Improving Credit

[Prototype]

So, I got me a credit card at 18, and have been irresponsible with it since. I have a $700 limit, and have never really been in a position to control that much (believe it or not) until now.

Here are my options right now:
- Pay it off entirely, and use the credit card to pay off bills.
- Pay off a portion of it, like half, and pay the rest in a month.
- Make a much better effort of paying the monthly payments, or reqular payments to get it taken care of sooner.

Cutting up the card is definatly in my near future, but I want to make sure it's taken care of before I do that.

What is the best route to make strides towards improving my credit raiting?

Any help would be appreciated.

[Eagle Eye]

I think the best way to improve your credit with a credit card is to pay off small monthly payments (meaning they will make interest off you). I think that if you pay it off in one lump sum it will not hurt your credit, but I don't think it will improve it.

Maybe someone can tell me I am wrong.

I really don't think your credit would be that bad if it was only $700. I have heard people say that credit cards can either give you great credit or bad credit depending on what you do with it.

[Hakan]

Pay it off completely, right now.

Then use it on a monthly basis and pay off the statement balance on the due date each month for two years.

Do not pay a dime of interest and do not use the card to spend outside of your means. This improves your credit rating and doesn't allow those vultures to profit off of you.

I used to work at the Royal Bank doing credit checks of people

Also, this is really important, read the contract that came with the card in its entirety.

[Cowperson]

Originally posted by Hakan@Jun 15 2005, 10:11 PM
Pay it off completely, right now.

Then use it on a monthly basis and pay off the statement balance on the due date each month for two years.

Do not pay a dime of interest and do not use the card to spend outside of your means. This improves your credit rating and doesn't allow those vultures to profit off of you.

I used to work at the Royal Bank doing credit checks of people

Also, this is really important, read the contract that came with the card in its entirety.

Sound advice.

If you have trouble handling credit - and many people have personalities which render them incapable of having anything less than all their credit facilities at the max - then having credit which requires you to pay it out completely every month might be the way to go.

A lower level American Express card requires you to pay off the balance every month . . . . you have no option.

Cowperson

[Neeper]

I wish I only owed $700 on my card(s).

Hmm.. just my Visa gold alone is $11,000. GRRRR

[snappyk]

mine was at 13000, just refinanced to get rid of my debt and cut up my cards

[Looger]

a stately 7 g's, been railed for two years...

they keep raising the limit!

[BaronInEdmonton]

I've know people who've owed more than my mortgage on credit cards (under $80 000 now, woo!). Pay it off now and never use it again, except in emergencies. Credit cards are evil and should be avoided at all costs.

The start of life is hard enough with starting careers, family, and buying your first house. Starting 30 or 40 grand in the hole makes things way tougher.

[Incinerator]

I don't owe a single dime on any credit cards, they will suck you dry as soon as you start owing. I have a LOC and I use it to pay for everything, even the condo. And I'm only paying the interest on the LOC right now.

[Ro]

That's interesting to hear Hakan- I was under the impression that things worked a little differently...

My understanding was that credit card companies love people who pay interest on their credit cards, as long as they clear the balance completely every now and again. For example, you have $1000 on your card, you make the minimum monthly payment for 6-8 months, then pay the entire thing off in one swoop. Credit rating soars.

I know that's what I did/do, and I apparently have a very good credit rating. I found that hard to believe at first, because I usually carry a balance from month to month on my cards. But I was told by somebody at my bank that I have proven to be a responsible borrower, AND I make the bank money by paying some interest.

???

[Mike Oxlong]

The credit card companies LOVE people who pay interest to them. However they are not the people who always decide on credit. Equifax, and Trans Union base your credit score on a number of factors.

1. Debt ratio. If you have a credit card balance that is always close to the limit that look bad on your record and hurts you. Hakan is bang on, you should pay it off immediately.

2. Payment history. As long as you are paying the minimum monthly payment you shouldn.t have any black marks here. So once you pay it off keep using it for small things but pay it off entirely every month.

3. Credit Inquiries. If you have a whole ton of inquiries into your credit it hurts your credit score as well. Try to keep them to a minimum. Only apply for credit if you absolutely have to.

There are some other factors I know I am forgetting but this gives you a start. You should really go to equifax.ca and read up on credit.

[nfotiu]

Originally posted by Mike Oxlong@Jun 16 2005, 07:53 PM
The credit card companies LOVE people who pay interest to them. However they are not the people who always decide on credit. Equifax, and Trans Union base your credit score on a number of factors.

1. Debt ratio. If you have a credit card balance that is always close to the limit that look bad on your record and hurts you. Hakan is bang on, you should pay it off immediately.

2. Payment history. As long as you are paying the minimum monthly payment you shouldn.t have any black marks here. So once you pay it off keep using it for small things but pay it off entirely every month.

3. Credit Inquiries. If you have a whole ton of inquiries into your credit it hurts your credit score as well. Try to keep them to a minimum. Only apply for credit if you absolutely have to.

There are some other factors I know I am forgetting but this gives you a start. You should really go to equifax.ca and read up on credit.

These things are all bang on. I think the credit bureaus give highest scores to people who use less than 60% of the balance.

But, unless you are not making your minimum payments, the sad fact is your credit score is probably hurt most by the fact that you have only one $700 credit card. Having more credit, with higher limits would improve your score a lot. Paying down your one $700 credit card won't affect your score noticeably.

One more thing. If the interest is higher than 8 or 9%, you should call your bank and ask them to lower the rate or move you to a low rate card. This might not work if you've missed minimum payments.

[Prototype]

Originally posted by nfotiu@Jun 16 2005, 01:08 PM
But, unless you are not making your minimum payments, the sad fact is your credit score is probably hurt most by the fact that you have only one $700 credit card. Having more credit, with higher limits would improve your score a lot. Paying down your one $700 credit card won't affect your score noticeably.

I've had other cards that I don't need anymore, and I currently have a jewlery store card ($1000) with a balance of $100 on it.

This isn't the only card I've had, it's just the hardest one for some reason to pay off.

I've taken in all the info, and I'll be taking the advice. Thanks a lot all.

[MJK]

Originally posted by Prottotype+Jun 16 2005, 08:32 PM--></div><table border='0' align='center' width='95%' cellpadding='3' cellspacing='1'><tr><td>QUOTE (Prottotype @ Jun 16 2005, 08:32 PM)</td></tr><tr><td id='QUOTE'> <!--QuoteBegin-nfotiu@Jun 16 2005, 01:08 PM
But, unless you are not making your minimum payments, the sad fact is your credit score is probably hurt most by the fact that you have only one $700 credit card. Having more credit, with higher limits would improve your score a lot. Paying down your one $700 credit card won't affect your score noticeably.

I've had other cards that I don't need anymore, and I currently have a jewlery store card ($1000) with a balance of $100 on it.

This isn't the only card I've had, it's just the hardest one for some reason to pay off.

I've taken in all the info, and I'll be taking the advice. Thanks a lot all. [/b][/quote]
Messege me when you get online...I am a credit card expert and can help!

[Prototype]

Originally posted by MJK@Jun 16 2005, 01:33 PM
Messege me when you get online...I am a credit card expert and can help!

"Expert", as in you have a bunch of them on the go, or as in you know how to work one. Or is it that you know to go broke by way of credit card :P .

I'm going to stop by a Citifinancal on the way home. I think Equifax thinks I'm 44, not 24. I have to get that fixed too.

[MJK]

'Expert' as I know a lot about them. All the ins and outs and how to get and maintain good credit.

[Maritime Q-Scout]

I find if you use it and pay it off at the end of the month, captialize on the points etc you should be ok.

My grocery bill of $23.73 just cost me $3.73 as I cashed in some points for free food. Can't go wrong there. I've saved a few hundred in groceries and have maybe spent $50, MAYBE on interest