..... interest does it build your credit the same way as not paying it off every month??
What is the BEST method of building credit?
2007-01-19 07:09:49 · 9 answers · asked by Anonymous in Business & Finance ➔ Credit
The answer is not exactly. Because to build a history you have to show a history. Meaning pay the bill in full and you are carrying a zero balance. But a smart move is to buy something and pay off the majority of it. Leave a little balance left over and then do it again next month. Every couple of months pay the bill in full. You need to carry some balance to show your credit worthiness. The scoring system looks at your balances.
The scoring system also looks at your blances versus your limits. In general keep your balances low and always below 50% of your available line of credit. 30% or lower is ideal.
Also never close out an old card. In doing so your score then takes the next oldest card to account for your history. This will drop score. Also don't raise or lower your limits to try and change your score. Lowering them only makes it look worse and changes your 50% mark. while increasing them only adds another inquiry.
You want to keep it good and show you are responsible. Right there what I gave you will be a big boost in about 6 months. But also stay away from opening new lines of credit. That too will lower your score.
Basically you have to use it and not abuse it to get a good score.
i put a link in here that will give you some tips.
2007-01-19 07:22:27 · answer #1 · answered by logan 5 · 4⤊ 0⤋
The question presupposes that you would incur bills and partially pay it, in hopes of raising your credit score. This is a bad thing to do and any gain in credit is loss due to foolish use of money.
One should buy only those things on credit to facilitate the transaction of the sale. Credit balances should be paid as soon as possible. Savings accounts should be growing on a daily bases and all people should be about earning more each minute.
The best credit risk is "0"; none at all. The people with money in the bank are the people that can pay even when there is no income. The thing that all of us need is to increase our income and save.
If after taxes:
Our income is $20,000 and our expenses is $12,000: Our saving is $1,800 / the rest we throw away. Our credit rating would exceed the other guy who makes $80,000 / expenses $65,000: Savings $5,000.
The reason being is the ability of a person to recover from a 50% loss of income is another factor of things that happen. My point is that, putting your funds to work, is the only way to improve your credit rating that makes sense in the long run. Other tactics result in a shell game.
2007-01-19 07:41:13 · answer #2 · answered by whatevit 5 · 0⤊ 0⤋
It's okay to use credit and not pay it off completely, but as time goes on, you'll increase your monthly liabilities, and reduce the amount of available credit, which will lower your credit score.
It's good to keep your debt down to around 20% or less of your available credit. So if you've got three credit cards with a total credit line of $10,000 altogether, keep your balance down to $2,000 or less.
You want to have a good chunk of available credit, otherwise you'll find your score sinking.
You don't need to pay everything off completely, you just need to have reasonable ratios of available credit.
Learn more at http://www.thetruthaboutmortgage.com and
http://www.thetruthaboutcreditcards.com
2007-01-19 07:42:08 · answer #3 · answered by Todd S 3 · 0⤊ 0⤋
Paying it off monthly demonstrates a good ability to pay on a regular basis. Even if you only make minimum payments on a timely basis, your score goes up and you will not have any issues with future loans, mortgages etc.
2007-01-19 07:14:13 · answer #4 · answered by Anonymous · 1⤊ 0⤋
no it's not the same
paying it off is the best thing you can do
not paying it off is the worst thing you can do
the ONLY method of building credit is paying your bills every month on time
2007-01-19 07:23:03 · answer #5 · answered by edoubleyou 4 · 0⤊ 1⤋
Your credit would actually build faster if you did not pay off your credit card each month, but you paid on time and your balance each month did not exceed 50% of the available credit.
2007-01-19 07:14:53 · answer #6 · answered by jseah114 6 · 1⤊ 3⤋
Pay your full amount due the month that it is due. If you don't, you may at best get a good FICO score like 650. If you do, your score may be 750 or more. Have a great year.
2007-01-19 07:16:04 · answer #7 · answered by firestarter 6 · 0⤊ 1⤋
yes
2007-01-19 07:54:56 · answer #8 · answered by cork 7 · 0⤊ 0⤋
http://answers.yahoo.com/question/index;_ylt=AoHmr3_QCNxviQUrR.XnJ6Tsy6IX?qid=20070109155014AAdJl4R&show=7#profile-info-62c6008d0b2a4511cd62ee1eb619d572aa
Read the answer I gave here.
2007-01-19 07:14:23 · answer #9 · answered by Anonymous · 1⤊ 1⤋