Credit card/credit question.

I would just ask the bank,or the credit company the card was issued under, BUT if I had to guess I would think you would have to use it somewhat, but why not, just don’t go nuts and make sure you pay it off completely every month and your credit will soar.

@SQUEAKY I’m asking because someone just told me you don’t even have to use it, and I was always under the impression that you had to.

You’ve got to use it at least some to build up any credit history. Having it and not using it doesn’t really show anything. Financial companies want to know that you can use credit responsibly, not just sit on it.

If you use it wisely don’t go nuts, and pay it off completely every month,even really small it frees up your capital to earn a months interest,and you still get the things you want,the drawback is if it gets away from you the interest will eat you, so make damn sure you pay it off every month.

I think it should increase your credit score, because your ratio of a available credit will be higher with the credit card than without.

I’ve heard that even if you use the card, if there are no fees being assessed (meaning you’re keeping the balance paid in full all the time), it doesn’t help your credit score. I don’t know that I believe that, as I have a credit score in the 800’s and I’ve never paid a credit card fee. Amazon just issued me another new credit card with $5,000 credit.

My advice is to apply for The Chase Freedom Card and pay the balance in full every month. I’m currently earning 5% cash back on gas and 1% on everything else. Even if it doesn’t help you build credit (and I think it will) the card will put a little cash in your pocket now and then. Mine pays me $100’s a year and I pay them nothing.

Sam’s club will give you 5% back on gas, too, if you can manage to get a membership cheaply enough, and their 5% is year round. I split a membership with a friend (each comes with 2 cards) so mine was about $22.50 the year. There are certain times of the year and certain qualifiers that might allow you to get a card cheaper.
Otherwise, I find the card fairly worthless. Toilet paper and paper towels are cheap and good.

It is absolutely untrue that paying in full is a bad thing. That is a myth that has been passed around for years. My husband and I have always paid in full and his credit is in the 800’s, mine in the high 700’s. Even when we had no mortgage. Having open credit improves your score, and always paying bills on time.

^^^What @JLeslie said. I do what she said above and my score is in the 800’s.

Take it from one who’s been in and then finally out of credit card debt, there’s lots of good advice above—especially about paying off your balance every month to avoid extra charges and more importantly, to avoid accumulating debt. I’ve read that the value of a high credit score is less important than consumers have been led to believe, but regardless, avoiding debt should always be your number one priority.

Both. Just having the card increases the amount of creditworthiness you have, which means that $$ you owe on other cards is a smaller percentage of your total debt. In effect, your numerator stays the same, but your denominator is larger, so you generally look more positive to the agencies.

But that’s just a part of the deal.

You want to make small purchases, and pay them off over time – say, 2–3 months, so that you can build a history of paying off what you owe.

So – use it a little every now and then.

@elbanditoroso Again, no. Who told you that? Why pay interest on anything you don’t have to. Paying every month, even in full, is paying every month.

@JLeslie – Ok, we will disagree. I have read – numerous places – that you improve your history by showing responsible borrowing and paying off. Maybe you don’t read the same magazines I do.

I’ve read the same thing, @elbanditoroso, and, as stated above, I doubt it.
I agree with @JLeslie and @2davidc8 that using a credit card and keeping the balance paid will build good credit.

I think the proliferation of “No credit? Bad credit? NO PROBLEM!” places has changed the paradigm.

When I have time I’ll look for a link about it. There is always a chance I’m wrong, but on this I don’t think so. I think it is a misinterpretation. Paying each month some people interpret as not paying it off, but it can be paying it off.

Having a credit card is borrowing. The company has given you money to borrow. Not using it shows control and responsibility, not the opposite. Using it, and paying it off when billed also shows responsibility.

@JLeslie – your second paragraph is where i disagree.

If you NEVER use your credit, then how does the credit card company know how good you are at paying off?

If you do a small purchase and pay it off over time, then you are building a track record.

I’m willing to concede that possibly using the card is better than not using it to build credit, but for sure paying it in full each month is always the best idea. No doubt in my mind. Not only for credit, but for financial reasons. Borrowing money costs money. It’s ridiculous not to pay in full, unless you are using that money to earn greater than the percent interest you are paying. Almost impossible with credit cards.

I charge pretty much everything. When I was younger I made money doing it, because we earned such high interest in our savings accounts. Now, with interest rates today, that doesn’t really apply, I make pennies a year holding onto my money by charging, but I do get free hotel
stays, which saves me about $300—$500 a year.

Charging something and not paying it off when the bill comes is like throwing money in the street.

Good credit matters, because when you need a loan your interest rate will be lower if you have great credit. Literally, you borrow money cheaper, it’s not just about getting a loan.

I can’t see any reason why someone would be reluctant to use a credit card for some things. What’s the downside? Except for the risk of identity theft, and if you are the type of person who thinks a credit card is “free” money, and you will overspend, there is no downside, only an upside.

Here’s a link

See #4.

To build credit score you will have to do few things like:

Make your payments on time.
Keep your credit card debt low.
Keep your account for as long as you can.