what is the best way to get great credit with credit cards?

Question

i want to know how much should i spend on each credit and should i pay off completly or should i leave a few dollars on i heard that you should use 30% on each then pay off each month but leave 5 10 dollars so credit card company get some money . also will it hurt my score if i don't use my 5 cards monthly? I only use my cards for bill, gas groceries ect. so i know i'm spending money that i already have. does any one know what are other things i can do to bring up my credit score. i have a 580 right now but i will be looking to get a house in a year or two so please if anyone has any ideas on raising my credit score pease respond thank you.

Answer 1

The credit card companies make money from the merchants... they charge a fee on every purchase. If you leave $5 or $10, you're going to have to pay interest on the whole bill because it's calculated from Average Daily Balance... also, you lose your grace period! You should pay your bill in full and on time and not exceed 30% of your credit limit on each card (maxing out is BAD, even if you DO pay it off).

Use your cards wisely and pay them off in-full and on-time. Your mortgage lender may not like that you have 5 credit cards because it's easier to get in debt. Until then, see if you can raise your credit limits (but still pay in full and on time and don't charge more than you need to) so that your balance-to-credit-limit ratio is lower and that part of your credit score (which accounts for 30%) is higher. I wouldn't recommend using more than 25% of your credit limit, actually!

35% of your FICO score is determined by payment history, so if you have some late bills or outstanding balances, it pulls your score down. Pay on time and in-full if you can... at least make minimum payments.

30% of your score is determined by your debt-to-limit ratio (credit card balance or amount you charged vs. your credit limit) so try to keep this as low as you can ESPECIALLY since you're going to be looking for a mortgage. You can try to lower your credit limits INSTEAD OF CLOSING ACCOUNTS if the mortgage lender so desires... this is because...

15% of your score is determined by length of credit history. The longer you've had a credit card (or loan account), the better... so if you *must* close a card, make sure it was the most recent because it will hurt your score less.

10% is the mix of types of credit... installment loans (student loans, auto loans, mortgages...) vs. revolving credit (credit cards)

10% is search for new credit, so don't apply for more credit cards and if you're looking for a mortgage in the future, do all of your searching within a 2-week period so that it only counts as one inquiry (each credit card application counts as a hard inquiry, whether you sign up for the card or not... but those prequalified offers don't count as inquiries...)

Answer 2

I agree with most of the posters on here, but I feel that credit cards should only be used in dire emergencies like unforseen transportation and medical expenses. People tend to rely a little too heavy on credit cards and purchase "perishables" like gas or food, or "unecessities" like large purchases that will quickly depreciate. Some people fall into the "Rob Peter to pay Paul" syndrome when they have multiple credit cards to live what I call "C-2-C", which is check to check. Now I'm not saying that credit cards are the devil, but if used improperly, they can send you to hell in a handbasket quickly! If you have a debit card, that should be used as a primary source of payment. That way the "daily expenses are already paid for and over with, without the thought of having to pay additional interest. Not to sound contradictory, I do understand that sometimes things should be purchased on a credit card to show activity. The only way to effectively do that is to make a purchase that you know you could make with the cash on hand. For example, if I needed to buy some tires for my car, and I have the money in my checking account, then I'd go ahead and buy the tires on my credit card and then pay it right off a day or so later.

Another thing that you can do is report anything that you pay monthly like insurance, utilities, wireless phone, and ESPECIALLY rent to this CRA(consumer reporting agency) called PRBC. It's strange that 35% of your score is derived of payment history, but the whole story about what and when you're paying is not always told. Well, that's where these guys come in. Any recurring payment can be reported, whether it's historical (up to 3 years) and current in a scored report that can be considered with your traditional credit reports under the Fair Credit Reporting Act(FCRA). I've supplied the link to the website for more information, since there's too much to describe in this answer. I hope that my advice along with everyone else will help you out!

Good Luck!

Answer 3

There re a lot of different credit card companies picking the right one for you can be difficult. Hence, this quick (but extensive) guide will help you find the most suitable credit card for you. Check out http://mycreditcardfinder.net/creditcards-getting-greatcredit and here a piece of advice: Pay off the (whole) balance before the due date. You can pay the minimum, but it's a long haul... Do this for a few years, then your credit will be gorgeous! Read the fine print exactly. If you can't pay the bill before the first due date you have to pay fees (Which you can read in the fine print)

Take care

Jere

Answer 4

First of all, the "advice' was NOT to use more than 30% of your limit. Credit bureaus ding you severely for using more thant that-- which is pretty lame, if you ask me, but okay.

It doens't matter if you use a card at all, if you pay it in full, if you charge $5 or $500. The only two important things are that you are under 30% at all times and that you have no late payments.

A credit card has only one "good" Option to report: "Pays as agreed." or "current". Whether that means you made an ontime payment or you had no payment due at all doesn't matter.

You dont need to use them for groceries, gas, etc. You'll be tempted to go into debt. You can use one or two on occasion but there's no need to use all of them.

Don't open any new cards-- 5 is really the maximum you want on your report. The bureaus like to see a mix of credit cards and installment (loan) accoutns for the most impact.

Answer 5

Once you've established a credit record and creditors can see you have no problems paying off your debt you may start receiving offers from major credit card companies. You could start getting all sorts of mail from Discover, Visa, MasterCard and even American Express.

Be careful about applying for too many lines of credit. Most lenders will check your credit history when you apply for credit and each inquiry is noted on your credit report for at least six months. Too many inquiries are a red flag to creditors that you may be financially unstable. Your best bet would be to apply for no more than one line of credit every six months.

If you are still being denied credit after applying with local businesses or you can't get a loan you may not meet minimum salary requirements some creditors may use to gauge your ability to repay your debts. If this happens you may be approved for credit if you can find a friend or relative with good credit to co-sign for a line of credit in your name. This could be a risky proposition for the co-signer, however, as they'll be stuck with the bill if you can't make your payments. Read more tips about build your credit at: http://www.card-gallery.com/article/43,Many_Credit_Repair_Techniques_Can_be_Used_to_Build_Credit

Answer 6

pay off the balance BEFORE the due date
the WHOLE balance
thats the secret to it
you can pay the minimum but its a long haul my friend
read the fine print
does the card charge an annual fee? is that due up front? what will happen if I cant pay the bill up front before the first due date? BOOM you are screwed right there hidden fees naw they aint hidden they are right there on that fine print they throw in there that nobody but a philadelpia lawyer will bother to read
get the card
and PAY the balance off before the due daue
Get it? do this for a few years then your credit will be supurb!
suppose you order a card the card cost 75 dollars anual fee and 45 dollars sign up and it has a limit of 300 dollars credit on it how much in dollars can you charge? 300? nope

75+45=120 300-120=180Plus the fee for transaction if any plus whatever you charged ok you at least need to pay the $120+a maybe more.can you pay the 120? ok then pay me the minimum just send in 20 of that 20 I will pay ! dollar towards your account and give myself 19 for carrying you till the next due date.you may now load up your credit crd to the 300 limit and continue to pay 20 bucks that is until I have to rollover yer account to the newer balance from the interest on the account which is now in the 30% mode because it wasnt origannaly PAID IN FULL by the monthly due date
and you want 5 of these?

Answer 7

You should spend no more using credit cards then you can afford to pay.

No, you don't need to leave $5 or $10 on each month. I probably charge anywhere from $500 to $3000 every month on my Visa and I pay the entire thing off every month. I have never paid them a dime in interest and they love me and keep raising my limit and giving me more points and cash back. My credit score is in the high 700's.

Visa makes money from the merchants. Every time I put something on that card, they are getting a percentage from the merchant I bought it from for the convenience of them being able ot accept credit cards.

You bring your credit score up by paying your bills ON TIME every single month. On time payments is the biggest factor on your credit report.

The second biggest factor is debt ratio. That is the amount of debt you have divided by the amount of credit limit you have. If you have a card with a $5000 limit and you have $4000 charged on it, your debt ratio is 80%. If you only have $500 charged on that same card, your debt ration is 10%. You add up your total debt and divide it by your total credit limit.

Another factor is applying for credit. Don't apply for a lot of cards. Every time you do, a query goes on your credit report and can lower your score. You don't want a lot of new credit applications if you're trying to raise your score.

Answer 8

Pay your bills on time. Sign up for automatic bill payments so you stay on top. Don't use more credit than you have available to you. Keep the credit cards you've had the longest, to maintain your good credit history.

Watch this free workshop for more credit information
http://coaches.aol.com/money/jean-chatzky/saving.html?defaultTab=2&defaultItem=3

Answer 9

The best way to establish great credit with credit cards is to pay each bill in full ... before the due date. Only charge what you can afford to pay off when the bill come due each month.

Answer 10

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RE:What is the best way to get great credit with credit cards?