Uh-Oh, Graduating College Student

[Key]

help

I've been running searches but it's hard to get a clear and accurate picture, and I really really don't want to make a stupid assumption and kill my credit.

So I just graduated, and trying to build the strongest credit possible (I didn't have a CC in college). I have 3 right now, a $200 limit Capital One, a $250 limit from 1st Financial Bank (both are visas). And a $5,000 Chase Perfectcard (mastercard).

Would it be ok to cancel the VISAs and just stick with the mastercard? All these cards came in the mail within the last year. I'm afraid canceling my cards may have an adverse affect on my rating, should I just stick em in a shoebox and forget about them?

Now from reading the posts, I should have 50-60% of my credit used. Is that per card, or all credit available to me? I also read that my credit cards report my balance only once a month. When is that? Does that mean I should keep my balance at 50-60% through that period?

Do I pay off all the balance right after that period, and rack up more credit purchases, or do I pay the minimum amount and keep my balance floating at 50%? Is it safe to just pay the minimum every month and keep a balance?

What if I go OVER that 60% limit, say 70%, pay off the over-balance immediately the next day, and get it down to 60%? do they ever see that I hit 70% ?

I ordered a credit report from Capital One, they have this program where I pay a couple bucks a month and they send me a quarterly Credit Report with my Credit Score. I read that everytime you have your credit checked, your score takes a small hit, but they assured me they have it set up so that the query does NOT affect my credit score. Is this BS?

Sorry if it just seems like I'm rambling, I just have no idea how my score is reported, and trying to get it optimal =/

[Woodberg]

I'd go ahead and cancel any cards you're not using. It shouldn't have a negative impact on your score. You'll be fine as long as you pay off your bills each month on time. I use my banks online checking feature which really helps me pay on time.

[90degree]

No more than 60% on each card is optimal.

Keep all the cards open.. have running balances on a couple of them.. put the others in a shoe box if you like.

Credit is reported every 30 days.. what happens in-between matters not.

[NoSoup]

Would it be ok to cancel the VISAs and just stick with the mastercard? All these cards came in the mail within the last year. I'm afraid canceling my cards may have an adverse affect on my rating, should I just stick em in a shoebox and forget about them?

I would actually avoid keeping them in a shoebox - use them each month, all of them. That way, it will report that you made a payment on time. However, the amount doesn't matter. If you buy a pack of gum on one card and a pack of smokes on the other, that's fine. As long as there was at least some balance on the card each month and you made your payment on time, it will report that. To avoid paying interest, I would pay the cards off in full each month, though.

Now from reading the posts, I should have 50-60% of my credit used. Is that per card, or all credit available to me? I also read that my credit cards report my balance only once a month. When is that? Does that mean I should keep my balance at 50-60% through that period?

Actually, that is incorrect. You should not have more than 50-60% of your credit used - ever. That is per card, but it works out as a whole as well. For instance, it is better to have two cards with limits of $1000.00 and a balance of $500.00 each than the same two cards, one maxed out and the other empty.

Do I pay off all the balance right after that period, and rack up more credit purchases, or do I pay the minimum amount and keep my balance floating at 50%? Is it safe to just pay the minimum every month and keep a balance?

You can either make purchases throughout the month and pay the cards off in full or keep a floating balance. However, if you pay your balance off in full every month you can avoid paying interest. Make sure, though, that if you are paying it off in full each month you carry the balance all month long. A friend of mine would use his credit card and then immediately pay it off via online payments. Occasionaly, it would report that there was no balance nor activity on that card for the entire month.

What if I go OVER that 60% limit, say 70%, pay off the over-balance immediately the next day, and get it down to 60%? do they ever see that I hit 70% ?

Basically, the credit reporting agencies take a "snapshot" of your current situation. That means that if they happen to take that "snapshot" on that particular day, it would look as if you were up to 70% of the limit. Keep in mind, however, that the highest amount you have ever charged up is kept track of, and will affect your credit rating.

I ordered a credit report from Capital One, they have this program where I pay a couple bucks a month and they send me a quarterly Credit Report with my Credit Score. I read that everytime you have your credit checked, your score takes a small hit, but they assured me they have it set up so that the query does NOT affect my credit score. Is this BS?

Well, it is true that whenever you apply for credit (basically, an inquiry) it will damage your score. However, when you check your score for yourself, it typically won't damage it at all, as it is not considered to be an application for credit. I have only had experience ordering credit directly from the credit reporting agencies, though, so I would check with Capital One and see if it will look like an inquiry or not. If it does, it may potentially damage your score.

If you need anything else, just ask

[Key]

Wow, thanks NoSoup ! You're the man. I've read a lot of your posts in my searches and was hoping you might stumble along

Basically, the credit reporting agencies take a "snapshot" of your current situation. That means that if they happen to take that "snapshot" on that particular day, it would look as if you were up to 70% of the limit. Keep in mind, however, that the highest amount you have ever charged up is kept track of, and will affect your credit rating.

So even if they don't happen to take a snapshot at that time, they would know i hit 70% and it would hurt my score regardless, right?

Well, it is true that whenever you apply for credit (basically, an inquiry) it will damage your score. However, when you check your score for yourself, it typically won't damage it at all, as it is not considered to be an application for credit. I have only had experience ordering credit directly from the credit reporting agencies, though, so I would check with Capital One and see if it will look like an inquiry or not. If it does, it may potentially damage your score.

So when I order a credit report from say, one of the online credit reports, or order one from Equifax or whatnot- it doesn't hurt my score? I thought ANY inquiry into your credit, including your own, dinged it.

So now ..


Should I try and use as much of the credit as possible, up to that 50%? I plan on paying off my balance completely each month so I don't have to worry about interest. But that also means I'm not going to ever get near that 50% mark, especially on the $5,000 card.

Does an EXCESS of credit hurt? For example, i estimate maybe a regular usage right now of about $500 per month on credit- much much less than the $2,500 50% "sweet spot". Would it help build my credit if say, I paid all my bills on credit (as opposed to checks/debit), used my credit card instead of cash for movies, groceries, etc. In order to try and get as close to that $2,500 spot every month? I wouldn't spend more than I was normally spending- just using credit at every opportunity instead of cash.

Right now my mother pays bills out of checks in her checking account, I could volunteer to pay the bills with my credit and have her pay off the credit bill instead.

oh, and does it matter if you have sporactic charges? i mean if you don't regularly maintain a 40% balance. for example, one month you use almost no credit, 5%. next month, 50%. next month, 25%, then back up to 40%, then 2% again. just wondering how close an eye i should keep on my credit.

[NoSoup]

Lol, Thanks - I just try and help out where I can

Yep, it would report as your high credit, even if you hit that 70% mark for one day, and that "snapshot" was taken a different day.

As far as sustaining that limit, it actually doesn't matter what your balances are. That 50-60% mark is simply the Maximum that your balance should be - not the goal you want to keep it at. Basically, all it comes down to is that you had a balance (regardless of the size, providing you say under 60%) and that you made your payment on time. It is actually good for your credit to carry very little outstanding unsecured debt. Credit card debt is considered unsecured, because there is no collateral. The larger the amount of unsecured debt, the more it will damage your credit. Typically, secured loans, such as vehicle loans or Mortgages, are helpful.

I hope that answered your questions, if not - bring em on

[Key]

so now when you say it's good to carry little "outstanding unsecured credit "debt".. by "debt" do you mean any balance at all, or a balance that was unpaid and interest is now being collected on it?

if you mean ANY balance, then does that mean i should keep them as low as possible, for example a pack of gum on each credit card (just so there's SOME balance to pay off), and nothing else (thus only using 50 cents out of a $5k card)? i think that's what trips me up. it's bad to have zero use, and it's bad to have more than 50%, so i'm trying to find that happy medium point i should stay at.

i also have a student loan i'm paying off at the moment (which i'll be consolidating this month) if that means anything

[NoSoup]

Originally Posted by Key

so now when you say it's good to carry little "outstanding unsecured credit "debt".. by "debt" do you mean any balance at all, or a balance that was unpaid and interest is now being collected on it?

if you mean ANY balance, then does that mean i should keep them as low as possible, for example a pack of gum on each credit card (just so there's SOME balance to pay off), and nothing else (thus only using 50 cents out of a $5k card)? i think that's what trips me up. it's bad to have zero use, and it's bad to have more than 50%, so i'm trying to find that happy medium point i should stay at.

i also have a student loan i'm paying off at the moment (which i'll be consolidating this month) if that means anything

Basically, some people take credit cards to the extreme. I would imagine that it would be best for you to keep your total unsecured debt low, but it doesn't mean you can't carry any balances at all. If you have a grand or two in unsecured debt, it isn't really anything to worry about, but when you have 5k+ it will put a serious dent in your score...

[Key]

ok, well i definitely won't be carrying any balances past that 50% threshold, and i doubt i'll even make that, so no worries

i'll use it normally and won't worry so much about the balances. but like i said, i plan on paying it off full every month so there won't be any charges.

thanks again, i'm sure i'll have questions later on but i think you've managed to address all my concerns at this point !

[NoSoup]

Sounds good, glad I could be of service

Also, if you want me to take a look at something, you don't just have to cross your fingers - feel free to send me a PM with the link and I'd be more than happy to glance over it.

[Key]

Did I mention you're the man? Doesn't matter, I'll say it again. You're the man.