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Building Credit

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Building Credit

I'm just starting to build credit and I'm trying to obtain high limit CC's for a number of reasons. I have a secured cc for $500 with Capital one. Which method is best to achieve my goal? Should I spend the entire balance every month and pay it in full before the due date. Or should I just spend under $50 per month and pay it before the due date every month. Or is there any other recipe for success I'm unaware of that someone can hip me to??? I'd really appreciate any feedback...Thx!
7 REPLIES 7
Established Contributor

Re: Building Credit

I don't have a strategy for you but I do know that Capital One likes to see usage.  

 FICO 8
Message 2 of 8
Contributor

Re: Building Credit

Do you have any other TLs?

 

What's your AoOA & AAoA?

Message 3 of 8
New Member

Re: Building Credit

No I do not have any other Tradelines. I don't know what AooA means but my Aaoa is nearly one month. I'm absolutely NEW to credit. Which is why I was only able to get a secured card. But I make great money and I have little overhead due to me being able to live in my parents other house. I bought my car cash and I'm single! So I'm looking to build my credit profile now.
Message 4 of 8
Frequent Contributor

Re: Building Credit

If it were me, for the first 3 to 6 months, I would keep the balance that is reported to the credit bureaus less than $50.  This way you are keeping your utilization down.  You can spend more than $50 per month on the card, but want what is reported to be less than 10% utilization.  This way you are not dinged for excesive credit utilization.

 

Also if it were me, I would suggest to treat your credit card as if it were a debit card.  I say this because often times we get caught up on 'minimum payments' and pay unecessary interest.

 

HTH = Hope This Helps


Starting Score: EQ 593, TU 600, EX 612
Current Score: EQ 850, TU 850, EX 843
Goal Score: EQ 750, TU 750, EX 780


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Message 5 of 8
Community Leader
Senior Contributor

Re: Building Credit

Welcome OP

You stopped at the right place at the right time to start your credit journey. Kudos to you.

So here are some pointers to get you started, keeping in mind that in order to secure high CLs, one must treat this as a marathon, not a sprint. So no late payments, no returned payments, and no applying for lots of credit.

First, let’s get in the habit of PIF.
So, you can charge up to your CL as long as the balance reporting at statement cut is between 1% - 8.9%. In this case for C1, it’s between $5 - $44.50. This way, you’re using your card, but not paying interest!

Second, after 6 months of faithfully following this ritual which will last you a lifetime, let’s move to see if there’s any prequals for you. IMHO, I would check Discover and AmX first. If there’s a preapproval, apply for it.

Now once you have 2 cards, the goal is slightly different. Have one card report $0 at statement cut and the other following the example above—less than 8.9% reporting. Again, you can still charge on both your cards, but it’s what reporting that counts.

At the one year mark, apply for your third card. 3 CCs provide maximum FICO scoring points. So this time the goal is to let 2 cards report $0 at statement cut.

Now OP, these are goals toward creating a great credit profile to obtain prime cards with nice SLs, which can take 2-3 years to build.

Also, I think joining a CU would be a good idea. And if there’s any military affiliation, joining NFCU will be a feather in your cap.

GL2U
GOALS: Garden til APR 2020 and 800 Club


SEP 2019: EX 791, TU 797, EQ 800
JUN 2019: EX 788, TU 794, EQ 779
DEC 2018: EX 777, TU 783, EQ 799

|| AmX Cash Magnet $25K || NFCU CashRewards $20K || Macy's $20K || Discover IT $18.7K || NFCU CLOC $15K || NFCU Platinum $12.5K || AmX ED $11.5K || CitiCostco $7K || CitiDC $6.3K ||
Message 6 of 8
Super Contributor

Re: Building Credit


@Anthony_03 wrote:
I'm just starting to build credit and I'm trying to obtain high limit CC's for a number of reasons. I have a secured cc for $500 with Capital one. Which method is best to achieve my goal? Should I spend the entire balance every month and pay it in full before the due date. Or should I just spend under $50 per month and pay it before the due date every month. Or is there any other recipe for success I'm unaware of that someone can hip me to??? I'd really appreciate any feedback...Thx!

Hi Anthony.  Can you tell us more about why you want to have high limit CCs?  And also what your timeframe is for this goal?

 

A person can have a perfect 850 score with three cards having only a $500 limit each.  Thus higher credit limits do not in themselves help you build a higher score.  

 

Quickly getting several high limit cards (e.g. 5 cards with a 20k limit) is almost impossible for a person who's only account is a 1-month old $500 CL.

Message 7 of 8
New Contributor

Re: Building Credit

Capital One is the worst when it comes to extending a higher credit line to you. I have never missed a payment, and I have had that QuickSilver for over 3 1/2 Years ( My 2nd Credit card!). I agree with the other member that they will only extend it if you use the card liberally. 

Message 8 of 8
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