Once you get that credit card, here's how to use it most effectively! The best way to make your scores improve is to keep the balance of your cards low in relation to your higher limit. In other words, with a $1,000 credit limit, you should carry no more than $100 in balance to optimize your score. Paying off the account provides no activity for your scores to be calculated. Closing the account may very well make your overall debt ratio higher and bring your score down. The best way to use a credit card is to do the following: Start off each month by making one small charge. This could be a tank of gas, date night with your spouse, or your monthly gym membership fees. Once you make that charge, put the card away! (When your card is not in your wallet or purse, you are less tempted by those "emergencies" such as that shirt on sale!) When your bill arrives in the mail, pay it off completely. Each month use the card again. By using this technique you should only spend $30-40 each month. And each month as your bill comes in, pay it off completely. The $30-40 balance will be reported to your credit report and paying it in full will eliminate any finance charges. Altogether, this low balance on a higher limit shows that you know how to use credit and that you are not living on credit! This will boost your scores (and save you cash!) |
