By Admin on Jun 20, 2009 in Credit
360waves_professor asked:
I have a $600 limit student Bank of America credit card. Some people tell me the best way is to pay the card balance in full at the end of the month and others tell me it is best to leave a small balance (like around $5)because the interest rates is what eventually improves the score.
http://1mortgagecalculator.info
I have a $600 limit student Bank of America credit card. Some people tell me the best way is to pay the card balance in full at the end of the month and others tell me it is best to leave a small balance (like around $5)because the interest rates is what eventually improves the score.
http://1mortgagecalculator.info
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If this does matter, it is a very small amount of difference in your score. I have been paying full every month and creditors love that. I have never had any problems getting any type of loan in my life. You should just save on interest and pay full because its not worth the risk of getting into a debt. Hope this helps.
Johnson M | Jun 21, 2009 | Reply
Paying interest is silly it has nothing to do with your credit score.
The best way to use your card is for every day things and pay it off in full before the due date.
Don’t worry about a balance because the difference between the billing and due dates will leave a small balance for them to report.
I have done this with 3 credit cards for the last 24 months and have raised my score over 150-points.
SPIFIMAN1 | Jun 24, 2009 | Reply
The second part is a rumor. Always try to pay the full balance at the end of the month; it will help your balance to available ration, boosting your credit score, plus it will save you money. Always attempt to pay in full. Remember that.
butterfly420? | Jun 26, 2009 | Reply
As others have said, leaving a small balance and paying interest will not help you credit score. In fact, it will hurt it just a little. This is because about 35% of your FICO score at any point in time is based on the percentage of your available credit that you’re using; and showing a higher utilization percentage hurts your score. So to get the most of that 35% of your score, you’d have to be using 0% (none) of your available credit at that point in time. So you want to pay off your balance in full both to avoid interest and to have your FICO score be higher.
I’m going to go ahead and explain a little more that you didn’t ask about the best way to build your credit score. This is the best approach you can have to using credit cards:
1. Find the student rewards card (or combination of cards) that will pay you the most in rewards for your normal expenses (I’ll explain how to do that in a moment).
2. Funnel most/all of your normal expenses through your card(s) without max’ing any of them out
3. Always pay your monthly balance(s) in full every month and on time (I usually pay a day early just to be safe)
In following that approach you will:
1. Build your credit quickly and demonstrate need for higher credit limits (by funneling your normal expenses through your card(s))
2. Avoid interest and fees
3. Earn great rewards
To quickly see which student rewards card will pay you the most in rewards for your entered spending profile, you can use this rewards calculator:
The Citi mtvU card and Citi Driver’s Edge for College Students card are both quite good, but for different categorical spending profiles.
Big Brotha Mike | Jun 26, 2009 | Reply