Living with credit

How to earn extra credit and use it wisely

John Egan

Being a good credit card customer has its advantages, and those can come even when you didn’t ask for them.

For me, that truth has been underscored recently in two ways:

  • American Express extended a six-month, no-interest offer for my American Express Platinum card. I accepted the offer, which took effect when I enrolled in the promotion.
  • Capital One raised the credit limit for my Quicksilver Cash Rewards credit card by 75 percent.

Periodically, I receive pleasant surprises like these, and they’re not randomly bestowed upon me.

I get these rewards because of my good credit behavior. It’s like getting extra credit for going above and beyond with a school assignment.

More credit for those who handle credit well

Why am I earning this extra credit from credit card companies?

For one thing, I pay my bills on time. Always. Credit card companies appreciate this. On-time payments demonstrate that you’re a responsible customer.

In addition, I pay well above the minimum due every month. Again, this shows credit card companies that I’m a trustworthy customer.

How using credit well boosts your credit score

Now, not only does this behavior benefit my APRs and credit limits, but it also helps my credit score. How so?

First, FICO scores are made up of five factors, with payment history accounting for 35 percent (the biggest portion) of the scoring formula.

“FICO’s research has shown that a person’s payment track record tends to be the strongest predictor of the likelihood that the individual will pay all debts as agreed in the future,” credit-scoring expert Barry Paperno told (Paperno also writes’s weekly “Speaking of Credit” column.)

Second, by paying more than the minimum due each month on all my credit cards, I’m striving to keep my credit utilization ratio as low as possible. This ratio, which weighs the amount owed versus the amount of credit available, accounts for 30 percent of a FICO score.

Credit experts used to say that keeping this ratio under 30 percent was ideal, but the advice now is to keep credit utilization as close to zero as possible.

What happens if I abuse this extra credit?

The APR promotion from American Express and the credit limit increase from Capital One can be devalued if they’re abused. How so?

If I were to accumulate a massive amount of charges on my AmEx card and max out the credit limit on my Capital One card, this would run counter to behaving like a smart cardholder.

Instead, that could jeopardize the positive track record I’ve built with my credit cards.

How (and why) I’ll do the right thing with my extra credit

Here are two ways I will avoid getting into trouble with my higher credit line and extended promotional offer.

  • Don’t rack up more charges on my AmEx and Capital One cards.
  • Take advantage of these credit upgrades, but cut the balances on other cards to adjust my overall credit use.

In a sense, AmEx and Capital One have handed me gifts that I must not exploit. If I were to go on a spending binge fueled by the additional credit, I’d almost certainly pay for that splurge down the road – in higher interest, added credit card debt and a tanking credit score.

See related: 7 building blocks of good credit, How a high-limit card can boost your score

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