-
for bills, is having it on autopay with the biller superior to using it manually to pay that biller? I prefer to manually manage all that as I have for years but I figure its beneficial to get that on a credit card and just make sure its paid off. I already basically use a bills bank account to do essentially this manually
-
only purchase what I already have set aside/budgeted for and can payoff before the grace period
-
anything else?
Spend 30% or less (not more) of your limit and pay it off every month. Don’t accrue interest. Do it for a long time.
Also ask for an increase to your credit limit every year or three.
I did this for a while, but then at some point Barclays decided that since I wasn’t utilizing a decent portion of my credit regularly, they needed to reduce my limit by 2/3rds. When I called them they said it was to protect me, so that I wouldn’t accidentally spend way more than I regularly intended. Even after pointing out that my income didn’t reduce, so my ability to pay the already approved credit limit didn’t reduce either, I would still have to apply (with a hard credit pull) to get the limit reinstated.
And of course, a reduction in credit availability tanks your credit score for a bit, so I doubt that I would get approved for the limit I already had. I don’t even think it was that large of an amount, something like 10k before the reduction.
This is a stupid game
It’s a stupid game but it’s not stupid to play it
Pay it off each month. Full stop.
It is WAY too easy to tell yourself, oh, I’ll just pay half now and then next month I’ll finish it off. Next month comes and your car is in the shop, gotta put that on the card. Ok well I’ll just take an extra month, no biggie. The interest piles on, and then your job has a glitch with payroll, it’ll take an extra 3 days to get paid. Now you need to put your phone bill on there. It is a slippery slope that catches a lot of people in the trap of debt.
I’m even in the habit of charging something, then going home and paying it off that day. I only use cards for points/miles.
Just be sensible and responsible with your credit usage and it just goes up naturally. Check it regularly and dispute every single negative claim, regardless if it’s true or not. I think there’s a hack around when you do your disputes. It’s a long game.
Open as many as you can. The “penalty” of opening new credits is lower than increasing your limit if you are just starting. Find no annual fee cards that give good welcome bonuses and get some “free” money. If they reject your application you can usually dispute it by calling and asking why and most of the time you can get approved by providing some extra documents. Other than that it’s just patience
Source: I migrated 8 years ago and had to start my credit score from scratch
Edit: adding fico score weights
Seems like you’ve gotten a million different answers already so here’s another for the pile:
What I understand is that keeping about 30% is the sweet spot for the best credit improvement, as others have said, in the end they want to milk you so it’s good to show you’re willing/able.
So when you go above 30%, you always pay back more than minimum. 1.5 or 2 times what minimum would be. Ideally not all to give them more time to milk you(cumulative interest).
When you are at 30% or lower, you pay the minimum and allow them to build the most interest and try to put some purchases on it to get it back above 30%.
If you do that, it’ll show continuous use, a decent roi for them, and that you are able to pay consistently and above minimum so they don’t have to worry about you.
You shouldn’t carry a balance, it doesn’t improve your credit score, just costs you money. Common misconception.
https://sh.itjust.works/comment/27832491
Please ask if you have any questions I’m happy to explain better or more thoroughly.
Because the credit score is really a ‘ how safely milkable are you’ score it counterintuitively benefits you to keep a balance on the card that isn’t over some threshold. You can sign up for their free credit score monitoring service and observe where that balance lies for each service somewhere around 40-60% but don’t quote me in that.
Too high of a balance and you’ll lower your score. Carry a mild balance and increase your score. Pay that balance off and take a small hit.
This isn’t exactly true. I have a score above 820 and always pay my entire credit card balance off before it’s due every month to avoid interest. In fact, most of my cards get almost no use, except for the one with the best benefits. I use the others sparingly, I only use them twice or so a year to keep them open.
I say “isn’t exactly true” because of two things. Normally, the balance reported to the credit agencies aren’t what the balance was when it was due. It depends on when the lender reports it to the agency. For example, most of mine appear to be mid-cycle. This allows me to pay it off with no hit to my credit, so long as I just keep using it regularly.
Second, if you have any other type of loan (car, mortgage, personal, etc) then it really doesn’t matter. Those will almost always have a higher balance and payments anyway. Your credit score isn’t from one single source unless you are brand new to lending. It actually will lower your score if you only have one loan as well, so it’s important to keep accounts open (meaning you need to use your credit cards so they don’t get closed) and in good standing.
Always pay credit cards off entirely so you don’t give the bank your money. Always.
Like, say I spent 2500 to buy some big ticket items ive already saved for, when should I pay off that balance or to what extent should I pay it down and let that milkable amount you were talking about,
I was going to pay it off next week, should I wait till next month to pay it off or longer, obviously gotta find out and make minimum payments so thats the floor but what is the ceiling according to what you’ve suggested?
The person above had absolutely no idea what they’re talking about. Pay your balance every month. My credit is great now and I defaulted on my student loans 20 years ago. Never give the CC company a cent. Maximize your points, autopay your balance on time every month. Switch/add a card when you can qualify for a more rewarding card. Go spend some time reading NerdWallet. Don’t listen to 14yos on forums.
I have a 780 score and have helped several friends and family build their credit including coming back from a bankruptcy this stuff is a hobby for me. OP was asking about credit maxing and that’s how you do it.
I have a 780 score too and I pay it off every month. It may depend on other things for each person. I bet it’s dialed in to each individual.
Its arbitrary though. My score was that and I had $45k debt at one point due to divorce and a move etc. They only care that you keep making payments to show they can offer you more ways to get in debt. Its stupid to pay interest to get a highacore.
Then there was my wife who barely had an credit cars and no other assets or debt and she was over 800 somehow.
Like others are saying, pay it off every month. Ideally, you’ll want to keep the usage around 10-30% max. If you have a $5000 limit, that would be a monthly usage of $500-$1500. If you max it out, banks will assume that you’re a risk and will ding your score.
Keeping it below 30% will also help grow your limit. Banks will periodically up it. This is also based on reported income, but from experience, if you have a low limit and max it every month, they will not really increase your limit.
As another person already said, the guy you’re replying to doesn’t know what they’re talking about. But what they’re saying is a common misconception, and I’ll explain why.
-depending on your billing cycle, at some point in the month the credit card company will do two things on the same day: 1) generate a billing statement for you with the amount you owe and due date and all that 2) report how much you OWE THAT DAY and also WHETHER YOU PAID YOUR LAST MONTH’S CHARGES to the credit bureaus.
-for 2), it is a snapshot in time. If you’ve charged $500 throughout the cycle, what is REPORTED to the bureaus is that you have $500 charged, which shows you’re using your card.
You can come in the very next day, pay off ALL $500 and pay NO INTEREST and your credit score goes up. You DO NOT NEED TO CARRY A BALANCE and pay interest (bad) because your usage is only reported once a month, not day by day.
So, people conflate using a card at all (which you should do in order to build a good credit history) with carrying a balance, because they don’t understand how their information is reported.
So:
-get a card
-use it to pay for stuff you already were going to buy
-try not to charge more than 40% of your credit limit on the card
-pay it off IN FULL every month
-profit (literally - as your credit gets better you’ll have access to cards with better rewards and benefits)
Treat your card as if it were a checkbook.
Hook it up to a bank account that covers twice the card’s credit limit. You can pay it off once a month, or pay it off whenever you approach the limit; which method you use depends on your limit and spending habits.
Autopayments are good — the reason you hook it up to an account with a relatively low balance is so you have a throttle on your spending AND so if the anti-fraud protections miss something, you have time to dispute the charges before they get paid off.
Other things to note: use chip and pin when possible; with chip and pin, any disputes default to being in your favor, with the merchants having to prove why that shouldn’t be the case. If you use tap, it’s all on you to prove why it wasn’t you who made the charge.
Using this method, paying all my utilities etc. through my credit card, I got my credit rating above 80 in a few years.
treat it like a checkbook
Will do
No it isn’t. A big part of the score is credit utilization and the lower is better. I usually keep mine in the single digits
The limit is 5000 so what amount are we talking here?
Like 21% interest so I want to be careful but Im receptive to your point
Oh lord well don’t CARRY a balance and pay interest just use the card for everything you don’t mind being tracked about and pay it off every month. This way you keep an average monthly balance but you don’t pay interest. You also can earn points with a good card most of my kids Xmas gifts come from points I save up all year just paying my regular bills.
If your nut is very tiny this won’t be much but I keep car payments, insurance payments, phone bill, every monthly bill I can on a card and pay it off every month before any interest accrues. if you’re lucky you can put rent on there. I don’t know what the exact percentages are sorry just have been gaming credit cards for years and know the score is highest if you keep them in use.
Ya that sounded a bit off
As duchess has said, I agree to pay off the balance every month. I don’t have an issue with putting auto payments on and my score is quite high.
