LaSirena wrote:
Hello,
I'm hoping you guys can help me with 2 questions I have:
1. In order for me to keep my credit cards in good standing, what is the minimum usage I should have? I currently have 2 credit cards with a 0 balance, and I need to know if in order for those accounts to be considered in good standing I have to make at least one charge per month. I thought I read that somewhere, but a friend of mine just told me that as long as I use the account once per year and pay it off that's sufficient. Can some of you please clarify this for me?
2. How soon does credit card activity get reflected in the credit scores? I have one credit card that currently has a balance, and I just made a large payment to it. Will this large payment, which will help with my debt ratio, be reflected within 30 days?
Looking forward to hearing from you. Thanks so much for your help!
Hi, welcome to the forums!
With only two cards, you probably need to use both during each month, but only let one report. You do this by paying one off before the statement date, so that it will show a $0 balance on your reports. You can take turns on this if you like. And if you want to experiment with letting both report or neither report, please do so, and then update us with any score change!
Most of us have 5-6 cards or more, and we find that one reporting a balance yields the best results. The one that reports should show a balance of 9% or less of that card's limit, so you might be paying in two steps.Again, this is just for ideal tweaking of scores. But it does result in your credit reports showing frequent but responsible usage. It's up to you as to how far you want to carry it.
Your friend's advice might result in having cards closed by the issuer for insufficient usage, unfortunately. We usually advise using any card with a Visa/ MC/ Discover/ Amex logo once every three months or so. You might be able to get away with once every 12 months for a store card, one that does NOT have the Visa/ MC/ etc logo, but I wouldn't want to risk it. Lenders are canceling more quickly these days in an effort to get their books in order. And if you have a bank card (Visa/ MC/ etc) from HSBC or Orchard, you probably should use it once a month. They will cancel you in a heartbeat.
To show usage, all you have to do is buy one thing that you were going to buy anyway, even if you paid cash --so, a tank of gas, a grocery trip. Don't carry balances: if you let a card report a balance, be sure to pay it off before the due date. Or charge a Slurpee at the local 7/11 and pay it off as soon as it shows up online.
Hope that helps!
eta: Whoops, forgot #2: almost all CC's update to the credit bureaus on their statement dates, reporting the balance that shows on that statement. This isn't the due date, but the date that the statement shows up online.
Exceptions: American Express reports 4 weeks after your statement drops, a few days before the next one. Essentially, you will always be looking at the previous month's balance for AmEx. HSBC/ Orchard, and (I think) US Bank report on the last business day of each month, reporting the balance as of that date.
You might have to experiment a bit to confirm this. And calling customer service at your lenders is generally a waste of time. Most CSR's can't stand to say "I don't know," but in fact, most don't know, and they will earnestly tell you all sorts of things.