How do I prove my ability to pay CC bills?

[Nadar]

Hi, I would like to know how does someone with a new credit card and new credit file prove his payback ability?

Should I at least once go near 50 percent and pay in full to prove that I can indeed pay off high balances or do I stay below 30% (or 9 percent as suggested in fico forums)

Do CC issuers look favorably when someone  with a new card always barely it and has less than 10 percent utilization?

[chwebb1]

What exactly is your goal? Are you trying to go for Auto-CLI? What lender are we talking about? How long have you had the card?

I would tell you in general that you don't want over 10% to report at statement cut, especially if you're planning on applying for more credit sometime soon. And don't get too crazy. You really don't want to ever get over 80%, but even 50% util is bad.

And honestly the best way to show that you can pay is to pay on time. Every time.

[Gunnar419]

Yes, it does vary from lender to lender. Some are more likely to give auto-CLIs if you frequently use 35-40 percent of you CL with them (Barclays, and IMHO Discover). Others don't like that at all. The main thing, though, if your only goal is to prove that you can pay, is to pay well above the minimum every month, and keep doing that forever.

To establish your reliability and financial stability, it's not necessary to PIF, though you might want to do that for other reasons. It's just necessary to show you can plug away, month after month.

[baller4life]

My strategy is to only charge what I can pif each month. Let less than 10% report on statement then pif by due date. NEVER pay late!!

[jaraico]

dont carry balances, use it for everything! everytime you swipe they get paid and they love it=] plus paying your bill every month and lots of use will definitely get you cli

if you carry a balance like people have previously stated keep it as low as possible.

the 9% you mentioned i think is referring to your overall utilization from all credit cards.

anywho good luck!

[samm90]

I just use it and pif. I wouldn't intentionally spend extra, just use it instead of cash and debit. Pif so you don't get charged interest and collect rewards.

[LearningMoreAboutCredit]

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@Nadar wrote:

Hi, I would like to know how does someone with a new credit card and new credit file prove his payback ability?

Should I at least once go near 50 percent and pay in full to prove that I can indeed pay off high balances or do I stay below 30% (or 9 percent as suggested in fico forums)

Do CC issuers look favorably when someone  with a new card always barely it and has less than 10 percent utilization?

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Treat your new card and subsequent cards like debit cards.  Charge only what you can payoff in a month...every month  

Whether you're going to apply for additional credit or not, you should only let <10% on one card and zero on any remaining card balances (that's if you're playing the FICO game).  Good luck!

[DigitalArk]

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@LearningMoreAboutCredit wrote:

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@Nadar wrote:

Hi, I would like to know how does someone with a new credit card and new credit file prove his payback ability?

Should I at least once go near 50 percent and pay in full to prove that I can indeed pay off high balances or do I stay below 30% (or 9 percent as suggested in fico forums)

Do CC issuers look favorably when someone  with a new card always barely it and has less than 10 percent utilization?

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Treat your new card and subsequent cards like debit cards.  Charge only what you can payoff in a month...every month  

Whether you're going to apply for additional credit or not, you should only let <10% on one card and zero on any remaining card balances (that's if you're playing the FICO game).  Good luck!

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+1

[cashnocredit]

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@Nadar wrote:

Hi, I would like to know how does someone with a new credit card and new credit file prove his payback ability?

Should I at least once go near 50 percent and pay in full to prove that I can indeed pay off high balances or do I stay below 30% (or 9 percent as suggested in fico forums)

Do CC issuers look favorably when someone  with a new card always barely it and has less than 10 percent utilization?

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This can be informed by recent FICO.COM banking blogs.

The risks have been shown to be signifitcantly lower when people make total monthly payments that are at or above 200% of what the minimum payments would be if their LOCs were maxed out across the board.

Lets say you had a total CLs of 20k and your minimum payments were, say, $600/mo if you were maxed out.  If the monthly payments you make are $1200 or more then you would be considered low risk and additional CLIs would be more likely even if you carry higher than average balances - not that that;s a good idea.

Note that this doesn't mean you carry a balance. If your monthly PIF payments average over $1200 then your CLs would be supported.

This is a new area of banking research made possible by the new, more detailed, CRA reporting which includes not only balances but actual payments made.