Go Back   The Finance Forums > Finance forums > Credit Ratings



Credit Ratings Issues of credit ratings and credit scoring here.

Reply
 
Thread Tools
  #1  
Old 12-25-2010, 01:31 AM
Radix Radix is offline
Junior Member
 
Join Date: Dec 2010
Location: CA USA
Posts: 1
Default Using revolving credit to build credit

When you get a credit card, and pay it off in full when the bill is due, will it still build your credit? I hear people saying you should pay more than the minimum but still hold a balance, otherwise it wont get reported. Is that true?

I've been trying to figure this out for a while now, and I get contradictory answers from a variety of people. Even on this forum I read a thread where cjscully and pants711 make the exact opposite statement. Check out the "improving credit" post. CJ says pay in full, pants say pay over time.

I'm confused... And it seems A LOT of other people are too!
Reply With Quote

Old Sponsors
  #2  
Old 01-05-2011, 12:38 AM
NumbersMadeSimple NumbersMadeSimple is offline
Junior Member
 
Join Date: Dec 2010
Location: IL USA
Posts: 5
Default Re: Using revolving credit to build credit

Quote:
Originally Posted by Radix View Post
When you get a credit card, and pay it off in full when the bill is due, will it still build your credit? I hear people saying you should pay more than the minimum but still hold a balance, otherwise it wont get reported. Is that true?

I've been trying to figure this out for a while now, and I get contradictory answers from a variety of people. Even on this forum I read a thread where cjscully and pants711 make the exact opposite statement. Check out the "improving credit" post. CJ says pay in full, pants say pay over time.

I'm confused... And it seems A LOT of other people are too!
You are certainly correct that there is often conflicting info about credit scores. But although the exact algorithms used to calculate credit scores are not published, the major factors involved in the calculation are well known.

Re: your specific question: every credit card account is reported to the credit bureaus every single month. Your credit report lists the credit limit, the outstanding balance, and whether the payments have been made on time for each of the last 12 months. It does not specifically report whether you pay the card in full, make the minimum payment, or something in between - although that information is used in the calculation of your score.

Keep in mind, that unless your credit card company reports to the credit bureau on the day after they post your payment, (they don't) your credit report will always list a balance.

In addition, if you regularly use your credit card, your balance may never be zero at all, or perhaps only for a couple of days at a time. Even if you pay your monthly statement in full, you have probably already used the card for new purchases.

Hope that helps.
Reply With Quote

  #3  
Old 02-19-2011, 07:10 PM
mycreditgroup's Avatar
mycreditgroup mycreditgroup is offline
Junior Member
 
Join Date: Feb 2011
Posts: 7
Default Re: Using revolving credit to build credit

If you are paying your bill "when it's due" you're actually shooting yourself in the foot a little bit.

Credit card companies report on the "Statement Date" which is a few days before your "Due date". So I would look at your bill, look for the statement date and make sure your bill is paid 2 days before that date. If you pay it off by that date, your credit report will show Zero balance for the next 30 days (until the next statement date)

In terms of best utilization - the FICO Scoring system looks at both Individual utilization, as well as cumulative. So, the best way to carry credit cards is like this

- 2 cards with no balance (using them once a month or so just to keep them active)
- 2 cards with very small balances (less then 9% of your limit)
Reply With Quote

  #4  
Old 06-24-2011, 07:21 AM
becky_m's Avatar
becky_m becky_m is offline
Junior Member
 
Join Date: Jun 2011
Posts: 21
Default Re: Using revolving credit to build credit

good answers peeps, learned a thing or two there :-)
Reply With Quote

  #5  
Old 09-01-2011, 08:43 AM
expert.debt expert.debt is offline
Junior Member
 
Join Date: Aug 2011
Posts: 5
Cool Re: Using revolving credit to build credit

The quickest way to develop or rebuild your credit score scores is by employing both of the two principal types of credit score:

* Revolving accounts (credit score cards, which allow you to develop up and shell out down debt).
* Installment loans (mortgages, vehicle loans and other debt that's repaid in periodic installments).

But some individuals can't get credit cards in today's restricted environment. Others don't want to use them, often since they really don't have faith in by themselves not to overspend or due to the fact they don't have confidence in credit score card businesses.
Reply With Quote

Reply

Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off



» Boards




All times are GMT -4. The time now is 02:01 PM.


Powered by vBulletin® Version 3.8.5
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.