How to use a rewards card while rebuilding

[hippychic823]

I'm currently rebuilding and have a QS1 with a tiny little 300 CL. I have had it for about 2 months and been using it kind of like a debit card, charging it up to around 250 and then PIF. However, since the limit is so low I have to do this a few times a month because with my family of 5 one trip to the grocery store maxes it out lol. However, I was thinking maybe I shouldn't be using it like this while I'm still rebuilding because I'm maxing it out and PIF at least twice a month and I worry that it looks weird to the issuer. Any advice/tips? I want to use the card as my everyday card to get the cash back and to bring my score up but I worry that I'm not doing it right.

[SouthJamaica]

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@hippychic823 wrote:
I'm currently rebuilding and have a QS1 with a tiny little 300 CL. I have had it for about 2 months and been using it kind of like a debit card, charging it up to around 250 and then PIF. However, since the limit is so low I have to do this a few times a month because with my family of 5 one trip to the grocery store maxes it out lol. However, I was thinking maybe I shouldn't be using it like this while I'm still rebuilding because I'm maxing it out and PIF at least twice a month and I worry that it looks weird to the issuer. Any advice/tips? I want to use the card as my everyday card to get the cash back and to bring my score up but I worry that I'm not doing it right.

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It looks great to the issuer.

To make it look great to the rest of the world, be sure not to let more than $80 report when the statement cuts.

[hippychic823]

It usually reports with a zero balance because I PIF before the statement cuts. With it having only a 300 CL I'm nervous to let anything report because a tank of gas on that CL puts me at 10% util lol.

[Anonymous]

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@hippychic823 wrote:
It usually reports with a zero balance because I PIF before the statement cuts. With it having only a 300 CL I'm nervous to let anything report because a tank of gas on that CL puts me at 10% util lol.

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There's a scoring penalty....

    (a) associated with having all cards at $0.

    (b) associated with having all cards showing a positive balance.

When you have exactly one credit card, you have to choose which penalty you want.  According to Thomas Thumb and a number of other scoring theorists, Penalty A will be a good deal worse than Penalty B.

The best solution, given that you are paying your card down anyway frequently, is to pay it to $5 shortly before the statement prints.  As long as the statement balance is < $26.99, then you will be at < 9% which is fine.

[hippychic823]

I'm starting to understand, I think lol I appreciate the input guys

[Sandman771]

If you can get a second card or if not go the secured route and get a small $300 one just to have one at zero. Use it how you want and PIF every month before the statement cuts. My Open Sky is the one I use for that and my NFCU is my daily driver. I only have the two, but I'm up 30 points in two months. Now if I just get these bogus collections squared away I'll be good enough to maybe get a third lol

[Failingupwards]

I understand this, but if we have more than one card, and another (Visa) is carrying a balance that we're paying down, it's better to have the Cap 1 $300 card paid to zero when the line reports, right?

[Anonymous]

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@Failingupwards wrote:

I understand this, but if we have more than one card, and another (Visa) is carrying a balance that we're paying down, it's better to have the Cap 1 $300 card paid to zero when the line reports, right?

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Hi FailingUpwards.  Are you the same person as HippyChic?  Your post above seems to suggest that you are.  (You both refer to the Cap 1 $300 card that you have.)

But yes, if a person has two cards, one of which she is gradually paying off, then she will maximize her score each month by having the other card reporting at $0.  Many people don't need to worry about maximizing their score every single month -- they can reserve squeezing out all the extra points as a strategy for the 40 days before they next apply for credit.

But when a person is rebuilding, it's likely a good idea to keep her score at the highest it can be each month, so that her other creditors don't see the score dip too low (and thereby panic and take what is called AA or adverse action)..  SouthJ has helped me realize that.

[SouthJamaica]

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@Failingupwards wrote:

I understand this, but if we have more than one card, and another (Visa) is carrying a balance that we're paying down, it's better to have the Cap 1 $300 card paid to zero when the line reports, right?

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Yes

[HeavenOhio]

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@Sandman771 wrote:

If you can get a second card or if not go the secured route and get a small $300 one just to have one at zero. Use it how you want and PIF every month before the statement cuts. My Open Sky is the one I use for that and my NFCU is my daily driver. I only have the two, but I'm up 30 points in two months. Now if I just get these bogus collections squared away I'll be good enough to maybe get a third lol

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Given that the OP already has an unsecured Capital One card, she's probably in a position to apply at mainstream banks rather than a predatory one like Open Sky. When she reaches six months of history on her current card, she would likely be eligible for a second Capital One card (without a fee). Or she could poke around and see what AMEX or Chase might have to offer. There'd be nothing to stop her from checking AMEX and Chase right now, although she might find that she needs some more history. In the case of Capital One, they'll only issue one card per customer in a six-month span.