Got my first secured CC

[Anonymous]

Hello, I just got my first ever credit card (a secured one) from Capital one with a credit limit of $200. What is the best way for me to use it in order to increase the limit?

How can I increase the limit? Also any tips on the usages? How can I be careful and make sure that it will build my credit score fast?

[Anonymous]

Congrats on first CC! In answering some of your questions, with a $200 limit, you always want to PIF - never carrying a balance; always pay on time, preferably before due date; and eventually with a having a secure card, you'll be upgraded. From what I've read here, Cap 1 is a good place to start off with credit profile, yet they aren't as genourous with CLI as others, but do right by them and other banks will notice. Not saying that you are, but we, with small CLs, can have a tendency to take it for granted and are not mindful of doing what we need to do, so don't be that someone. There others way more knowledgeable than me on these matters, and they'll chime in with great advice. Anyone, please correct where needed. Thanks. 

[Anonymous]

Thanks for the advise. When you see other credit card companies will notice, how will they notice that with secured credit card? also how long would it take to be noticed? 

[Anonymous]

Wait until your card has arrived in the mail, you've activated it, and you have your username and password set up with Cap One for online access.  Then give customer service a call and find out when they estimate your first statement will print.  Knowing when the statement will print is crucial.

If you want a simple foolproof method for building your credit, make exactly one small purchase each month that is between $4 and $17.  Allow the statement to print,  Then pay the statement balance if full AFTER the statement prints (e.g. a few days later).  Then make one more purchase during the next statement cycle, and repeat the whole thing again.

If you have NetFlix, the $9-10 monthly charge would be perfect.  Then you get set up your card to do autopay in full and you're done.

Make all other purchases with debit cards for the first year.

I got the $17 number for the ceiling because you want the balance that gets reported to the credit bureaus to be < 8.99% of your credit limit.  Cap One will report whatever is on the statement (total amount owed) the day after the statement prints.

Six months after you opened this card, you will be able to get your first FICO scores.  To make sure those scores are as good as they can be, I suggest you implement the Share Secured Loan Technique in May.  The lender we used to recommend for the SSLT was Alliant, which is no longer a good option, but by April we will have some good alternatives to Alliant.

[Anonymous]

Cap1 cards are difficult to get to graduate, but it is a good starter product. 

DO NOT get caught up in the excitement of these boards and start apping too soon!! Keep your Cap1 card, use it monthly and PIF, and don't app for any more cards for 6 months. You should generate a FICO score then.

After 6 months, the next card I would advise for you is a Discover It card. They love thin files, they will grow for you very nicely, and you will earn double cash back for the first year.

One other thing you could do while building your first 6 month history is take out a share secured loan (SSL) from a credit union. This will give you a credit mix early on which will also help your FICO when it generates.

[Anonymous]

Got it. I already have the capital one secured card and used $60 in 2 days. I have enough savings to pay it in full.

Did I already utilize a lot? Can I pay in full before the billing cycle is even kicked?

[Anonymous]

After 6 months, can I not apply for BOA unsecured credit card? I have a checking account with BOA and maintained it for the last 4 months. Would that negatively affect my credit score?

[Anonymous]

---

@Anonymous wrote:
Got it. I already have the capital one secured card and used $60 in 2 days. I have enough savings to pay it in full.

Did I already utilize a lot? Can I pay in full before the billing cycle is even kicked?

---

Look over what I wrote earlier.  Cap One will report to the three bureaus whatever your card's balance was on the day that the statement prints.  The amount reported will be the Amount Owed listed at the top of the statement.  You want this amount to be between $4 and $17 every month.

Thus if you pay your current $60 balance down to $4 at least a couple days before the statement prints you should achieve that.

You will also need to pay the Amount Owed at the top of the statement a few days AFTER the statement prints.

It would really be simpler if (moving forward) you made one single charge in the region of $4-17 and pay the statement balance in full (after it prints).  There's no advantage to using the card a lot right now.  You have a debit card, right?  Why not use that for your real purchases?

[Anonymous]

Gotcha. So on the capital one app, the balance currently reads $0. Are you suggesting that I pay lets says $50 before the balance shows up and pay the remaining atleast 5 days before the due date?

[Anonymous]

---

@Anonymous wrote:

Gotcha. So on the capital one app, the balance currently reads $0. Are you suggesting that I pay lets says $50 before the balance shows up and pay the remaining atleast 5 days before the due date?

---

Pay the remaining amount after the statement cut date. You want your utilization under <8.99%, but not zero. Right now you have $60/$200 = 30% utlization.

@Anonymous @Anonymous said...

$4/$200 is 2%

$17/$200 is 8.5%

Choose an amount to charge to your card between $4 and $17 and setup autopay to pay in full on the due date. Do not spend more than $17 a month with the credit card.