Even If You Pay off Your Credit Cards Every Month, Your Credit Scores Can Be Hurt by Large Spending

Your credit utilization measures the amount you owe to the creditors on your accounts against your total credit lines.  If you charge a large amount to a card or multiple cards, it does not matter whether you pay off the balances immediately once you receive the bills, your credit scores will be hit by the rise of the total credit utilization %.  When the amounts are reported, the credit utilization % gets recalculated right away, which will affect your scores.  Whether you pay off whatever you owe a week later or by the due date, your score has been affected by the amounts reported by the creditors.  That score will stay until at least the next billing cycle.  



The only way to avoid this situation is to pay off the large amount you have charged before the current billing cycle ends.  A high utilization is a red flag to lenders, so keeping the ratio of debt low is very important.  There’s no magic number here, but for every 1% increase in the credit utilization,  the score goes down a few points.  The higher the %, the more points will be reduced.


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