Student with no credit history

Anonymous · ‎04-21-2011

I recently turned 18, and I am new to this whole world of credit. I have researched all over about credit cards and how to manage them. But I need some help, I am new here. I applied for a couple of student credit cards (I am a freshman in college), and got rejected, the only one I got accepted for was the capital one MTV rewards card. I have no credit history. My credit limit was 300, I started using my card as soon as I got it, however I plan to pay my balance in full every month; (I am enrolled in paperless billing). I read that I should use only under 10% of my credit line. i have a couple of questions, should I use only 10% of my credit line, and how long would it take for me to establish some credit with this card, I plan on checking my credit score every month to check if capital one is reporting my credit. Also, what is the best strategy I could go with to get my credit limit increased, and should I keep this card for as long as I can, or should I cancel it once I get a better one. Sorry for all the questionsand your help is greatly appreciated. Thank you!

andre181 · ‎04-21-2011

You can use as much of your credit limit as you want, just make sure that you pay it down to at least 10% BEFORE the statement comes out.

Do that and make sure you do not go above your credit limit, and you will be in good shape in about 6-12 months. Also, your Capital One account is probably a "credit steps" card, which means capital one will increase your credit limit after so many months (usually 5 or 7 months) of using the card, paying on time, and staying under your credit limit. If it is a credit steps card, you should get a letter explaining the program in the mail with a month or two of getting your card.

As long as this card doesn't have an annual fee, keep it for as long as possible, even after you get some bigger and better cards.

Congrats on your first card!

Anonymous · ‎04-21-2011

@andre181 wrote:
You can use as much of your credit limit as you want, just make sure that you pay it down to at least 10% BEFORE the statement comes out.

Can you please elaborate on this. I am enrolled in paperless billing; so I can pay off my balance online anytime (not sure if this would help my credit score). Would it be fine if I pay off my whole balance when my statement comes out/my due date, or should I pay it down beforehand. Thank you

trumpet-205 · ‎04-21-2011

Ideally, PIF before next statement period starts.

Anonymous · ‎04-21-2011

@trumpet-205 wrote:
Ideally, PIF before next statement period starts.

that would be by the payment due date, correct?

andre181 · ‎04-21-2011

@Anonymous wrote:

@andre181 wrote:
You can use as much of your credit limit as you want, just make sure that you pay it down to at least 10% BEFORE the statement comes out.

Can you please elaborate on this. I am enrolled in paperless billing; so I can pay off my balance online anytime (not sure if this would help my credit score). Would it be fine if I pay off my whole balance when my statement comes out/my due date, or should I pay it down beforehand. Thank you

Your account has a statement cutoff date, which is the day that Capital one will create your statement and send it to you. It is usually about 3 weeks before your payment due date.

You should try to pay your card down to below 10% two or three days before this statement cutoff date, so that the statement they send you does not have a high balance on it. The amount on each statement is the amount that capital one will report to your credit reports, so you want it to be as low as possible.

For some people, it is easier to just pay off their credit cards every week or two when they get paid. That is always an option too.

Hope that makes a little more sense!

Anonymous · ‎04-21-2011

Your account has a statement cutoff date, which is the day that Capital one will create your statement and send it to you. It is usually about 3 weeks before your payment due date.

You should try to pay your card down to below 10% two or three days before this statement cutoff date, so that the statement they send you does not have a high balance on it. The amount on each statement is the amount that capital one will report to your credit reports, so you want it to be as low as possible.

For some people, it is easier to just pay off their credit cards every week or two when they get paid. That is always an option too.

Hope that makes a little more sense!

Sorry for all my questions, I am very new to this, and thank you for helping me. One last thing, considering the fact that I am enrolled in paperless billing, (my statement isn't mailed to me), how would I be able to find out the exact date my new statement is generated by capital one.

andre181 · ‎04-21-2011

@Anonymous wrote:

Your account has a statement cutoff date, which is the day that Capital one will create your statement and send it to you. It is usually about 3 weeks before your payment due date.

You should try to pay your card down to below 10% two or three days before this statement cutoff date, so that the statement they send you does not have a high balance on it. The amount on each statement is the amount that capital one will report to your credit reports, so you want it to be as low as possible.

For some people, it is easier to just pay off their credit cards every week or two when they get paid. That is always an option too.

Hope that makes a little more sense!
Sorry for all my questions, I am very new to this, and thank you for helping me. One last thing, considering the fact that I am enrolled in paperless billing, (my statement isn't mailed to me), how would I be able to find out the exact date my new statement is generated by capital one.

That's ok! Learning this stuff can be tricky!

You can call Capital One and ask them what day your statement will come out, and they will tell you (and it should be the same date every month). Or you could just wait until the first statement comes out, and then you will know it will be that same day every month.

Anonymous · ‎04-21-2011

That's ok! Learning this stuff can be tricky!

You can call Capital One and ask them what day your statement will come out, and they will tell you (and it should be the same date every month). Or you could just wait until the first statement comes out, and then you will know it will be that same day every month.

Thank you so much. so here's my plan: I will pay my balance in full every week until my statement comes out, for future months 2-3 days before the date when my statement comes out I will pay my balance in full. Is there anything else I need to know to help my credit score.

Anonymous · ‎04-21-2011

@Anonymous wrote:
I recently turned 18, and I am new to this whole world of credit. I have researched all over about credit cards and how to manage them. But I need some help, I am new here. I applied for a couple of student credit cards (I am a freshman in college), and got rejected, the only one I got accepted for was the capital one MTV rewards card. I have no credit history. My credit limit was 300, I started using my card as soon as I got it, however I plan to pay my balance in full every month; (I am enrolled in paperless billing). I read that I should use only under 10% of my credit line. i have a couple of questions, should I use only 10% of my credit line, and how long would it take for me to establish some credit with this card, I plan on checking my credit score every month to check if capital one is reporting my credit. Also, what is the best strategy I could go with to get my credit limit increased, and should I keep this card for as long as I can, or should I cancel it once I get a better one. Sorry for all the questionsand your help is greatly appreciated. Thank you!
Hi whoqwerty & welcome aboard!

Congrats on taking your first steps into the world of credit! Stick with your plan to pay in full every month (charge only what you can pay for) to stay out of debt, and don't ever, ever, EVER pay late. Did I mention to never, ever, ever pay late? Yeah... don't do it. Ever. Not E-V-E-R. Never, never, never, ever...

Ahem... I'm just sayin'.

Without any prior credit history, it'll take approximately six months of reporting before you have a score.

You can use as much of your credit line as you like (don't go over the limit!), but PIF to avoid interest

The "Less than 10% rule" applies to when you're working to maximize your FICO score, or to avoid reporting balances that may make your other lenders nervous. You can use as much (up to the limit) of the credit line as you like, but you have to be aware of a) the due date, and b) the statement or reporting date. The goal is to have no more than 10% utilization on any one card, and overall (revolving) report on your reports. Utilization is the your balanced owed divided by your revolving credit line; AKA "Amounts Owed" in the graphic below. And, as you'll see, utilization makes up 30% of your credit score, only 2nd to payment history... which is why you will never, ever, ever, EVER, N-E-V-E-R pay late.