My credit limit is $2K. I've had the card for a year. I need to ask them to raise my limit, I know. I usually spend like $1K a month and pay it in full when the bill comes in (~15 days early).
The bill comes on the 15th. I'm already at $1,700 for the month. I probably won't go over my limit until the 15th, but is it better for my credit if I pay off like $700 now and then just pay whatever the bill comes to when it comes in?
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doesn't matter unless you're looking for a new loan. nothing will go on your actual credit report until the company files a delinquency against you, and most companies will allow you to be late but never report it on your credit (some as long as 120 days late), with the only caveat being you pay late fees & interest.
all they look at is "does this person have any delinquencies on this cc?" if no, then you're considered in good standing, if yes, you'll have a tougher time getting other lines of credit.
it is important to pay it in full, but spending significantly less than your limit? I'm not sold on that. if you are consistently maxing it out, that will look bad, but if you use 50%, so what? if your limit is low and you continuously pay it off, so what? a way to trick the system (I think, this worked 5+ years ago) is to pay it off early so a lower balance posts at the end of the billing cycle, that way it never looks like you had a really high balance.
The amount that you spend if you pay it off each month is meaningless. The only thing that matters is how much you have available vs how much you owe that is on the books. And of course that you pay on time every month but usually only late payments of 60+ days will actually do anything.
If you have a CC with a limit of 100k and put 100k on it every month but pay it off when the bill comes and don't pay any interest ever, it'll look EXACTLY the same if you had the same card and did the same thing but only spent $1 dollar a month on it. To the credit reporting agencies you will still have 100k available on that CC.
Also, it takes on average of about 3 months for anything to take effect on your credit report. So if you had a bunch of debt, and paid it off today and went to get a loan next week, you'll still be showing that you owe all of that debt for a while.
Takeaways: -Pay bill early/on time and in full -Get as high a limit as possible -If applying for a loan, keep your balance at 0 for 3 months
Correct?
What if I accidentally hit my limit and my card gets declined and I pay with my debit card, then pay the CC bill to get available credit back... will that ding my credit or is that between my bank and I?
absolutely nothing to do with your credit what so ever.
These are the things that effect your credit: Debt/available ratio. You want this to be as close to 0/alot Amount of open lines (7 credit cards, car loan, mortgage, school loan, etc. all add up) Missing payments Bankruptcy/foreclosure/ID Theft/repo/etc. Just bad news all around Pulling your credit report (every time it's hard pulled you lose about 5 points, unless it's something like you shopping rates for auto loans. If you go to 5 different places in a week, it'll only hit you for 5 points, maybe 6 instead of 25.)
There's some other things that will effect it as well, but those are the major ones that you should worry about.
If you pay off your credit card every month you have 0 debt when all things are considered. As soon as you carry a balance, that's when you have debt.
It would probably help you more to open a second credit card than it would hurt you. You'll raise your available credit amount which will help in the long run. Your score will go down by about 5 points and then after that go back up.
I would open up something like an AmEx so you can get the best rewards. If you're paying it off everything month the interest rate doesn't matter just the rewards do so you want to max that out.
Having a second card is also good if something happens that you didn't plan for. I know when the Target breach happened this past winter, if I didn't have multiple cards I would have been SOL as my cards were getting canceled and new ones sent out to me seemingly every other week it seemed like so I had no idea what one was going to work and which one wasn't. Also to go on with that, It's good to have more than one in case some place doesn't accept your current card. I once went to a Secretary of State (DMV in Michigan) that accepted credit cards... except they only accepted mastercard and American Express. Between all my debit cards and credit cards, all I had was Visa and Discover... I got lucky though because I have a card in my name for my parents account for random things... which came in use because it's a mastercard.
Yes, credit utilization is a significant component of your score. Get your limits up and pay before the statement date if you're getting ready to apply for debt. Outside of that, pay the statement balance only (not the entire current balance) on the due date. Maximize your float!
"pay the statement balance only (not the entire current balance) on the due date." I already do that. Would it be beneficial to pay the entire balance when the bill comes in?
"Maximize your float!"
Can you explain what this means, please?
I put about $4k/mo on my primary card. My statement closes on the 21st of the month and the statement balance is about $4k. When that bill is due on the 14th of the following month, my current balance is about $7k ($4k statement balance + (3 weeks / 4 weeks) * $4k recent charges). As long as I pay the statement balance of $4k, I avoid interest charges. I don't need to pay-in-full. So, an extra $3k stays in my checking/savings account (@1% but it's something). Amex basically floats me a loan for a few weeks, which I earn a bit of interest on.
If you're applying for a loan, it would be beneficial (perhaps only a bit) to pay in full before your statement closes to reduce your apparent credit util. Credit reports pull the last statement balance (or even the one before that). They don't get real time info from CC issuers.
Credit Karma says I have a thin line. They extended me 3 offers and this one looks appealing:
http://www.capitalone.com/credit-cards/journey-student/
Thoughts?
My recommendations- Try to get higher credit limit from that lender Open up a new account now, doing so will raise your total credit limit. Another thing to consider is that if you wait any longer to open up a new account, your average age accounts will drop in half if you have no other accounts. If you wait two years with one acc and open up a second, it automatically will drop down to 1 year average age. Continue opening up new accounts as you feel needed but by opening more early on you will see less impact from opening new accounts later on. Also its never a bad thing to pay the bill midway through the month, that way you will never have a late payment. Also figure out your spending and what kind of rewards you value, if you want cash back look at a BOA cash back card with 3% cash back on gas and other good cash back bonuses along with Amex Blue Cash. If you desire travel rewards look at rewards cards like air line and hotel rewards cards or cards like Amex and Chase Sapphire.
Full disclosure I have 6 cards, a total credit limit of just under 20k, a 750 average score and I'm 19. Cards are- Discover It (Quarterly rewards, great sign up bonus- 0 APR 18 months and cash back match first year), Barclay Apple Reward (Bought a Mac, financed half and returned it kept the card, got $100 in apple giftcards), Sunoco Rewards (5 cents back on every gallon), Chase Amazon rewards, Chase Sapphire Preferred (Lots of good rewards, $95 yearly fee but if you hit sign up bonus covers the fee for 5-6 years) and Bank of America cash back (Used on anything not covered by Discover for cash back in a given quarter)
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