What is the best way to build credit ?

Question

I just got my first credit card so I need a little help.

I don't have a lot of cash so I was thinking of make many different small purchases and building it up that way. Somebody told me though that if I always paid on time and never had a balance on my credit card then I would not be building up credit. Is that true? Also how do I check to see my credit is going from none to something fairly good? Please help.

Answer 1

Use the credit card, and pay it off in full every month.  Set it up to be able to pay online.  You can even have the bill automattticall paid.  That way yuou do  not have to worry aboout a late payment.

The person that told you tha tyou needed to carry a balance on the credit card is incorrect.  It is much better to pay in full.

Answer 2

http://www.apply-best-credit-card.com/ho...

Credit scoring software looks at five areas of your credit reports:

Your Payment History

Amounts You Owe

Length of Your Credit History

Types of Credit Used

Your New Credit

Improve Your Payment History

Always pay your bills on time. Late payments play a major role in driving down your score.

If you have past-due bills now, get current and stay that way.

Contact your creditors as soon as you know you will have a problem paying bills on time. Try to work out a payment arrangement and negotiate with them to keep at least a portion of the late notations off of your credit reports.

If your situation is serious, see a legitimate, non profit credit counselor. Avoid the scam artists who promise a quick reversal of your credit problems.

Keep Debt to a Minimum

Keep your credit card balances low. High debt-to-credit-limit ratios drive your scores down.

Pay off debt, don’t move it around. Owing the same amounts, but having fewer open accounts, can lower your score if you max out the accounts involved.

Don’t close unused accounts, because zero balance might help your score.

Don’t open new accounts that you don’t need as a quickie approach to altering your debt-to-credit-limit ratios. That can lower your score.

Length of Your Credit History

Time is the only thing that can improve this aspect of your scores, but you can manage it wisely:

Don’t open several new accounts in a short period, especially if your credit history is less than three years. Adding accounts too rapidly sends up a red flag that you might not be able to handle your credit responsibly.

Manage New Credit Wisely

Several credit inquiries during a short period means you are attempting to open multiple new accounts, and that lowers your credit scores.

Credit scoring software usually recognizes when you are shopping for a single loan within a short period of time, such as a home loan. If multiple inquiries are necessary, have them pulled as closely together as possible.

Checking your own credit report does not affect your scores.

Do try to open a few new accounts if you’ve had credit problems in the past. Pay them on time and don’t max out your credit limits.

The Types of Credit You Use

A mixture of credit cards and installment loans, loans with fixed payments, can help raise your score if you manage the credit cards responsibly.

Having many installment loans can lower your scores since payments remain the same until balances are paid in full.

Don’t open new accounts just to have several accounts or to attempt a better mix of credit.

Closing an account doesn’t remove it from your report. It may still be considered for scoring purposes.