Revolving Credit 12-Month Plan - Building Credit and Scores

[Neblett]

... or, "The Little Card That Could."

At the moment, I only have one credit card - a store card from Target with a credit limit of $200. Now that I'm caught up with it, I'm relying on this little card to help me build my scores and creditworthiness for a few months. I know it's not going to be as effective as a real credit card, but I need to start somewhere. After I get my new car at the end of the month (everyone think positive thoughts and send lots of good juju my way), I am thinking of getting a secured B of A card (pay $99 and have a $500 balance) as a second source of revolving credit - only for use in emergencies or as a gas card.

Does the following plan for the Target card make sense? And is this the wisest way to use it to build credit in a small way, with the greatest impact, while staying in a conservative budget?

Current balance: $27
Payment Due Date - July 17
Amount Due: $0

July 16 - Pay $27
Balance - $0

July 21 - Buy Harry Potter book and a couple of household items, purchase not to exceed $50

Payment Due Date - August 17
August 16 - Pay $50

August 21 - Buy $50 of household items, clothes, or entertainment items (CDs, DVDs, etc.)

Payment Due Date - September 17
September 16 - Pay $50

September 21 - Buy $60 of accessories for new iPod that I'm getting in Sept. and office supplies

Payment Due Date - October 17
October 16 - Pay $60

October 21 - Buy Halloween party items - no more than $50

Payment Due Date - November 17
November 16 - Pay $50

November 20 - Buy cooking supplies for Thanksgiving - $50

Payment Due Date - December 17
December 16 - Pay $50

December 18 - Buy last minute Christmas gifts - $150

Payment Due Date - January 17
January 16 - Pay $150

January 18 - Buy Valentine's Day gifts - $60

Payment Due Date - February 17
February 16 - Pay $60

February 18 - Buy spring clothes - $100

Payment Due Date - March 17
March 16 - Pay $100

March 18 - Buy DVDs - $50

Payment Due Date - April 17
April 16 - Pay $50

April 18 - Buy CDs - $50

Payment Due Date - May 17
May 16 - Pay $50

May 18 - Buy summer clothes - $60

Payment Due Date - June 17
June 16 - Pay $60

June 18 - Buy birthday present for ME! - $100

Payment Due Date - July 17
July 16 - Pay $100

Apply for CLI after 12 months of on-time payments in full! YAY!

Message Edited by Neblett on 07-03-2007 11:19 PM

Message Edited by Neblett on 07-03-2007 11:20 PM

[Anonymous]

Your plan sounds good to me, and I actually got the secured card from B of A ($99 for $500 deal). After on-time payments for about 8 months, they upgraded my card to an unsecured card with a $1,000 CL (and I got my deposit back!). I called B of A 3 months after the upgrade and asked for another CLI (on the same card) and the credit analyst was (having a good day) glad to approve my CLI to $2,000 (with new employment update). This is more credit than I need, but it's a good cushion to help with my utilization rate. My advice is: keep the balance on any bank-issued credit card as low as possible (~10%) because as I've seen from some of my credit reports, a high balance on bank cards is bad for you because they want to see that you have lots of available credit. Also, it looks like you're cutting it close on your payment dates. I personally pay the minimum payment that is due right away, then pay whatever "extra" I can afford throughout the rest of the billing period. I also try to end with a larger payment near the end of the billing cycle because some credit reports show Last Actual Payment Amount. I see that you can keep track of your payment due dates and this is a big step for anybody new to credit, so congrats on that good habit. I'm new to credit also (11months history) and I'm doing pretty well, just got some debt to work off, but keeping scores in the upper 660's-680's... Best of luck!

[Neblett]

My plan's dates are not firm, just a principle. You're not the only one who expressed concern at the potentially dangerous pattern by cutting it close to the payment due dates. Not really planning to wait until the last minute to pay the balances off - just created the model to show myself that I have a month to do it, and saving up $50 to $100 is not that hard. I also want to give the account enough time for balances and payments to post positively on credit reports.

But ultimately, the model is:

1 - Pay balance in full before due date.
2 - Charge a small, easily payable amount to the card
3 - Pay balance in full before the due date.
4 - Rinse and repeat.

Message Edited by Neblett on 07-04-2007 08:41 AM

[Neblett]

Quick question.

How much of a bump should I expect when Target erases the past dues that are showing Jan-April '07, as they agreed to do? It will also reduce my utilization to 10%.

This adjustment will mean that a 4-month derogatory history within the past 7 months will become a 7-month "Pays as agreed" with no late pays or past dues reporting.

[Neblett]

Some advice needed...

Is it best (for credit building purposes) to wait until after you get the bill from the credit card co. to send you the bill before you pay, so that the amount posts as a billed amount, or to charge it, then pay it immediately?