So do you not have any credit cards right now? If so, then you should get one to improve your scores but...
Not using the card or never allowing it to report a balance actually results in a FICO scoring penalty for 'no revolving credit usage' anywhere from 5-20 points, depending on profile. You need to report a balance each month for optimal scoring but that balance should be less than 9% of the corresponding credit limit so not to lose points for high utilization - given you'll only have the one card contributing to available credit.
There is no need to pay off purchases immediately in order to avoid interest. Unless otherwise stated by the card issuer (generally sub-prime/poor credit issuers), there is a 25-30 day grace period on purchases before interest begins to accrue.
So, use your card, let it report, and pay in full by the due date and you'll get the FICO benefit of showing use while never paying interest.
Welcome to the forum.
@Anonymous wrote:Beautiful, thank you! That's exactly what I neeeded to know. I had been using my credit card regularly but had been paying it off before any credit could be reported. Now I know to let it report but to make sure it's less than 9% of the credit limit, and of course, pay it on time. Thanks again!
Ryan
The optimal practice for scoring is to let all but one of your cards report zero balances, while one bankcard posts a small balance before you pay it off.
If you don't use a card, it will eventually be closed by the lender.
@Anonymous wrote:I see. So you're just saying to rotate which card posts a balance that month, while the rest have zero balances, and you give each card a turn to post a small balance so that none of them close while getting the most optimal score?
Ryan
Well I do try to use each card every month. But that has nothing to do with what balance I would let report. The scoring is based on what balance reports, not on what use you made of the card prior to the balance reporting.
@Anonymous wrote:I see. So you're just saying to rotate which card posts a balance that month, while the rest have zero balances, and you give each card a turn to post a small balance so that none of them close while getting the most optimal score?
Ryan
That is one option, yes. But I believe what @SouthJamaica is basically saying is to make sure all cards get regular use. However, you can use the same one every month as the one that reports a balance.
@Anonymous how many credit cards do you actually have? Your initial post read as though you only had one card, but your recent responses indicate you have more than one. Some clarification is needed for more specific guidance.
@Anonymous wrote:I do have more than one card, yes. I have some department store cards, a personal credit card, and a business credit card. I was just trying to simplifiy my question to isolate the piece of knowledge I was after. From one of the responses, I was under the impression that if you don't use a card, then they close it. So if I only ever use one of my cards to report a balance, then wouldn't my other cards eventually get closed? I obviously have these cards for different reasons - I use my personal credit card to make grocercy store and personal purchases so I can get money back, and I use the business card when I make purchases for my business. So I'm going to be using all of the cards anyway. I guess I was just confused about the principle of only reporting money on one of the cards versing using all of them.
You keep mixing apples and oranges. Using the card is one thing. Reporting a balance on it is another. If you spend $500 on a card, and then pay it off before the reporting date, your reported balance is zero.