Doomsday

iTrader: (8)

Just wondering how to build up your credit using credit cards. Do you charge them up and pay them off every month? Let them cycle through 30 with a balance? Keep them at a percentage of the credit line? Or just keep them a 0 balance at the end of month? Does is look bad if I pay of loans to quick?

nickdotcom

iTrader: (9)

get a credit card
buy a pack of gum
hide it from yourself
pay it off every month

MESS

iTrader: (5)

what he said

99FRC

iTrader: (5)

Basically, the credit reporting companies look at how much credit you have available to you and how much of it are you using up. Keep them below 30% of your credit limit on each card at all times. Anything under 30% is viewed as positive, anything between 30 and 50% is nuetral and anything over 50% is a negative.

Doomsday

iTrader: (8)

So use them often or here and there, then keep them at zero at the end of the month.

BigSteele

iTrader: (17)

Use it to buy stuff you have the money for (like a debit card). Then just pay it off as soon as you can. Thats what I do, usually with gas. Or with larger purchases that I have the money for (or almost) but want to only pay like 1/2 now, then the rest in a couple of weeks.

Dont buy big (non-emergency) items if you dont have most of the money.

Onyx Z

iTrader: (3)

Use it ONLY if you can pay it off before the due date. Otherwise stay away from them.

shoemike

iTrader: (25)

carry a small balance here and there.
AND ALWAYS PAY ON TIME!

ryansm1

iTrader: (8)

www.creditboards.com

That is a great resource for (re)building your credit. The best thing you can do is open an account and keep it for a while (so even if you get a better offer down the road, don't close your first account just because the limit is lower or interest rate is higher). History is important.

Second to that, always pay your bill on time. I would also recommend you resist the temptation to open a Capital One card as your first, as they don't report a credit limit and utilization to the reporting agencies, rather they submit your high monthly balance which indicates 100% utilization of the limit (bad).

Most cards will have some limit, say $1000, and report your utilization, say $200, so you have 20% utilization. Capital One will report your high balance ($200) as the limit, so you show as having 200/200 or 100% utilization. There are ways around this, but it's easier to just use a different card.

After that, there are some things that are good practice but not necessary to improve your credit score (don't carry a balance unless necessary, don't buy things you can't afford, etc.).

Check your credit every so often to see how you are progressing and to make sure everything is in order. Sorry for the novel.

Splitz

iTrader: (1)

Credit cards can be used for different purposes, this is something that I learned whilst shopping for a mortgage.

If you've got a $1,000 limit credit card (1 for the sake of argument), and you have a $200 balance, and you pay it off every month, this doesn't mean anything, because you are not USING the credit that is being given.

I was told to "max" it out say $900 and pay the $50/month on it. To the bank, it shows that you can control your spending by how much that you charge and that you won't go OVER. They are looking for payment stability not necessarily the ability to pay it all at once. When it comes to mortgages they want STEADY payments (obviously).

Now, if you've got 3 credit cards with close to $0 balance (say all have a $5k limit), this can actually HURT you if looking for a mortgage. IT's the "Available" credit that will knock down your Beacon Score. The mortgage company isn't stupid, they know what if they give you a $130k mortgage, and you've got $15k in credit card CREDIT avilable, you might end up paying the credit cards BEFORE you pay the mortgage. By maxing out the $15k for furniture shopping, and just general BS.

In closing, credit cards can be used for seperate causes, either one will hurt you depending on your credit goals. Do one thing at a time when it comes to credit. If you shopping for a mortgage, don't pay the credit cards off, if you looking for a car loan, have everyhting paid off. But you can't do both at the same time. It's amazing, after I closed on the house, EVERY credit avenue became availalbe to me, and I've got a sub 650 Beacon Score.

Wickedlildragon

iTrader: (1)

how do you find out your becon score? i have a credit monitering service that tells me my fico score...is that similar?

Splitz

iTrader: (1)

I think FICO scores are used by Credit CArd applications and Mortgages.

Beacon scores are used for Car Loans I think....

If somebody knows differetn, please correct, but i do know that there are two "Scoring" Systems, FICO And Beacon.

kornfreak_401

iTrader: (77)

damn good thread...

lo_jack

iTrader: (27)

I have had success by using less than 50% of any one card, throwing a good amount of business at them that I would otherwise have written checks or used a debit card for, and always paid on time. I have some balance transfer balances sitting at low APRs (less than 4%).

You do not have to fear the credit, but make it work for you, not the other way around.

I would like to know what a Beacon score is.

Texass683

iTrader: (17)

the best way to build up your credit is to get a credit card that has a good interest rate, not one that rapes you, then immediately put $100 on there and keep it at or around $100. The best is to use the card for nothing other then to get gas. Use it for the month to get gas and then at the end of the month pay the balance back to $100. If you also would like to get a gas card that works too.
The worst thing for your credit are cell phone bills. Pay those on time or before if possible. Cell phones kill people with their reporting because the second its late they report it.
Also do not over draft from your checking account. That is also a major strike.

Sorry to rant, but my dads an Economics professor so I have heard about this stuff since I could walk.

ryansm1

iTrader: (8)

Beacon is what Equifax calls their credit score. There are different types of scores (that you can't buy/see online) like the auto-enhanced beacon. The scores you get from a monitoring agency or that you buy online are classic FICO scores.

Why would you intentionally carry a balance that would charge interest against you? If you pay your charges off after the statement is made but before the grace period expires, you still show utilization on your card, but avoid paying finance charges.

2 SLOW

ya, who would listen to these guys that are trying to make people pay interest for no reason

Corny40

iTrader: (7)

I heard of a guy who got pre-approved for a home loan and a few days before closing went and maxed out his cards buying flat screens, furniture, and what not. When the time to close came, he wasn't "approved" anymore, so he had all this new **** and no house to put it in.

Mike96z

iTrader: (78)

if your limit is over like said, it will look bad, until you pay it off, and if you keep in good standing, it will look good in the end.

Black2001z06

iTrader: (32)

He speaks the truth!

This is what I do every single month.
If I have a choice of using my debit card vs. credit card and I have the money in the bank...I always choose credit...just to build credit, then pay it off in full or maybe I might leave a <$100 balance.

Biggest debt load that I have ever financed was $15k on my z06 and I had that paid off in 7 months, just to show credit worthiness and to keep the rich man from getting richer!!!