How do you NOT screw up your credit score?

Question

Basically, what keeps it from going down? And what makes it go up? I'm new to the whole credit card thing. I just turned 18 and only have one Visa from Wells Fargo. I've only had 3 bills and I've paid them all in full the first cycle each time. I've now encountered my first bill where I will not be able to pay the full amount outright on the first cycle to get it back to a $0.00 Outstanding balance. If the bill is say...$700 and the card itself has a $1200.00 limit, How much should I pay off now? If I don't pay it off in full now, will my credit score go down? Minimum Payments are $25, but I doubt that's a good idea either. Please help get me out of the dark on this. Thank you all!

Answer 1

Pay your bills on time, try to stay under 45% of the credit limit, and don't cancel older credit card accounts years from now. Despite what that wingnut above me has said you might open up 1 or 2 more cards, even if rarely used. Years from now that will establish credit depth and more than one tradeline. Have the limits raised even if not going to charge up that high. Most mortgage loans will need to see as qualifying at least 2 trade lines and at least with over a 2000 limits. This is so they can view credit responsibility on your part. Pay as much as you can but keep in mind paying off a cards total balance each month wint raise your score as fast. Congrats on your wanting to be credible and years from now your borrowing abilities will be rewarded with lower rates. You are probably right now around a 640 score and should be above 700 within a year with your good credit habits. Scored reports will affect your score more than unscored and inquiries made when applying for loans will have a point drop. Apply sparingly and only when necessary. Get a copy of your report at annualcreditreport . com unscored and check for errors. Errors and identity theft are very harmful to your score. I see someone after me also suggested late payments aren't score killers. Remember this, DONT PAY LATE, regardless of what anyone tries to tell you. Payment history makes up a percentage of your score that you cannot afford to lose when building credit. Right now payment history will determine the rates on most credit building accounts you are trying to establish. Bad advice at this point in time will cost you. E mail me with further questions so others dont tarnish your education process on this.

Answer 2

First, be careful with the advice you hear. Paying late will hurt your credit. Don't go a month without paying. At your age, being concerned about your credit is great. Many times, younger people get a credit card in their hand and go nuts! Try to keep the balance below 50% of the limit and again, don't miss a payment. Missing a payment will give the cc's reason to raise your interest rates tremendously which could lead to problems down the road. Keep this in mind as well, credit score is good but debt to income ratio is extremely important as well. You could have a great credit score but still be considered a credit risk if you have high balances and are paying out a large percentage each month.

Answer 3

What's important is that you make at least the minimum payment on time. You can pay the minimum on a card for years before the balance is completely paid off. How long it takes you to pay it off does not get reported on your credit report. The only info reported is basic account info, how long it was opened, credit limits, high & low balances, if there were any late payments, & how late those payments were. The whole point of a credit account is that you can't pay it all in full up front & payments are needed so it is not expected that you have a zero balance at the end of every month.

Answer 4

I'm a financial aid officer at a local school here, so I deal with loans and peoples' credit pretty often. I don't deal hugely with actual credit scores, themselves, but I've heard enough from the loan companies (and from my parents, who have EXCELLENT credit) to know some of the ins and outs.
First of all, your credit score doesn't decrease solely because of your lack of paying bills. In fact, whenever you get your credit checked for any reason, you get a "point" on your credit score, which causes it to decrease little by little. So my first advice would be to keep the credit checks to a minimum.
Secondly, it's always important to know what kind of interest rate you're getting yourself into when applying for credit cards and loans. Being as young as you are, with no type of established credit, it's pretty inevitable that your interest rate will start out pretty high, no matter where you go. However, the better you are about keeping up on payments to the credit company, and the more established your credit gets, the better your interest rate will get. All of that to say this: when you're not able to pay your bill off in full each month, there will be a percentage (whatever your interest rate is) added on to the monthly amount. The longer you stretch out your monthly payments, the more interest gets added. That is the way those companies make their money. :)
So as far as making the minumum monthly payment of $25, it would probably behoove you not to do that. If you can afford more than that, it's better to pay more--that way, you end up paying less in the long-run. Not to mention, you show the credit corporation that you are a good customer.
Anyway, good luck with all of this! I'm glad to hear that you're interested in being so responsible, especially since most people your age could care less about this type of stuff. :)

Answer 5

I work as a credit analyst for BOA so hopefully here are some tips for you...

1. Pay your bills on time. The minimum payment is the BASIC minimum they need so that you will not have any bad marks to your credit card. So if you're reallly tight on cash, pay the minimum but ON TIME!

2. It realllly doesn't matter how much you pay, as long as you are consistently bringing your outstanding balance down. The bank's main concern is: Are you using your credit card? Are you consistently using and paying off your credit card?

Let's say you have a $1100.00 as your outstanding balance. If you spend more than you pay off your balance, the bank will sometimes even REDUCE your credit line down. Because you will be a "risk" factor to them. What you want is balance. If you spend $200 this month, pay $350. You don't want to spend more than you pay.

3. Being late once or twice is fine. BUT! You do not want to be late more than two times. Nor do you want to put your account int a past due. If it goes into a past due, you can still save your credit score, so long as you are not past due for 30 days +.

4. Every once in a while you want to make a big purchase. But be sure you can pay that off. If you do that, the credit card company will see that you can spend your money responsibly and raise your credit line. And sometimes your APR.

* I forgot to mention. It's okay to pay the minimum or anything less than the full balance due....but don't forget....if you pay anything less than the full balance due for that month you will get a finance charge.

Answer 6

The key to good credit is being consistent. At your age, you should start building long term credit. Meaning, having at least 3 tradelines (credit card, auto loan, etc) for a minimum of 12 months. Pay these items on time and limit credit inquiries to six per year. You are on the right track, however, remember that paying off your credit card every month only works for people who have already established credit. You need to build credit..so the process is certainly different. Think long-term.

Answer 7

Pay as much as you can and on time. Lower your balance and keep it below 40% of your credit limit. Owing more then 40% of your limit is held against you.

Answer 8

Keep your credit usage less than 30% on all accounts. Make your payments on time. Don't apply for credit cards you won't use.

Answer 9

pay your bills on time