New credit card

[Anonymous]

My son is 18 and just got his first credit card.  We have always told our children that if you charge it, you pay it off.  Will he establish credit if he pays off his balance every month?  We don't want to see him carry a balance and add interest if he can pay it off every month.

[lkcrew426]

Short answer - Yes. The best way is to have more than one card and let ONE report less than 3% of the credit limit each month, alternating cards (so I've read). However, if he pays it in full every month - he is well on his way to a good stable credit history, and a good financial practice at that.

[KingAdrock]

Keep in mind CCC's usually report to the bureaus on your statement date, not your due date. The amount listed on your bill is the amount that will be reported, hence carrying a balance is not necessary. So definitely encourage your son to pay in full, always.

If really you want to play the "Maximize your FICO score" game, you can make payments before your statement cuts, and therefore be in control of what amount will be reported. Less than 10% utilization of your credit limit is beneficial to your FICO.

[Anonymous]

The best way is charge things and pay in full by the due date, never be late, never go over credit limit. This develops good credit history.   

Carrying a balance only costs more money,  it does not help.   

Playing the FICO games( pay early, utilization) are to maximize the FICO score.   They do nothing to develop history either.     They are just tricks to optimize score, which you may want to play when applying for major credit (auto, mortgage, etc).  IMHO,  they are kinda useless for new user.      

[haulingthescoreup]

... but they are very useful for those of us who are bad with deadlines!

Since I switched to paying before the statement date, I haven't come close to being late. And that's something that I'm determined never to do again.

[Anonymous]

I pay minimum payment immediately after the statement cuts.   Then I usually PIF a few days before the due date.  

That is my "never be late" tactic.