I recommend that you use your credit card(s) for a small number of purchases monthly for things you would already spend on, say gas in the car, or groceries.  And then pay it off every month.  That will actually help your rating.

As someone else pointed out, it is not good to have high credit limits.  The amount of credit that you have will be counted against you when borrowing.  The reason is that a lender will want to know that they have the best chance of being paid from your monthly pay.  If you have a credit limit of $1600 (like now), the chances that a lender for say a car loan would be able to get paid every month is greater than if you added a $5000 credit limit card and there was the potential for you to have up to $6600 worth of credit card debt to compete against their loan for payment every month.  So, when you have a higher credit limit, you actually make getting additional credit from a separate lender harder.  So, with a high credit limit, you may get worse interest rates from new loans (mortgages, car loans, HEL/HELOCs, etc) or may have to pay more in points to purchase.  When getting credit, the best way is to get credit commensurate with your level of need and spending.  If you don't need a lot of credit, don't accept a lot of credit.  I've turned down several offers in the last several years to raise my credit level from existing credit cards to avoid this problem.  We have enough credit for any emergencies and travel and don't need/want more.[/quote]

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