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Just curious, I know the right way to do it per forum consensus is pay every card off in full each month before the statement cuts. How then does it report that I am using/building "credit" when really I am just using my credit card as a debit card?
I'm a newbie to this credit building, but it's my (limited) understanding that your report should still show what you put on your card each month, regardless of whether you pay it off in full. This is only my understanding. So, that being said, if it's accurate, my goal is to only charge around 10% on a card and still pay it off in full, and to never go over 30%. I'm open to suggestions on this as well!
I think what they are looking for is that you are making a regular monthly payment and not utilizing more than 30% of your credit. The less the better.
@AQ wrote:I'm a newbie to this credit building, but it's my (limited) understanding that your report should still show what you put on your card each month, regardless of whether you pay it off in full. This is only my understanding. So, that being said, if it's accurate, my goal is to only charge around 10% on a card and still pay it off in full, and to never go over 30%. I'm open to suggestions on this as well!
I think what they are looking for is that you are making a regular monthly payment and not utilizing more than 30% of your credit. The less the better.
But, and maybe this is my real question- don't they appreciate you running tons of cash through your card? In other words, would it behoove me to run it up to 30% and pay it off EACH WEEK- for a greater total spend per month? I just don't see what card companies would get out of doing business with someone who is barely using the card (at least, with my measley 2 and 3k limits, I would never charge above 600 or 1k a month. This must be almost a waste of their time..)
It really doesn't build that much credit...It will boost your score temporarily for that month by reducing you utilization but it may also not reflect what you spend every month which can hurt your score longterm I think.
The key is to have one card report a small balance (<10%) and have all the rest report zero.
@gpfirestone wrote:It really doesn't build that much credit...It will boost your score temporarily for that month by reducing you utilization but it may also not reflect what you spend every month which can hurt your score longterm I think.
These is no "history" of what you spend every month, so there is no way for that to affect your score. Spending has no bearing on Credit Score, it's all about paying on time over a long period of time and keeping your revolving balances low
@AQ wrote:I'm a newbie to this credit building, but it's my (limited) understanding that your report should still show what you put on your card each month, regardless of whether you pay it off in full. This is only my understanding. So, that being said, if it's accurate, my goal is to only charge around 10% on a card and still pay it off in full, and to never go over 30%. I'm open to suggestions on this as well!
I think what they are looking for is that you are making a regular monthly payment and not utilizing more than 30% of your credit. The less the better.
AQ, this isn't quite correct. Generally, your reports show what is on your cards on the day the statement cuts. You could put a million bucks through your cards but if you pay it off before statement day, the reports don't see it.
Also, it's the credit reporting agencies who like to see low utilization (not zero, but at least a little something showing on one or two cards). The card companies themselves may like it if you run quite a bit through their cards and/or run a nice, profitable monthly balance. There are many mysteries and conflicts of interest in credit scoring, but low (non-zero) utilization shows that you're using your credit but not abusing your credit.
Oh, I think I misunderstood. I thought the person was implying paying it off before the grace period ended, as in before interest was attached to it. That is what I am trying to do--charged $20/month on my credit card for an autodraft for a regular payment, then pay it off as soon as the statement ends or "cuts" as you put it more eloquently.
So you would suggest I am doing right--keeping my credit on a card at a low rate and paying it off once the statement cuts? I have a $500 secured card and have set up an autopay that's $20/month. I kinda figured keeping a regular amount charged would be more beneificial than varying amounts (or at least safer), and keeping that at 10% or less. I guess that's less than 5%.
Thanks for your help!
@AQ wrote:Oh, I think I misunderstood. I thought the person was implying paying it off before the grace period ended, as in before interest was attached to it. That is what I am trying to do--charged $20/month on my credit card for an autodraft for a regular payment, then pay it off as soon as the statement ends or "cuts" as you put it more eloquently.
So you would suggest I am doing right--keeping my credit on a card at a low rate and paying it off once the statement cuts? I have a $500 secured card and have set up an autopay that's $20/month. I kinda figured keeping a regular amount charged would be more beneificial than varying amounts (or at least safer), and keeping that at 10% or less. I guess that's less than 5%.
Thanks for your help!
YES- you understood correctly- this was my question.
So- the better answer then is to leave the balance on when the statement cuts and pay it before the due date?