Capital One. I just got my first card and....?

Question

I have a credit score of 750 but have limited credit history. i have a $500 limit on my new Cap1 card.
I'm trying to build my credit history and the company told me that they dont report the credit limit. What should i do? Should I make purchases totally less than 150 and pay off the bill each month or should i max out the card at $450 and pay it off the same month so that the report looks like that is my limit?? Any suggestions as i want to build a very nice credit history so i can get a cash back rewards card in 6-12 months from now.

I'm VERY responsible about my money and will pay off the credit card IN FULL EVERY month.

Thanks for any helpful suggestions.

What is a "defacto" credit limit????

Answer 1

De facto credit limit means that the true credit limit is not established/reported. The amount you have charged is what looks like your credit limit.

Unfortunately, Cap 1 is the worst in that area. They will not report your real credit limit. They only report the highest amount you have charged and that makes it look like that amount is your credit limit.

That way, if the highest charge you have made is, for example, $150, it will look like your credit limit is $150 and your utilization will be shot until that balance is paid down. Then, if you make another charge that is less than $150 but higher than around $75, your utilization will be shot again.

If you are planning on maxing out the card, wait until you have a couple of months that you "know" you will not have to rely on your credit rating. Also, wait until the statement cuts before paying it off. Yes, you will be paying some interest, but if you pay it before the statement cuts you will be defeating your purpose as it won't report the high limit that you had charged.

There is another way to go about it without having to actually pay what you charge, no nothing illegal lol. Look and see when your statements cut, then a week or so before it cuts, go and make a purchase. After the statement cuts, return what you purchased for a credit refund.

Doing that is a bit tricky. You have to get your timing down or you may run into problems when trying to return the item, restocking fees etc (if it's a high priced item).

I do not guarantee that it will work, it is a decision you would have to make. I would just suggest not purchasing anything that you do not want just in case.

Cap 1 is a subprime lender. With your scores you may qualify for a prime card.

You might check out the site I've listed and do some reading in the credit forum. There are plenty of threads about prime lenders and who was approved with what score, what history etc.

There is also a great database link in there (CreditPulls) that shows what lender pulled what report, what the persons scores were, what baddies etc were on the report, if they were approved/denied.

While that site is a credit repair site, there are many people that frequent the site who have excellent credit, they are looking for feedback and experiences on different prime cards.

It is a "free" site. And there is no spamming allowed. You do not have to worry that you will be spammed to apply for credit cards or for anything else.

Answer 2

If you max the card and pay it off, that would become your defacto credit limit. After that, just use it lightly and continue to pay it off. One of the things credit scores are based on is how much of your credit are you using verses how much you have available. Another thing is how long is your credit history.

If you've ever heard of Dave Ramsey, one of his recommendations is to just throw out the credit card altogether and never depend on credit at all. He believes you shouldn't ever have to be concerned with your credit score if you manage your money well. You might want to check his website before you make a mistake and get into trouble.

Just a thought...

Answer 3

One of the things I"m going to do when I get my new credit card, I will use it ONLY for gas, which I'm already paying for. Then I will pay the bill 100% each month. Instead of using my ATM card for gas each time, I will use the same money to pay off my card, and build a credit history.

Answer 4

I am in your same posistion, what I do is use it like a regular debit card knowing what I can and cannot purchase so that I can pay off the bill at the end of the month. I dont worry about trying to max it out or not, just use it like you normally would and keep in mind that you do have to pay it back.

Answer 5

Hi, these articles might help:

How to Manage Your Credit Card Debt?
http://www.askaquery.com/Answers/qn1579.html

Debt Management and Building Wealth
http://www.askaquery.com/Answers/qn1581

How to lower your debts?
http://www.askaquery.com/Answers/qn1576.html

How to reduce debt : How to lower your expenses?

http://www.askaquery.com/Answers/qn1577.html