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How to use credit card

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How to use credit card

I currently have two credit cards. I have the Indigo Platinum $300 SL and I am waiting on my Capitol One Quicksilver, with $300 SL, to arrive in the mail. I want to raise my credit score and increase my SL. How should I use these cards so that I could do this?

Starting Score: 456
Current Score: 675
Goal Score: 705


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35 Inq
Repossession-currently on payment plan $150/mo
New car note-$550/mo
Self Lender-$45/mo (1 late payment June 2018)
Merick Bank-closed 0 balance (settled)
Indigo cc-$300SL
Capitol One Quicksilver-$500SL

Student Loans-$5,000 interest (deferred)




















Message 1 of 6
5 REPLIES 5
Contributor

Re: How to use credit card


@Lewisa410 wrote:

I currently have two credit cards. I have the Indigo Platinum $300 SL and I am waiting on my Capitol One Quicksilver, with $300 SL, to arrive in the mail. I want to raise my credit score and increase my SL. How should I use these cards so that I could do this?


What you normally would use your debit card for, use your new credit cards. Then pay it off every month. If you don’t think you can be disciplined to wait for the due date, PIF weekly. Show responsible usage and it will open doors to greater limits.

7/16/2019

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Message 2 of 6
Community Leader
Senior Contributor

Re: How to use credit card

Welcome, @Lewisa410. Smiley Happy

 

Indigo is one of those icky products. I'd spend as little as possible on it… maybe not at all if you can get away with it. Simply make sure your fees are paid up.

 

Capital One is a good bank. Use the card as much or as little as you're comfortable with. But do make sure you're not letting it sit for months without using it at all.

 

For scoring, what you'll want to watch are your statement balances. These will appear on your credit reports. No later than a day before your statements cut, you'll want to pay your balances down to a desirable level. "Reponsible" borrowing is generally defined as 28.9% of one's limit or lower, and it puts you in approximately the second best FICO tier. That's a good place to be.

 

To fully optimize scoring, leave a tiny balance on one card ($5 but not much more), with the other card reporting a balance of zero. We call that AZEO. Most people will achieve their AZEO scores with balances of up to 8.9% overall utilization and 29% individual card utilization. You'd have to test between the two levels to see how your profile reacts.

 

The upshot is that anything between AZEO and 28.9% should be good. You want to avoid higher utilization percentages.

 

Utilization is only a one month snapshot in time, however. If it's too high one month, you can fix it the next. Because it's a one-month snapshot, utilization doesn't necessarily help you "build" credit. What helps you "build" is on-time payments over a period of time.

Message 3 of 6
Established Member

Re: How to use credit card

Thank you so much for taking the time to explain this to me. I will keep the $5 balance on the Capitol One cc. Thanks a lot. 

Starting Score: 456
Current Score: 675
Goal Score: 705


Take the myFICO Fitness Challenge

35 Inq
Repossession-currently on payment plan $150/mo
New car note-$550/mo
Self Lender-$45/mo (1 late payment June 2018)
Merick Bank-closed 0 balance (settled)
Indigo cc-$300SL
Capitol One Quicksilver-$500SL

Student Loans-$5,000 interest (deferred)




















Message 4 of 6
Established Contributor

Re: How to use credit card

Congratulations on your newest CC! I would suggest first and foremost to pay in full each month. Secondly, I would try and keep utilization low, below 30% if possible. I know that’s difficult when you have small beginning limits. You may need to pay off the card more than once each month. Last, for now, NEVER miss a payment! Best of luck, and welcome!
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Message 5 of 6
Regular Contributor

Re: How to use credit card

Here is a primer from TPG about payment dates, etc.  Worth a read.

 

https://thepointsguy.com/guide/important-dates-for-credit-cards/

Message 6 of 6
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