I'm a student and have been using a debit card for about 2 years. My first credit card came in today and I have $700 in credit. What is the best strategy to improve my credit score as fast as possible? Obviously, I should never run into credit card debt. But should I pay all my monthly balance at once at some specific time or should I pay immediately after each credit card purchase? How often and how much should I spend with my credit card each month? I am not a big money spender and my parents give me cash anyway. I can very easily not use my credit card at all but I'm guessing that I should use somewhere between 0 and 50% of the credit each month just to increase my credit score? So should I pay in full or pay a little bit more than the minimun payment? I have heard both are good, but for 2 different things: one, if you always pay in full you get an excelent statement on your credit report from banks, it will also improve your credit score or give you the best possible; two, if you dont pay in full your credit card limit is likely to increase as a convinience to the bank because they see possibly gain in money from you. I have also heard that is good to have less than 50% of the total limit charged to the credit card at a time. But what if you have more? How badly will it affect you? or will it affect you at all?
Assuming you are capable of using it responsibly, and not digging yourself into a hole by graduation, just pay it off on time with the monthly bill. That way you pay no interest, show some maximum balance, and build a history of on time payments, "paid as agreed". The history is what will be most valuable later, in getting offers at better terms and building a good credit history for use in getting a home loan on good terms where it pays, and the current low credit limit will not affect that value as your limit is raised. You also want good credit on a good card by graduation to allow travel for job or job search purposes: i.e. car or hotel rental, or plane tickets. Trying to do that on cash, even if your employer reimburses you, is a bitch. As you know, credit cards don't give you money, they are only a way to pay for things, either now or later. The only point you determine your debt is at the point you decide to spend.
My recommendation: charge around $400 and pay off around 80% of the balance each month. Make sure you always have some kind of balance, but keep it below 35% of your CL. And of course keep your inqueries as low as possible. What is your current score?
