New to CC's----to carry a balance or not to carry a balance??

[Anonymous]

Trying to rebuild credit, got approved for Cap One secured ($500) and OpenSky secured ($200) my question is, what is the best way to build my credit using these? Should I carry a balance or not carry a balance (like $5 or $10) there seems to be a lot of opinions reguarding this subject. 

[creditguy]

Use them and pay them off before the statement cuts and just leave a small balance reporting on just one card, keeping the utilization under 9% for scoring purposes. For maximum scoring effect consider adding a third card down the road when it's right for you.

[Themanwhocan]

Never carry a balance, always pay all cards in full each month. The trick is when to pay each card each month.

Pay all cards off a few days before the statements generate, so that pending charges can clear and so that you have time to pay off the card and your payment can clear, EXCEPT one card pay off all but a few dollars so that a small amount appears on your statement and then pay that in full before the due date.

This is explained in more detail here: http://ficoforums.myfico.com/t5/General-Credit-Topics/How-do-I-play-the-1-9-Utilization-Game-Please-...

[tonyjones]

If you have a card with a low apr, just leave like $100 balance. You don't want your reports to have 0% utilization.

[Anonymous]

@ahatten0414

Don't forget to say "thank you" to those guys above my reply. I've notice people always ask but never take a few seconds to say what matters most - a simple "thank you" would suffice. 

EDIT: to keep it PG

[Anonymous]

I think the 1-9 game takes too much effort and doesn't give lasting gains. I would just make sure you pay before the due date. It doesn't really matter what comes through the statement date. The reason is that you aren't applying for anything new for a bit, so optimizing your utilization serves no purpose. Additionally, the biggest thing holding you back right now is your lack of history. Just use your cards, pay them off every month, and otherwise sit tight for the next six months and you'll see your scores improve.

[takeshi74]

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@Anonymous wrote:

Trying to rebuild credit, got approved for Cap One secured ($500) and OpenSky secured ($200) my question is, what is the best way to build my credit using these? Should I carry a balance or not carry a balance (like $5 or $10) there seems to be a lot of opinions reguarding this subject. 

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There aren't a lot of opinions -- you're misunderstanding.

You never need to carry a balance for scoring purposes.  Don't conflate allowing a balance to report with carrying a balance.  You can have a balance report without carriyng.  It all depends on when you pay the statement balance in full versus the report date.  Pay before the report date and no balance report.  Pay in full after and you have a balance reporting.  You can also pay prior to report to reduce the reported balance and then pay in full by he due date after it reports to avoid carrying and incurring interest.

Generally speaking, keep your revolving utilization at 30% or less.  If you're applying for new credit you may want to allow only one balance to report at 10% or less or at ~$2-$3 to eke out adidtional points.

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@Anonymous wrote:

I think the 1-9 game takes too much effort and doesn't give lasting gains. 

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To clarify:  Revolving utilization is determined based on current balances and limits as indicated on reports.  It does not consider prior revolving utilization.

[Anonymous]

There is nothing wrong with paying bills when they are due on a young account. Sure scores to be optimum they need to be zero, but a thin file needs the histiry. Give each creditor constant use if you only have two.

You have to go online and read and take note each statement cut day, pay off a few days before to adjust for short months. A 600 range score with no baddies isn't going to see an increase from zeros like additional months of history and subsequent CLI awards. Happened to me, I got a barclaycard with a big limit and floodgates opened, after putting along with a 750 capital one journey a year.

[Anonymous]

Thanks everyone for your help!