24 Looking to build Credit... What are some good tips on your first Credit Card

crcballer55 said:

No, you'll want to pay it all off every month (otherwise paying interest defeats the point of a good credit score). You just don't want to use more than 10% in a given month.

The credit tool that most people overlook here is the overdraft line of credit on your checking account. It'll be reported the exact same as your credit card, but protect you if you overdraft your checking account.

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no no, you're misunderstanding what I'm trying to say. If I recall correctly, someone in here said that the credit usage that gets reported is basically right at the end of a period. So what I'm saying is pay almost all of it off before the due date, and then pay the final small amount on the due date. Thus, it would only report it as a small usage %. Maybe I'm not understanding what they were saying if that's not the case.

cash is king.

crcballer55 said:

needsomejays said:

So I recently got my first credit card back around september or so and I've been reading through here. Good stuff. I just wanna make sure I understand this completely. So I hope someone can help me out.

-I have a limit of $1000

-lets say I spend around $400 for the month

So what you guys are saying is I'd want to pay off over $300 of that, like leave less than $100 left to still be paid. Then pay that left over amount on the due date?

Because if I pay it all off well before the due date it doesnt get reported?

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No, you'll want to pay it all off every month (otherwise paying interest defeats the point of a good credit score). You just don't want to use more than 10% in a given month.

The credit tool that most people overlook here is the overdraft line of credit on your checking account. It'll be reported the exact same as your credit card, but protect you if you overdraft your checking account.

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Usually a lot of these cards have no interest for the first 12-18 months though

needsomejays said:

 

crcballer55 said:

No, you'll want to pay it all off every month (otherwise paying interest defeats the point of a good credit score). You just don't want to use more than 10% in a given month.

The credit tool that most people overlook here is the overdraft line of credit on your checking account. It'll be reported the exact same as your credit card, but protect you if you overdraft your checking account.

Click to expand...

no no, you're misunderstanding what I'm trying to say. If I recall correctly, someone in here said that the credit usage that gets reported is basically right at the end of a period. So what I'm saying is pay almost all of it off before the due date, and then pay the final small amount on the due date. Thus, it would only report it as a small usage %. Maybe I'm not understanding what they were saying if that's not the case.

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And they would be wrong. I check my credit report three times each year (rotating each credit agency every 4 months) and they regularly show a balance even though I've never paid a cent of interest on any of them in my life.

Anybody have an Alaska airlines card? Recommend?

crcballer55 said:

And they would be wrong. I check my credit report three times each year (rotating each credit agency every 4 months) and they regularly show a balance even though I've never paid a cent of interest on any of them in my life.

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I'm still kinda confused, but let me ask you this. My limit is $1000. Lets say I make a purchase of $100, my account then says $900 out of $1000 available. Lets say I pay that off right away, once payment clears it goes back to $1000 out of $1000. Then lets say I make another $100 purchase and pay it off right away as well. WIl this equal to me using 20% utilization or not because I paid the first one off completely before even purchasing the second one.

I hope this makes sense

needsomejays said:

crcballer55 said:

No, you'll want to pay it all off every month (otherwise paying interest defeats the point of a good credit score). You just don't want to use more than 10% in a given month.

The credit tool that most people overlook here is the overdraft line of credit on your checking account. It'll be reported the exact same as your credit card, but protect you if you overdraft your checking account.

Click to expand...

no no, you're misunderstanding what I'm trying to say. If I recall correctly, someone in here said that the credit usage that gets reported is basically right at the end of a period. So what I'm saying is pay almost all of it off before the due date, and then pay the final small amount on the due date. Thus, it would only report it as a small usage %. Maybe I'm not understanding what they were saying if that's not the case.

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You're right.

Pay off 70% (ideally 91%-99% if you can) of your credit limit before the statement closes. Your credit card will now report a low balance to the credit bureaus when the statement closes. Once you get the new bill, pay off the whole balance to avoid incurring any interest charges.

needsomejays said:

crcballer55 said:

And they would be wrong. I check my credit report three times each year (rotating each credit agency every 4 months) and they regularly show a balance even though I've never paid a cent of interest on any of them in my life.

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I'm still kinda confused, but let me ask you this. My limit is $1000. Lets say I make a purchase of $100, my account then says $900 out of $1000 available. Lets say I pay that off right away, once payment clears it goes back to $1000 out of $1000. Then lets say I make another $100 purchase and pay it off right away as well. WIl this equal to me using 20% utilization or not because I paid the first one off completely before even purchasing the second one.

I hope this makes sense

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Your utilization rate is only calculated with your balance reported when your statement or billing period closes.

In your hypothetical above, your utilization rate would only be 10% if your balance is only $100 when your statement closes. It doesn't matter how much you spend before your statement closes.

NikeAirForce1 said:

You're right.

Pay off 70% (ideally 91%-99% if you can) of your credit limit before the statement closes. Your credit card will now report a low balance to the credit bureaus when the statement closes. Once you get the new bill, pay off the whole balance to avoid incurring any interest charges.

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I'm still kinda confused, sorry complete noob to this
So tomorrow is my due date for payment, and then the 12th is the statement closing date. So using those two dates, can you break that down for me?

needsomejays said:

NikeAirForce1 said:

You're right.

Pay off 70% (ideally 91%-99% if you can) of your credit limit before the statement closes. Your credit card will now report a low balance to the credit bureaus when the statement closes. Once you get the new bill, pay off the whole balance to avoid incurring any interest charges.

Click to expand...

I'm still kinda confused, sorry complete noob to this
So tomorrow is my due date for payment, and then the 12th is the statement closing date. So using those two dates, can you break that down for me?

Click to expand...

I don't know how much your last statement balance was, but pay at least all of that off by tomorrow.

If you have any new charges in this statement or billing period, those charges will report when your statement closes on the 12th. You only want to be utilizing 30% of your credit limit (ideally 1%-9%, but not too important). So pay off at least 70% of your credit limit before your statement closes on the 12th. When the statement closes, your credit card will report the balance that is reported on the 12th.

NikeAirForce1 said:

I don't know how much your last statement balance was, but pay at least all of that off by tomorrow.

If you have any new charges in this statement or billing period, those charges will report when your statement closes on the 12th. You only want to be utilizing 30% of your credit limit (ideally 1%-9%, but not too important). So pay off at least 70% of your credit limit before your statement closes on the 12th. When the statement closes, your credit card will report the balance that is reported on the 12th.

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okay let's say for this statement I spent $100. I pay off $90 by tomorrow. When should I pay the final $10?

NikeAirForce1 said:

needsomejays said:

NikeAirForce1 said:

You're right.

Pay off 70% (ideally 91%-99% if you can) of your credit limit before the statement closes. Your credit card will now report a low balance to the credit bureaus when the statement closes. Once you get the new bill, pay off the whole balance to avoid incurring any interest charges.

Click to expand...

I'm still kinda confused, sorry complete noob to this
So tomorrow is my due date for payment, and then the 12th is the statement closing date. So using those two dates, can you break that down for me?

Click to expand...

I don't know how much your last statement balance was, but pay at least all of that off by tomorrow.

If you have any new charges in this statement or billing period, those charges will report when your statement closes on the 12th. You only want to be utilizing 30% of your credit limit (ideally 1%-9%, but not too important). So pay off at least 70% of your credit limit before your statement closes on the 12th. When the statement closes, your credit card will report the balance that is reported on the 12th.

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Now I'm confused because you're telling him to pay it in entirely, so what charges would be reported on the 12th if he paid it off?

needsomejays said:

NikeAirForce1 said:

I don't know how much your last statement balance was, but pay at least all of that off by tomorrow.

If you have any new charges in this statement or billing period, those charges will report when your statement closes on the 12th. You only want to be utilizing 30% of your credit limit (ideally 1%-9%, but not too important). So pay off at least 70% of your credit limit before your statement closes on the 12th. When the statement closes, your credit card will report the balance that is reported on the 12th.

Click to expand...

okay let's say for this statement I spent $100. I pay off $90 by tomorrow. When should I pay the final $10?

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You have it mixed up. It goes like this.

Statement Opens (December 13th for you) --> Statement Closes (January 12th for you) --> Bill Due Date (Amount is the taken from what you charged 12/13-1/12).


What you want to do is pay off ALL of what your last statement balance was that closed on December 12th. If you have any new charges from December 13th - January 12th, those new charges (say $100) will then report on 1/12. Pay off 70%-99% of your CREDIT LIMIT before the 12th. When you get your bill or statement on the 13th, it will only report a credit utilization rate of 1%-30%.

You're paying off 70%-99% of your CREDIT LIMIT, not bill, before the statement closes. After it closes (the 12th for you), you will get a bill and a payment due date for the remaining balance. Pay off the rest before the due date to avoid incurring any interest charges.

Man, yall cats is making this WAY more complicated than it needs to be.

NikeAirForce1 said:

You have it mixed up. It goes like this.

Statement Opens (December 13th for you) --> Statement Closes (January 12th for you) --> Bill Due Date (Amount is the taken from what you charged 12/13-1/12).


What you want to do is pay off ALL of what your last statement balance was that closed on December 12th. If you have any new charges from December 13th - January 12th, those new charges (say $100) will then report on 1/12. Pay off 70%-99% of your CREDIT LIMIT before the 12th. When you get your bill or statement on the 13th, it will only report a credit utilization rate of 1%-30%.

You're paying off 70%-99% of your CREDIT LIMIT, not bill, before the statement closes. After it closes (the 12th for you), you will get a bill and a payment due date for the remaining balance. Pay off the rest before the due date to avoid incurring any interest charges.

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ahhhhhhhhhhhh now I get it! thanks for your patience

heLiumcLinton said:

NikeAirForce1 said:

needsomejays said:

NikeAirForce1 said:

You're right.

Pay off 70% (ideally 91%-99% if you can) of your credit limit before the statement closes. Your credit card will now report a low balance to the credit bureaus when the statement closes. Once you get the new bill, pay off the whole balance to avoid incurring any interest charges.

Click to expand...

I'm still kinda confused, sorry complete noob to this
So tomorrow is my due date for payment, and then the 12th is the statement closing date. So using those two dates, can you break that down for me?

Click to expand...

I don't know how much your last statement balance was, but pay at least all of that off by tomorrow.

If you have any new charges in this statement or billing period, those charges will report when your statement closes on the 12th. You only want to be utilizing 30% of your credit limit (ideally 1%-9%, but not too important). So pay off at least 70% of your credit limit before your statement closes on the 12th. When the statement closes, your credit card will report the balance that is reported on the 12th.

Click to expand...

Now I'm confused because you're telling him to pay it in entirely, so what charges would be reported on the 12th if he paid it off?

Click to expand...

If he had a balance left from his previous bill, he should pay off that FULL amount by his payment due date (tomorrow he said), to avoid incurring any interest charges. Any new spending that he did from December 13th - January 12th will be reported at the end of the day on the 12th.

His statement runs from the 13th of every month to the 12th of the next month.

Let's say his credit limit is $1000. If he spends $400 in one statement or billing period, his credit card company will report him utilizing 40% of his credit limit. Anything above 30% is not recommended. So what he should do is pay that balance down to at least $300 BEFORE THE 12th. That way, his CC company will only report him utilizing 30% of his credit limit. Statement ends on the 12th with $300 balance. He gets a bill for $300 along with a payment due date. He should then FULLY pay off the $300 before the due date to avoid interest charges.

Ideally, you'd aim for utilizing 1%-9% of your credit limit. So ideally, he'd only let $1-$99 report on his statement every month. Then he'd pay the rest off before his payment due date.

There's multiple discussions going on here.

The SAFEST and CHEAPEST way to build your credit is to use your card moderately and pay it off completely every month.

But, that is not the BEST way to build your credit - or the way to build the MOST credit.

For young bucks, the most important thing is actually neither of these - but just to avoid doing anything STUPID. Either way is fine for now.

You are basically showing the world that you can borrow money responsibly and sustainably.

So, think about it from their POV.

If a guy asks you for $100 every month and gives it back to you each month, that's great (ignoring for a second the fact that you don't make any money of him), but that doesn't necessarily make you eager to lend him REAL money - like to buy a home.

Translation: You can't go to Medellin and expect papi to hit you with a hundred pounds of work on the arm because you successfully sold dimes on your block for 18 months.

That's why people say that you should utilize your credit card for larger purchases and pay them off consistently and responsibly, while considering your overall credit utilization.

Those of you who have always paid your card off in total every month (and I was like y'all till probably my mid 20s), you're not actually utilizing credit, really. The banks understand this regardless of whether you do.

As to why the CC vs. cash argument, another thing to consider is that credit cards often offer a layer of protection beyond that which is offered with cash. Once I hand over my cash , you have it. If I pay with a CC, you still have to get it from the bank, and if I complain, they are a lot better and have a lot more resources to make sure I don't get screwed than one does to try to get his cash back after a transaction, when it turns into a he said/she said.


Finally, for those of you who talk that "buy a house in cash" nonsense... Let's even assume that you will actually ever have the amount of cash required to buy a house in any place that anybody might actually want to live. And, let's assume that the mere act of attempting to do so doesn't put you on the radar of tons of people you'd rather just not think about your existence. Here's the thing - what do you guys do with your cash? Where do you keep it? Do you invest it? Do you just put it in a shoe box and basically let it just become less valuable by the day?

Even you have 500K, you are STILL better off only putting down part of that on a mortgage with no pre-pay penalty. You can get mortgages at like 3.5% if you have good credit. The idea is to leave money in your pocket that you can invest and beat the rate you are paying with the rate you earn from investing. If the landscape is too dangerous for your liking, you can always dump more into pre-paying your mortgage, but you have options.

Finally, money is worth more today than it is tomorrow - inflation and all. So, when you are doing something like buying a house, if you pay up front, you are paying the full balance at the highest value of the dollar for the life of that purchase. On the other hand, if you are paying a stable amount each month for 15 - 30 years, the payments at the end are worth less. So, while you will shell out more actual dollars over time vs. paying up front, that only tells half the story because the actual purchasing power of the money spent in the two cases is the real issue, as is the opportunity cost of not having that money to invest over time.

...This is chess, not checkers.

Sorry for the meandering post.

Those looking to maximize credit, do not listen to those who say it's necessary or wise to carry a balance past your due date

It's quite simple. If you have more than 1 CC, pay off all completely before statement closing date except for 1 where you want to leave about 9% or lower to report to CRA. Then pay it off before due date. Never pay interests.

Two last post contradict each other, lol I guess there's no perfect answer

stop listening to some of these people, NOTHING wrong with carrying a small balance.

the point is to use the card responsibly and dont go into debt. only charge your card to what you actually have in you wallet/bank. thats why i do, ill carry a very small balance just for kicks especially since i have 0% APR so it doesnt affect me just shows the CC company i use the card and leave a little behind. It helps your credit, not kills it.

just pay youre bill on time, everytime and use it responsibly and you will be good. If you need to carry a balance then do it, if you dont have to then dont. easy as that.

JVII said:

Man, yall cats is making this WAY more complicated than it needs to be.

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Seriously! I never understood why we're so concerned with building credit anyways. If we spent half the time we do trying to understand this convoluted system trying to actually understand building wealth, we wouldn't have an ever increasing wealth gap. I could care less about my credit and still managed to always have a 700+ score since back in college. Just worry about paying it off at the end of the month and your score will increase. Just don't worry about the "Best" and worry about being in the top quadrant for better mortgage rates.

At this point, I just want my credit score to be good enough to get a low APR(0%-1.9) on the 2014 Avalon XLE Touring later this year. That's my only goal. Last time I checked, my score was close to 700, so I should be good by the end of the year, since I got a credit card now. I got a car paid off on my credit and my old credit card paid off, so I should be good, hopefully..

JumpmanPro97 said:

cash is king.

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Are you buying a house cash or car cash?

Im currently carrying a balance of 2700 on a card with a limit of 3600, 0% for 18months .

I have cards with similar limits that and 0 balances because I pay in full monthly.

I'm 20 and I need to start building too..

I've heard so many different things.

1.) Get a credit card, use it to pump gas, pay it off in full, get good credit after 6 months.
2.) Get a secure credit card, charge it and pay the minimum payment til it's paid off, then repeat, get good credit after 6 months.
3.) Get a credit card, buy small things / only as much money as you have, pay it off immediately (literally same day), get good credit.

Can anyone evaluate?

Also, I'm slightly confused. Let's say I buy a pair of Jordans at Foot Locker.. I will have a time period to pay it off and I can make a minimum monthly payment + interest?

So if "MP" =minimum payment, and "IT"=interest, the formula would be this every month? MP+IT = my monthly payments for X amount of months? How do they decide how long you have to pay? How do they decide what my minimum monthly payment is?

Thanks NT.. been somethin i've been meaning to do for a while now, just haven't gotten around to it. I applied for Chase Credit cards, Target credit cards, and have gotten declined for all of them because i have absolutely no credit history whatsoever. I don't know where is good to start and w/ who.