What is the best way to pay on your credit cards to build credit?

Question

If i had a credit card with a 500 credit limit and charged $140

is it best to pay the minimun payment on TIME untill the $140 charge is paid in full ....or pay the whole $140 before the due date using bill pay or on the due date ? which way would be the best way to build your credit score ?

Answer 1

Use the card, pay the bill in full when it comes in. Keep doing that & soon they will raise your limit. If you have to use that card & can not pay off the balance, pay it off as soon as you can & do not charge anything else on it till you do.

Answer 2

Pay the full amount as soon as you receive your bill, and do it a couple of times and before you know it your credit will increase and always continue to do it or at least pay more than the minimum and don't ever pay late.  

If your minimum due is $25 and the interest or finance charges for that month are 14.00 then pay then if pay $39.00 or more. Always pay more than min and pay the finance charges.

Answer 3

pay the whole $140 before or on the due date. Since you have such a low credit limit, I'm assuming you are a student in which case you shouldn't build up more than $60 per bill so it's easier to pay in full.

Answer 4

There would be practically no difference as far as building credit, but in the first option, your CC company would be making more money. It's true you have to "use" your credit card to build a credit history, but taking out a loan and paying utility bills on time also help.

What many don't realize is a large portion of your score is how many credit accounts you currently have, the total accounts you have held, and if they are in good standing. Contrary to popular belief, if you decide you don't like a credit card or find a better offer, pay off the balance, store the credit card in your files, but DON'T close the account. It is the LENGTH of time that each "account" (ex. CC, school loan, car loan, ect) has been open that has a significant effect on your credit score.

The most important score in your life after completing the SAT/ACT will be your credit score or FICO score. It is a dynamic number and will change as you use or misuse credit.

Answer 5

If you can pay it off pay it off.I don't think it matters but why pay they interest if you don't have to?People are looking at you and saying"hey, he pays his bills" either way.

Answer 6

To build credit, consistant payment.  If you pay it all off, it's looked at like once you have $, you pay stuff.  If you pay minimum payments over a period of time, you've established history.  I don't recommend not paying something off as soon as possible, BUT, if you trying to establish a credit history that is what is needed to do so.

Answer 7

Just take credit and pay it in time, and your credit score will be set. To avoid common mistakes while buiding credit, I recommend this one - http://freecreditreport.deep-ice.com - to monitor changes in you score and pre-estimate future scores for different scenarios of payments.

Answer 8

ABSOLUTELY DO NOT PAY THE CARD OFF IN FULL EVERY MONTH.  Yes, you want to maintain a low balance, preferably below 32% of the available credit limit.  The credit scoring system is based off the responsibility of the user.  If you maintain a low credit-debt ratio, your scores will soar.

Answer 9

One of the factors in determining credit scores is the ratio between how much you owe compared to credit limit.  You want to have a high limit with a very low debt because it shows the banks that you know how to budget and won't go out and spend every dime available.  Therefore, it is better to pay off the entire amount every month.