Best us of CCs?

[argo]

Hi,

What is the best use of existing credit cards for getting a better score?

I do not have any debts and am not going to. I am using CCs only to get better score and some cash back. I usually utilize them up to 90% and sometimes 2-3 times a month.

Fellows here advise to use only 50-65% for better credit history.

What is your perspective on the subject? What is, do you think, the logic on the other side? How do people in banks think?

[Broken Arrow]

I think the biggest thing is to pay it off on time every month and not carry a balance.

However, having a balance may keep the more aggressive lenders off your back and doing anything sneaky.

I don't think it's a good idea to use it to 90% on a regular basis. Part of what they are interested in is a good debt to credit ratio. 90% would reflect poorly.

[creditcardfree]

Originally Posted by Broken Arrow

I think the biggest thing is to pay it off on time every month and not carry a balance.

However, having a balance may keep the more aggressive lenders off your back and doing anything sneaky.

I don't think it's a good idea to use it to 90% on a regular basis. Part of what they are interested in is a good debt to credit ratio. 90% would reflect poorly.

I agree with you. It's all about the ratio, debt outstanding compared to the total credit available.

[argo]

Now, if it's all about the ratio, when do they count it? All the time or only at the end of each period?

[Broken Arrow]

I don't know, but I'm guessing at the end of the month. Hopefully other people here will know, but personally, I am more interested in how credit cards fits into my overall financial strategy as well as its everyday operations. For example, I have to constantly balance the credit card's outstanding balance against my allotted fund in my checking. Then, at the beginning of each pay period, I would make a payment online to pay off the debt.

Although I am not sure, but I think the simple act of paying off the credit card debt will increase your score more than anything... because it's a loan that's been paid off. Truth be told, even if it isn't, I would still pay it off to avoid paying interest.

[Bookie]

Credit cards are actually lines of credit rather than loans. A credit check reveals the limit, the percentage used, the age of the account, most recent transaction, and whether the account is being paid according to the agreement.

Originally Posted by Bookie

A credit check reveals the limit

unless the card is with Capital One, something they get quite a bit of grief over from savvy card users.

[Bookie]

Originally Posted by rexdart

unless the card is with Capital One, something they get quite a bit of grief over from savvy card users.

Good point.

[Broken Arrow]

Thanks for the correction.

[Ima saver]

I think they like the utilization to be 30% or less.

[Ima saver]

I think the ratio is reported when the credit file is pulled.

[vishenda]

As long as you pay off your card in full each month, then a credit utilization rate of around 50% and under is good. If you carry a balance, then you never want to exceed 30% utilization rate.

If you are consistently charging up to 90% of the credit limit, this can look dangerous, especially if you actually exceed the credit limit one month. You may wish to increase the credit limit on your oldest account, and close out your newest account if you want to increase your score a few points. Just don't expect a massive increase!

[Grobux]

A good way to think about credit cards is that the credit reporting agencies love to see people with available credit they don't use.

It's good to have a few credit cards that you rarely use. It will help keep you outstanding balance/available balance ratio low.

Also, reporting companies check your overall ratio for all accounts, as well as, your ratio for individual accounts. Therefore, it's better to carry a small balance on several cards than one large balance.

Of course, having multiple cards increases your risk of late fees. Also, if you're not disciplined, you'll just end up having more debt.

[sakigt]

Getting a few cards would also help your problem. If you get 2 more cards, but do not use them, this will lower your debt ratio and you can continue to use the 1 card as you are.

[poundwise]

A couple of the best uses for credit cards --


1) To open the door to your apartment or house when you forgot your keys

2) Confetti

[argo]

Originally Posted by poundwise

A couple of the best uses for credit cards --


1) To open the door to your apartment or house when you forgot your keys

2) Confetti

This is post I've been expecting.
Has anyone tried make them go through a fax machine?

[tinapbeana]

Originally Posted by argo

This is post I've been expecting.
Has anyone tried make them go through a fax machine?

i've put one thru the shredder!

and, um, i can vouch for that whole door thing, too

let's see: i use mine as an ice scrapper when my car is frosted over.
they're great to put under a table-leg when it's wobbly.

wonder what would happen if you microwaved one? think it would be like microwaving a CD?

[Bookie]

n/m. I missed an earlier entry.

[argo]

Originally Posted by Bookie

I might add a credit card is handy for scraping frost off the car windshield. It's stiff enough to be effective without any risk of scratching the glass.

My kids like to play with them. I would do this too if I were a kid now.