How to use a secured credit card to improve your credit score?

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How to use a secured credit card to improve your credit score?

Postby link223 » Sun Aug 07, 2011 11:16 pm

I have recently acquired a secured Wells Fargo Visa to help improve my credit with a $3,000 limit. What are the best practices to improve my score? What % utilization should I stay at or under monthly to boost my score? Is it best to pay in full to eliminate interest? What other tips should I live by to improve my score the most? Thanks!

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Postby Money card » Mon Aug 08, 2011 10:12 pm

Congratulations on the Wells Fargo card. what I would say is whatever you charge, pay in full. who wants to have any cardmembers that only pay 20. whether you go to Lord & Taylor, Kohls, Gap, Walmart or out to eat, whatever you charge pay in full. No interest charges. That's also a way to improve your score.

You say you have a 3,000 dollar limit. It's best to use the card, but never ask for a higher credit limit. Like charging anywhere from 100 per month, up to 350 is good to keep it around 10%. Some months you may charge less, but always pay your bill in full.

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Postby LTomBerry » Tue Aug 09, 2011 7:17 am

Correct it is best for you to pay in full and therefore eliminate interest. You do not have to carry a balance or pay interest to build credit. Of course the banks would love for you to carry a balance but that's because the interest is extra $$ in their pocket. What will build your score is the length of time it is open and paying on time.
You say you have a secured card with a $3k limit so I assume you deposited $3k into an account somewhere and your limit is based off of that. On an unsecured card there is nothing wrong with asking for a credit limit increase every once in a while; most banks have rules like once every 6 months. If you can help it avoid CLIs that use a hard inquiry.
10% is a good rule of thumb for utilization. As long as you pay in full it's OK if you go over that sometimes - the time when utilization matters the most is on a month that you are applying for new credit. Your score is a snapshot of your credit that month so a lender can't see what your Util was a few months ago.

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Postby ooxs » Thu Aug 18, 2011 5:11 pm

From my understanding, you must maintain a balance to developed credit, you paying of your account in full will continually report your account balance as zero. I will recommend you maintain 10 to 20 dollars every now and then.
Here is an example
I had a discover card for over about two years and paid it in full ever month, whenever i applied for another card i was declined for having no/insufficient credit.

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