Can't say thanks enough for all the stuff i'm learning on here! I got a 3-in-1 report from my Credit monitoring service from Equifax. On it i have the 1 new Credit card i have from Cap1. I've had this card for 3 months now to build new credit the credit report states: CAPITAL ONE Bal - $0 High Limit - $300 Pays as Agreed Comments: CREDIT CARD AMT IN HIGH CREDIT IS CREDIT LIMIT (Only 1 comment in EQ- & i have no idea what this means) I only charge up to about $30-$40 and pay this WHOLE amount off 5 days before payment due date. Am i doing this right? Doesn't it look like i'm never using the card??? How can i do it so that the CB knows i'm only using about 10%-15% of available credit? I'm worried because sometimes i go to pay it and my total due is $27 but there is a Balance of $34 ( so some charges i assume are for the next billing cycle) So i'm thinking maybe i'm only suppose to pay the amount due for that period ($27) and then the rest ($7) will show as a balance on my credit report? I'm just not getting how Credit utilization is accounted for when people say "pay your balance in full each month".... Thanks for shining any light on this.
70 views no response... was it really that dumb of a question ? how investopedia considers credit ultilization Credit Utilization Rate Definition | Investopedia What i find a lot of on the internet is "pay your balance in full each month" & never miss a payment is the right way to use your card...HOWEVER.... Credit Card Utilization and Average Credit Scores "FINDINGS The data and chart do suggest there is strong correlation between a consumer’s credit card utilization rate and their credit score. The lower the credit card utilization, the better the credit score generally speaking. There is one exception in this recommendation. At credit card utilization rate of 0%, the average credit score for this group is actually much lower than at the 1-10% (742 vs. 667). People with 0% credit card utilization could fall into 2 categories. 1) They don’t have a credit card because they have poor credit. Having a credit card and different types of credit help demonstrate credit worthiness in the eyes of lenders and credit scoring algorithms. 2) They don’t use their credit cards at all. This is the reason why credit score tips usually suggest you use your credit card every couple months if only on small purchase to show an active credit profile with positive payment history. With the results in mind, it would be unproductive to suggest not carrying a balance at all since this is a primary benefit of credit cards. The reality is that many consumers need the convenience of revolving debt from credit cards. Keeping this mind, we suggest keeping your balance lower than 35% on all your credit cards and making sure you pay on time and the debt is something you can manage." ---------------------------------------------------------------------------------------------------------------------------- So, should i be using the card ($300 limit) for $100 and paying off $70 a month, take a hit in interest ( for the $30 and consider that a fee i pay for improving my score? or just use $30 a month on it and pay it in full... (because CRA's will know the utilization anyways because it's not a matter of "balance" but usage instead)
I think the comment on your Eq report is just stating that your High Credit line (300) is actually your credit line and is not the highest balance you've carried on that card Total due might be what was due at the time that your statement was cut and since then you charged an additional amount of money. I know how you feel about taking the hit on interest but this may have to do with the creditors grace period... From my bank terms and conditions : How to Avoid Paying Interest on Purchases Your due date is 24 - 30 days after the close of each billing cycle. We will not charge you interest on purchases if you pay your entire balance by the due date each month. (Your terms may vary, check them)....so charge up whatever and make sure you have a balance come the billing cycle turnover, and just be sure to pay in full by the due date Don't feel bad about 70 views and no responses....remember, 95% of the people on this site viewing, are not members...and you can be sure some of them are collection agency trolls. In the two and a half months I've been back as a member I can only think of about 10 or so members that come around routinely.
Kamelon - not a dumb question at all! There's a difference between 0% credit utilization and no activity, period. (Which you map out well above.) No activity means little to no credit; so if this hypothetical person DOES miss a payment or something else to negatively affect their credit, the consequences are more significant since they don't have a ton of credit to fall back on. If you're making purchases each month AND making on-time payments in full, your credit score is going to go up AND you won't pay interest. No activity, on the other hand, means less credit history and more issues in the event of a delinquency. Despite what you might have heard, carrying a balance won't improve your score. The numbers you're referencing might refer more to the credit-using habits of these consumers than the scores themselves, if that makes sense....
Thanks guys, You both drew understanding into the topic but i still don't know how the CRA will know i only spent $30 of $300 (10%) as this is published on so many credit repair forums as the ideal usage to have...but i'm paying down the balance to $0 and my credit report states $0... Some how i'm wanting to believe that even though you pay off the balance down to $0 every month, internally they let the credit reporting agency know how much you used and that isn't something that is actually "seen" in a credit report. Mindcrime: the wordage on the comment line was really bothering me. I read the same grace period terms for my card. so long as the "statement is paid in full on the due date" there is no Interest charged... It was just weird for me to make $34 in charges and last month my balance due was only $27. i just do not want to pay a dime in interest or get a "default rate" so i paid the whole balance on the card ($34) rather than the statement that said $27 was Due... Jason: Thanks again for the confirmation about activity v.s. Utilization. I've recent read a few things about how CRA and creditors like to see different types of Credit too (car loans, mortages, lines of credits ..etc..) apparently a good mix of these is best... so there's more for me to learn. However for now i think i'll not overwhelm myself and just send out DV letters =) Speaking of sending DV letters... My last question is in regards to something mindcrime said & i've been wondering about: - Should i be worried about posting "my situation" & posting company names i'm dealing with, etc... if These CA are lurking around.. After all if i'm posting for help and the CA or JDB see the responses they'll get the jump on things already ... no? {i'm allowed to hijack my own thread right?}
I wouldn't worry too much about it, but I'd keep the CA's names to strictly CA and OC to OC if possible.
