New and have a question...

[Anonymous]

To my surprise I got approved for a credit card for the first time in years. So, if i pay the balance off every month ( i am only planning on using $50 of the limit per month) will this help improve my credit score? If yes does anyone know by how much? I really want to apply for a home loan next year and I am working on improving my score which is poor right now (upper 500's). I have 4 accounts in collections and I am planning to pay those off and I am wondering  how this will improve my chances assuming nothing else goes into collections and I pay everything  on time.

Thanks!

Message Edited by friskycat01 on 06-15-2007 02:54 PM

[Anonymous]

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friskycat01 wrote:

To my surprise I got approved for a credit card for the first time in years. So, if i pay the balance off every month ( i am only planning on using $50 of the limit per month) will this help improve my credit score? If yes does anyone know by how much? I really want to apply for a home loan next year and I am working on improving my score which is poor right now (upper 500's). I have 4 accounts in collections and I am planning to pay those off and I am wondering  how this will improve my chances assuming nothing else goes into collections and I pay everything  on time.

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Congrats on the new CC. Keep the util at between 1 and 9 percent. Util means utilization. Assuming you have a $1,000 CL, then a balance of between $10 and $90 is what you want when the statement cycle closes. I suggest shooting for a 5 percent util balance, $50 in this example, to protect yourself. If you charge $20 for gas the day the cycle closes, you'll jump up to $70 and still be within the 1 to 9 percent range. Nothing magic about 5 percent. Just a safety net.

On your collections, are these all really old or fairly recent?

[MidnightVoice]

It is wise to let FICO "see" a 1-9% utilization.  So if you use that amoiunt every month, it will be reported by the CC company, and then you can PIF afterwards.

If you use more, pay some off before the balance is reported

[Anonymous]

Oops correction it's 5 accounts not 4. Like I said, I am new so it is kind of confusing. Here is what my report says on my collections

#1

Date assigned: Oct 01, 2003

Date reported: Jun 01, 2007

Date last active: Feb 01, 2002

#2

Date assigned: Jun 01, 2006

Date reported: Jan 01, 2007

Date last active: Jan 01, 2005

#3

Date assigned: Jul 01, 2005

Date reported: Nov 01, 2005

Date last active: Mar 01, 2005

#4

Date assigned: Feb 01, 2004

Date reported: Jun 01, 2005

Date last active: Mar 01, 2003

#5

Date assigned: Dec 01, 2003

Date reported: Apr 01, 2004

Date last active: Apr 01, 2003

Message Edited by friskycat01 on 06-15-2007 03:12 PM

[Anonymous]

Call the CRAs and find out the DOFD, Date Of First Delinquency. Can you take a guess? It would likely be the date the account went 120 days late.

[Anonymous]

PFD the collections. That will do more than anything else you can add! (Pay for deletion)

As for as using the credit cards, I believe you only need your balance around 1%-4% only when you need your score highest. Other wise you can use your cards as you wish. Just charge anything on them each month and pay in full. It doesn't matter if it is $1 or $100. Just activity, amount doesn't matter in the long run. And I'd say 4 months before you apply for your mortgage do not exceed 1% on your credit cards. You want to keep them as low as possible but still have activity. Creditors don't like to see minimum balances paid. PIF is best.

What do other people think about ignoring the low UTL when you don't need your score up? I've noticed whether I max my cards or barely use them, when I pay them off the score returns to the same? True or false for you? I only pay them off when I need my score up!

Message Edited by ilovepizza on 06-15-2007 06:25 PM

[Tuscani]

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ilovepizza wrote:
PFD the collections. That will do more than anything else you can add! (Pay for deletion)

As for as using the credit cards, I believe you only need your balance around 1%-4% only when you need your score highest. Other wise you can use your cards as you wish. Just charge anything on them each month and pay in full. It doesn't matter if it is $1 or $100. Just activity, amount doesn't matter in the long run. And I'd say 4 months before you apply for your mortgage do not exceed 1% on your credit cards. You want to keep them as low as possible but still have activity. Creditors don't like to see minimum balances paid. PIF is best.

What do other people think about ignoring the low UTL when you don't need your score up? I've noticed whether I max my cards or barely use them, when I pay them off the score returns to the same? True or false for you? I only pay them off when I need my score up!

Message Edited by ilovepizza on 06-15-2007 06:25 PM

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Util should be 1-9%, not under 1%. How do you expect to get max score with low util if you PIF every month?

[MidnightVoice]

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Tuscani wrote:

How do you expect to get max score with low util if you PIF every month?

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My CCs report the statement balance.  So I keep the statement balance at 1-9% and PIF

[Tuscani]

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MidnightVoice wrote:

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Tuscani wrote:

How do you expect to get max score with low util if you PIF every month?

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My CCs report the statement balance.  So I keep the statement balance at 1-9% and PIF

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Right.. I just want to make sure people know not to PIF before statemet is cut.

[Anonymous]

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MidnightVoice wrote:

My CCs report the statement balance.  So I keep the statement balance at 1-9% and PIF

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Normally, the statement close date is about 5 days or so after the payment due date. Whether mailing a check, billpay, or paying online, check a couple of days before the statement close date so I know the balance.

In fact, it's also a good idea to check a couple days before the payment due date. Don't want a late or late fee.