How to balance credit utilization with a low $200 limit?

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4 posts
seacorb
 
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How to balance credit utilization with a low $200 limit?

Postby seacorb » Mon Mar 19, 2012 9:59 pm

I just got my first credit card and I have a few questions. I've done alot of research and couldn't find definitive answers! It is a secured card from Capital One (I have no credit), they made me put down $49 for a $200 line, which I've heard is a good thing.

I am trying to build my credit as fast as possible so I can get a car during the summer, so I went ahead and charged up the card, I only have $4 available on my credit. I made a payment for $29 for the annual fee which was my full balance, and am waiting on the other $196 worth of charges to post to my balance so I can pay them off immediately as well.

The problem is that it can't be done in a timely manner, 5ish days for charges to post while which my ratio is high, then another 5 days for my payment to post in while which my ratio is still high.

I was under the noob impression that I should use as much as my credit as possible on a monthly basis so long as I pay it off in full before each due date, then I did some research and I fully understand the credit to debt ratio and all that jazz.

So after I fix my previous mistake by paying my $196 balance as soon as the charges post and waiting for my payment to post after that, then I should only charge $20 (10% credit utilization) or less and pay the balance before each due date for optimal chances at increasing my score quickly, correct?

Hopefully they didn't report to the bureau's while my charges were posting or while my payment is posting because that would reflect the outrageous ratio that I temporarily have.

That bring me to my main questions:

Do credit card companies report on the same day every month or is it random? If so, is it possible to find out what day from said company? I guess it's not really important if I maintain lower than 10% credit utilization for the whole duration of my cycle, but it seems kind of silly that spending $18ish a month on my card and paying it off on time ONCE a month is going to do more for my credit score than nearly hitting my limit and paying it off the second all the charges post SEVERAL times a month.

Your billing cycle is set 25 days after your first credit card purchase posts, correct?

I plan on increasing my credit line to $500. I also plan on getting another secured card with my bank (Wells Fargo) and putting down $500 for the deposit as well, that way I'll be able to put $40 on each card per cycle and have two cards reporting - I got my Capital One Card on March 8th, will it effect my credit score negatively if I go into Wells Fargo tomorrow and get a secured card since it is so soon after getting my first card? If so how long should I wait?

Thanks in advance for your replies - I really need guidance and I've heard/read about a lot of people messing up their scores even though they had good payment habits!


namvet
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Postby namvet » Tue Mar 20, 2012 5:53 pm

Cap One will report the balance that shows on their statement. Just make sure that amount is not more than 30% of your credit line. That is all you need to know about credit util at this point. You can increase your secured credit line/lines anytime you want but wait 6 months between new credit apps. You can't rush credit establishment. If you do then you will not be happy with the results. Time and good credit management will get you where you want to go with your scores.

seacorb
 
Posts: 2
Joined: Mon Mar 19, 2012 9:22 pm
Location: atlanta

Postby seacorb » Tue Mar 20, 2012 7:32 pm

since new credit is only 10% of my score then wouldn't getting a new line of credit and using it as I said be more effective at raising my score? Experian has me at a 550 but my credit card hasn't shown up on my report yet, and its showing that I have a closed collection account. Should I try to contact the collectors and work out a deal where they remove my debt upon payment?

JCarter
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Postby JCarter » Tue Mar 20, 2012 11:45 pm

seacorb wrote:I was under the noob impression that I should use as much as my credit as possible on a monthly basis so long as I pay it off in full before each due date, then I did some research and I fully understand the credit to debt ratio and all that jazz.

So after I fix my previous mistake by paying my $196 balance as soon as the charges post and waiting for my payment to post after that, then I should only charge $20 (10% credit utilization) or less and pay the balance before each due date for optimal chances at increasing my score quickly, correct?

Hopefully they didn't report to the bureau's while my charges were posting or while my payment is posting because that would reflect the outrageous ratio that I temporarily have.

That bring me to my main questions:

Do credit card companies report on the same day every month or is it random? If so, is it possible to find out what day from said company? I guess it's not really important if I maintain lower than 10% credit utilization for the whole duration of my cycle, but it seems kind of silly that spending $18ish a month on my card and paying it off on time ONCE a month is going to do more for my credit score than nearly hitting my limit and paying it off the second all the charges post SEVERAL times a month.

Your billing cycle is set 25 days after your first credit card purchase posts, correct?

I plan on increasing my credit line to $500. I also plan on getting another secured card with my bank (Wells Fargo) and putting down $500 for the deposit as well, that way I'll be able to put $40 on each card per cycle and have two cards reporting - I got my Capital One Card on March 8th, will it effect my credit score negatively if I go into Wells Fargo tomorrow and get a secured card since it is so soon after getting my first card? If so how long should I wait?

Thanks in advance for your replies - I really need guidance and I've heard/read about a lot of people messing up their scores even though they had good payment habits!


This is a secured card, as you stated. So you can increase your available credit limit, by simply contacting Capital One and asking them to increase it and mailing in an additional money order, or paying with your debit card.

Capital One will post on the same day every month for you, the day your billing cycle ends.

It will not adversly effect your score to go in at any time and add an additional secured card, presuming they have already done the hard inquiry on your credit and will not conduct another one.

Good luck.



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