How does payment history (and usage) affect credit score?

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gx240
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How does payment history (and usage) affect credit score?

Postby gx240 » Sat May 19, 2012 11:59 pm

I just got my first credit card, and I'm somewhat confused about how I should use it. I should say that my goal is simply to increase my credit score. That's the only reason I got the card, and I don't actually need to buy anything on credit.

From what I've read so far payment history accounts for 35% of your credit score, and utilization makes up 30%. I'm having some trouble figuring out how to handle these two areas in practice though, so I have a couple questions.

I've looked through a bunch of threads on utilization, and from what I've read so far the ideal credit utilization rate is the smallest number possible that is greater than zero. Is this accurate? Or to put the question in more practical terms: Is the best method of improving this aspect of my credit score to just go to the store, put a $1 bottle of water on my credit card, and then not use it for the rest of the month?

Finally I'm curious about the payment history component that makes up 35% of your score. Are all the payments you make regarded as equally valuable? Using my previous example, if I put $1 on my card and pay off the balance in full every month, would that have the exact same impact on my payment history rating as putting a $1,000 balance on the card and paying it off every month (setting aside the effect on the utilization rate)? Does the amount actually matter, or is this component of the credit score merely checking to see if you pay your bill every month, regardless of the value of the bill?


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