Artsemis

I was told that as long as you pay the mimimum amount on a credit card, leaving some fee's to transfer to the next month will build credit better than paying the amount in full.

Is this true? I ask because I have always paid every penny on my statement.

Thanks

__________________

- Artsemis
~~~~~~~~~~~~~~~~~~~~
There are two keys to being the best:
1.) Never tell everything you know

kutulu

I think you are better off that way. At the very least you are saving yourself the interest money.

SirLance

It isn't true. When you pay in full each month, it means you have more available credit. The higher the portion of available vs. used credit, the higher your credit score.

__________________
DEMOCRACY is where your vote counts, FEUDALISM is where your count votes.

martinguerre

there is some truth to the statement. carrying a balance with out falling behind *may* increase your score.

but there are other ways to do that, too. And i choose to never carry a balance....i don't think it will hurt me at all when it comes to getting a home/ car loan.

__________________
For God so loved creation, that God sent God's only Son that whosoever believed should not perish, but have everlasting life.

-John 3:16

thingstodo

Carry a balance on a mortgage or a car or perhaps some other large purchase. That will help. Paying off a credit card on a regular basis is also a good thing. A balance on a credit card is far to expensive to maintain unless it is interest free.

Scores are based on things like: your payment history, outstanding balances that are current and balances that are late, a reasonable amount of available credit (meaning too many unused cards can be a bad thing), your income, total amount owed vs. income. Your score is even impacted by how many times your credit is checked, so watch out for those credit card offers with 10% off on your purchase. They usually aren't worth it!

Your score doesn't just impact how much you can borrow...it also determines your interest rate, how much car or home owner's insurance costs you...the list goes on. And it's so easy to get this now. For example, I just leased a car over the phone. When I struck the deal the salesman said it would only be good if my score was over a certain level. I gave him my SSAN and he was back within five minutes with the answer.

On another note, you can get a free copy of your credit report every year from each of the three reporting agencies. It's very important that you review this stuff and undertand what is there.

__________________
If you're wringing your hands you can't roll up your shirt sleeves.

Stangers have the best candy.

Artsemis

Thank you all very much for the replies.

__________________

- Artsemis
~~~~~~~~~~~~~~~~~~~~
There are two keys to being the best:
1.) Never tell everything you know

NoSoup

I hate to toot my own horn here, but I figure there is probably some information you could use here...

NoSoup's Guide to Obtaining and Maintaining Excellent Credit

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

Artsemis

Thanks =))

__________________

- Artsemis
~~~~~~~~~~~~~~~~~~~~
There are two keys to being the best:
1.) Never tell everything you know

Lady Sage

Having worked in the credit industry alongside banking both are true. We look at the following:

1) can you handle the credit you have
2) are you late
3) do you pay more than the minimum
4) how much do you owe vs. what do you make (aka. debt-to-income ratio)

thingstodo

And all of that feeds into the magical score! You can easily keep up with your score by having a subscription to something like identity guard or one of the other companies.

__________________
If you're wringing your hands you can't roll up your shirt sleeves.

Stangers have the best candy.

3Z3VH

If you are starting from having no credit whatsoever, like I did, the best thing you can do is get a secured credit card (Where they have $300 or so of your money in a savings as collateral on your credit card) for 6 months, and pay off your full balance every month MINUS $5 or so.

Why ? Having a credit card that gets paid in full every month never shows up on a credit rating. It essentially has no activity on that account.

Leaving $5 or so in there every month shows the card is getting used, and that you have the money to pay off all your bills without any problems. Sure, you will pay an extra couple pennies in the end, but that is a VERY small price to pay for a good credit score.

After 6 months, all that data bacomes legitimate. If they see you haveing a credit card for 3 months, it doesn't mean a thing. 6 months seems to be the lucky number, and then you start to see the credit applications roll in. What I did at that point is sign up for any card that had no startup, annual, or any other fees beyond your monthly percentage rate. Even if the rate sucked major ass, I still took the card. This raises your total credit dollar amount, without costing you a ton every year in fees.

The credit dollar amount is what qualifies you for larger purchases like cars, and motorcycles and such. Once you get into that range, if you get a couple LARGE dollar item things on credit, your total credit worth rises quickly, which is what leads you to looking good when it comes time to negotiating a first-time mortgage.

newtx

Consider joining a credit union and open a savings account with them. As soon as you can open a loan and pay it off on time or early. Your interest rate will be much lower and it will build you a solid credit rating.

NoSoup

Sorry 3Z3VH, but I'm gonna have to set it straight

I agree with you - getting a secured credit card is an excellent - and sometimes the only - way to start building credit. However, you do not need to carry a balance on the card to have it report as active. As long as you charge something on it each month, you can pay it off in full each month and it will still report.

After six months of continous reporting on your credit report, you'll actually get a FICO score. Prior to that, they credit reporting agencies don't score you due to a lack of history. That's why it's the "magic" number

You can certainly sign up for additional cards as you see fit - however, in my experience, I would stay away from Capital One cards if you are still building your credit. Nothing against the company, it's just they don't report your limit to credit reporting agencies, and often times if you carry a balance the agencies will assume you are maxed out.

I've been in the banking/lending/mortgage industry nearly seven years and I've never heard the term "credit dollar amount." What qualifies you for larger purchases like cars and mortgages is your history (sometimes lenders will have specific requirements you must meet - such as a minimum number of tradelines or a minimum amount that you've had history) combine with other non-credit factors - i.e. Debt to Income Ratio, Loan to Value Ratio, etc. In fact, if you aquire a large amount of debt (such as a relatively expensive vehicle) it will actually damage your debt to income ratio, thereby reducing your chances of getting approved for other large ticket items.

Just thought I'd throw that out there

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

Zar

Regarding NoSoup's post.

The only credit card I have (or have ever had) is a Capital One card, for about 4 years now (I'm 22). I've paid it off in full for every single month. In fact, they've recently upgraded me to their "platinum" package in which I receive points for every dollar I spend using the credit card which I can then use to get miscellaneous crap. If I've paid my balance off every month, will having a Capital One card hurt my credit? And, for hypothetical reasons, if I carried a balance of say, 30 dollars for a month (when my limit on the card is 5000), will that hurt my credit?

Thanks.

thingstodo

Zar...you are probably fine. Your report will state that you pay on time. That feeds your score.

I have a credit monitoring service that allows you to play with projecting your score from various activities. Funny thing...I projected closing a few accounts that aren't used any more and it actually dropped my score by about 10 points! Interesting.

www.identityguard.com

__________________
If you're wringing your hands you can't roll up your shirt sleeves.

Stangers have the best candy.

Sultana

Copied, pasted, printed, and studying tomorrow. Thank YOU!

__________________
"Love is a snowmobile racing across the tundra and then suddenly it flips over, pinning you underneath.
At night, the ice weasels come." -

Matt Groening

My goal? To fulfill my potential.

NoSoup

Cool - let me know what you think of it.

Either way, if you have any questions, let me know!

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

leftwingx

Yeah we had the same thing happen. The bank told us that if we cancelled a number of the credit cards that we had our score would improve.

Heh, the only reason we had those cards was because of the stories we heard in business school about penniless students using their credit to build some venture that turned out to be a gold mine. Of course without a solid idea, talent or courage the dream can only go so far.

__________________
Happiness is just a roughing penalty away.

thingstodo

No...my score actually would DROP (not a good thing like golf!) if I closed a few accounts. Now, I have a pretty high score...above 800, so that's what was interesting to me. These were accounts we haben't used in years and I figured it would only make things better but not sure, much to my surprise. Unless their calculations are off...

__________________
If you're wringing your hands you can't roll up your shirt sleeves.

Stangers have the best candy.

Mus24

I am new to US and therefore have no credit history but I opened up my checking and savings account at Chase.My bro asked me to use my Visa debit card to pay off his small monthly bills so that I start building up my credit.
But I read somewhere that paying bills with a debit card doesn't build up any credit score at all.Is that right?

So two days ago I applied online for a CapitalOne Cardit card with a $39 annual fee and they said they would send me one in a week.
Q1: Do I build up my credit score by paying bills from my Visa debit card?

Q2: Is CapitalOne credit card the right one to start with building a credit history?
Thanks.

captobvious

No, using your debit card doesn't affect your credit score. You need to use a credit card to start building up your credit score.

As far as the right card, it's pretty much personal preference. Different cards have different benefits. If you plan on paying off the balance in full each month, then you can choose a card based on the rewards that it offers. Before you use your CapitalOne card, you might want to look into some other options. I'm not familiar with that particular card, but I'm pretty sure you can find a card without an annual fee if you want to save $39.

Asuka{eve}

I've got a question. It seems that most people pay their balance at the end of the month. I'm new to credit cards and recently just got one. I never know when I need to pay every month so I just pay my credit card off as soon as a purchase shows up on online banking. Does that still add to good credit?

Mus24

Guys help me,I am new to this,is there any credit card I can get which has no annual fee.....I mean i have no credit history yet so I need to make a start,pay bills on time,I am not bothered about credit limit.I'm okay with as little as $200.
CapitalOne said they would mail me my card in a few days but its $39 per year,thats only $3 a month but I am just scared of being robbed by it.
Awaiting suggestions.

I received the wired plastic prepaid visa debit card today.
Has any of you used it?Is it safe enough?
Does it help build up credit score?

captobvious

I'm not exactly sure what you mean by never knowing when you need pay. Every credit card has a certain due date during the month. This varies based on the card you have. If you want to build good credit, then you need to make at least the minimum payment on time each month. As far as I know, if you do that, then you'll be building up good credit.

After a quick search, I found this card from Capital One for people with limited credit history.

As I mentioned before, debit cards don't have any influence on your credit score.

thingstodo

I didn't think you need to pay for a credit card unless there is a frequent something involved. For example, I have a Marriott card through some bank - I don't know which one - and there is a $30/year charge. However, I get that back in a big way over the year through all the extra point, etc. One month of charges gets me three nights in a mid-level Marriott property, so the $30 is well worth it.

Aren't there cards you can get that are secured with a deposit? For example, you give them $200 to hold and they give you a card with a $200 limit. I don't think there are fees attached to those but I'm not 100% certain.

The one thing you have to be careful with on that is the hold that gets placed if you rent a car or go to a hotel, etc. They hold more than the current charge amount as a back up. For example, if you rent a car the usually tag your card for around $300 or so until you turn it in and settle with the actual charges. The hold doesn't mean that your card has been charged, only that the available credit has been reduced until the transaction has been finalized.

$39 for a regular credit card seems outragious!

__________________
If you're wringing your hands you can't roll up your shirt sleeves.

Stangers have the best candy.

Mus24

Thingstodo,its not a regular card that I am referring to...this one from CapitalOne is for those who plan to start their credit history or those who have a damaged credit history and want to repair it,so if they charge $39 a year fee with no deposit,as they say,then its worth a thought,much better than those who hold your $300 till such time as you use the credit limits and it could be an year or maybe longer.
I,for one,would be more comfortable with paying a $39 yearly fee then to part with my meagre savings for a secured deposit.
I am not advocating CapitalOne Cards but consider $3 a month fee,its the price of two soda cans a month........Anyway I just hope there are no other fees or liability.....I'll be careful and will monitor every dollar used.....

NoSoup

Just a reminder....

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

Mus24

NoSoup,Your suggestion well noted......can you do some research for me and suggest one card that i should go for keeping in mind:
*I have limited savings but I also need a card to begin my credit profile,won't indulge in large purchases,would use it to pay bills regularly.
Awaiting your reply.

NoSoup

I would suggest getting a secured credit card to begin establishing your credit.

Basically, a secured credit card is simply a normal credit card, but funds are frozen to ensure that the lending institution doesn't lose their money when dealing with someone who has no/poor credit history.

To get one, simply contact a local bank or credit union (you may want to call around to check on rates first) and make sure they offer secured cards. Most, if not all, will - after six months of continuous reporting you'll have your credit score and can then apply for an unsecured card, or potentially ask the lender that gave you the card to release your funds.

Remember, if at all possible, don't borrow more than 30% of the credit limit - even for a few days. For instance, if you get a card with a $1000.00 limit, don't borrow more than $300.00. And I imagine it goes without saying, but always always always make your payments on time.

Good luck, and if you have any more questions, let me know!

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

Mus24

NoSoup, a few days back my bank has sent me a platinum visa card with a $500 limit,no annual fee and no secured deposit.
Next day CapitalOne also sent a card with $300 limit.Should I keep both?

Why do you think one should never borrow more than 30% of the limit.Even $300 is a tiny limit,so does that mean I should never be making purchases for than $90?What if I use up my credit limit but keep paying the amount well on time...is that okay?

NoSoup, a few days back my bank has sent me a platinum visa card with a $500 limit,no annual fee and no secured deposit.
Next day CapitalOne also sent a card with $300 limit.Should I keep both?

Why do you think one should never borrow more than 30% of the limit.Even $300 is a tiny limit,so does that mean I should never be making purchases for than $90?What if I use up my credit limit but keep paying the amount well on time...is that okay?

NoSoup

For the third time

I wouldn't get the Capital One Card in your case.

Yep, that's correct. You don't want to go over 30% of your limit, if at all possible - even if that's only $90.00.

The reason behind that is because once you get over that 30% limit, the credit reporting agencies will start knocking your score down bit by bit because your debt to limit ratio is too high. The closer you get to the limit, the more it would impact your score.

I wouldn't recommend going over that amount - even if you pay your bills on time each month - for the reason above.

__________________
I have an aura of reliability and good judgement.

Just in case you were wondering...

Mus24

Is it worthwhile to enroll in the payment protection plan?
Chase Visa charges 89c per $100 balance.

Lwang9276

I just had a question on how balance transfers work. I have around 2k in debt on my CC and I just pay the minimum. I heard of getting a new CC and xferring the balance over where the new CC has 0% interest. So how would this work? Any thoughts or help is greatly appreciated.

mfh

Yes, this would work. On the application for a new card there's an area to fill out an existing CC# for a credit transfer.

Having said that, I would recommend it under only one circumstsance - that you use that 0% interest to *actually pay off the card* instead of just piling more debt on.

Credit cards are EVIL, people. Use them as a convenience only! They will absolutely bury you. I learned this lesson the hard way (as young as I am...) and now I only use them for convenience, not extravagance.

And to anyone who is wondering "what does it take to get good credit" - simple. Apply for any shitty old card, including secure (pre-paid) cards, and deal with the high fees they give you. Consider it a price to purchase a credit history. Just make sure you are responsible with your payments (i.e., you always pay off your balance) and you should be in good condition within a year or 18 months. When you have a decent CC history built up you can then move to a cheap car loan and get an installment loan that will beef up your credit score further. With one installment loan (car) and 2 low CC accounts I was able to have a credit score higher than 700 when I was 22 years old.

__________________
mike