Just got a credit card... got some questions about credit score?

Question

I'm still very new to this whole credit thing and I want to have a good credit score asap. I just started my 2nd yr in college and already spent about $600 on books and food with the card (dont worry I got a job lol). My limit is $4,000.

I have 3 questions...

1) Should I spend anymore money using my card? I heard the rule of thumb is to stay at 25% of your limit (which would be $1,000 for me).

2) For my monthly bills, I know there's a minimum amount to pay. Should I pay more than that.... if so then how much or what % more should I pay?

3) I have 0 APR until March 1st. I was planning to pay off $100 per month so I can finish my balance in 6 months. Is that a good idea to get the best credit score?

3) Suppose my balance is at $900 and I pay it off (on time monthly). Will my score be better than if was doing the same thing with the $600 balance?

I'm still very new to this whole credit thing and I want to have a good credit score asap. I just started my 2nd yr in college and already spent about $600 on books and food with the card (dont worry I got a job lol). My limit is $4,000.

I have 4 questions...

1) Should I spend anymore money using my card? I heard the rule of thumb is to stay at 25% of your limit (which would be $1,000 for me).

2) For my monthly bills, I know there's a minimum amount to pay. Should I pay more than that.... if so then how much or what % more should I pay?

3) I have 0 APR until March 1st. I was planning to pay off $100 per month so I can finish my balance in 6 months. Is that a good idea to get the best credit score?

4) Suppose my balance is at $900 and I pay it off (on time monthly). Will my score be better than if was doing the same thing with the $600 balance?

Answer 1

1) I suggest you only spend money that you actually have if possible. What credit bureaus see is your balance fluctuating (i.e. you use the card) and what your credit card company reports as far as late payments, etc.

2)I prefer to pay the entire amount to avoid paying interest. The important thing is that you pay at least the minimum and that you pay it on time.

3)$100 a month is not a bad Idea so that you can keep everything under control and avoid paying interest. I personally would stash the money in a savings account and pay the the minimum and then pay the whole balance off when March rolls around.

4)I don't think that the balance matters so much as the fact that you pay the payments on time.

Suggestion: Use the card for anything that you would pay cash for. If you can get a card that offers rewards or cash back without an annual fee that might not be a bad idea to get a little extra $$ I'm a college student and know how hard it is to scrape up enough to buy books, let alone something fun to do from time to time.

Answer 2

From my personal experience as a college student:

1. Pay cash only. Use your credit card on extremely rare situations.
2. Pay at least the minimum. Pay the full amount if you can afford it. Be frugal in your habits (i.e. eating out, movies etc.) to pay off your credit card debts.
3. Paying off your balance while the APR is still 0 is a good idea. It will in fact help your FICO score since your debt/credit ratio will be reduced.
3. Your score (usually FICO) is based on your credit/debt ratio. The lower the better. Thus, it's better to owe $600 than $900. It's best to owe nothing.

Your questions show that you're more financialy savy than the vast majority of college students (smarter than I was at that point for sure). Remember, do all you can to keep your credit card debt as close to zero as possible.

Answer 3

1. don't spend more money than you can comfortably pay off. Don't use an arbitrary guideline. Set up your own budget and determine what is safe and sane for you to manage. Don't use your card for the heck of it. Use it for emergencies, unanticipated expenses (the cost of books can do that) car repairs, dental work. If you use if for convenience (going out to dinner, buying concert tickets), pay off the balance asap.
2. ALWAYS pay more than the minimum. Pay as much as you can (see budget comment above). Credit care interest is a total rip off. Use sparingly.
3. Seems like a good idea to eliminate paying outrageous interest rates
4. no. paying on time and paying more than the minimum is what's important, not your balance. only charge what you can comfortably repay.

debt is a stressful nightmare you don't need. It's great that you are giving this some mature thought. But worry less about establishing your credit and more about managing your cash flow comfortably. If you pay above the minimum, and pay timely you will be ahead of the game. If you can pay off the whole balance occasionally, that's good too. Then you have the advantage of credit when you need it without the stress of bills you can't pay.

Answer 4

in case you take advantage of the cardboard each and each month spending no more effective than 30%. Then on the top of the month pay it off. you've have a score close to seven-hundred. in spite of the undeniable fact that, some undesirable information for you. Your credit status isn't each and every thing. regardless of in case you probably did receive a seven-hundred score you may have what's considered a "skinny" document. this signifies that they are going to provide a lot less weight to the score than someone who has had many years of credit with distinct varieties. the actual undeniable reality that it really is made up of a unmarried mastercard for 5 months isn't considered adequate history. So regardless of in case you had the down fee and income to pay for the loan you've a intense interest fee or have a co-signer required. EDIT: Getting 2-3 playing cards received't help you contained in the couple of minutes period both. you want a minimum of 24 months of sturdy history to have a lot weight given for your credit document and score. 5 months should not be going to be adequate.

Answer 5

I won't repeat what everyone is saying, they are all correct. I'll just add to it. Keep your balance as low as possible by not buying unnecessary things. That way if an emergency pops up, you don't have to borrow money. If you're in college definitely don't tell your friends you've got a card, they'll come up with any sob story they can to help you blow through your limit. Sounds like you've got a good head on your shoulders, you should be fine.
Read your card holder agreement, pay attention to fine print, and you'll be OK. Just don't ever be late.

Answer 6

Here ya go.

1. The lower you can keep your debt, the better off you will be. That will decrease your debt ratio. That helps your score.

2. The percentage you pay doesn't matter as long as you pay more than the minimum. Some creditors generally calculate your minimum monthly payment as 2.75% of your outstanding balance.

3. Yes, the quicker you can pay off your debt, the better. It shows that you are not over-extending yourself.

4. No. Hundreds of dollars don't matter in helping your score. THOUSANDS of dollars DO matter.

Answer 7

don't spend too much with your credit card, the interest rates on them are very high. Always pay the full balance.

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