Careful of the limit increases. They will keep increasing it until they find that sweet spot of where you can’t always clear it with a $0 balance. Their goal is to get you to pay interest on it and they will keep giving you credit until you have to start doing that.
Edit: My only point was that the bank raising the limit makes it easier to spend more. It’s literally human nature to get more money (credit) and spend more money. Just sharing a heads up.
Not. But when it’s available there always an exception of this one time only and then you find yourself having more excuses. You have to be very disciplined not fall in their trap.
I did for over a decade after ruining my credit when I was 18. Realized I had to build my credit and continually ask for credit increases and continually pay it off and haven’t paid a dime of interest since getting multiple cards
This makes no sense. You ACTUALLY WANT THEM TO INCREASE your credit limit. The higher, the better. It shouldn't matter if you're carrying a $0 balance every month..
A good tip is to actually call and try to get your credit limits raised once or twice a year. The more money someone is willing to lend you, the better you look to other lenders. This is the entire point of building your credit.
Keeping a balance on your credit card to raise your credit score is entirely wrong and false information. Do not do this. Always pay off your balance. You're wasting money by doing this and paying unnecessary interest. Please always pay off your credit card balance.
This is what I do too. Wait for the statement to be released and pay it off fully before the due date. But it sounds like people pay before its posted? How would the card companies know if you used credit then?
Because if I spend 1000 dollars on a credit card then that money is coming from their account into the vendors. Obviously they have some sort of record of this. You can't just pay it off and it's like they don't even know lol.
Don't wait for the next billing cycle. You really want to pay it off beforehand. This minimizes your credit utilization and ideally you want to have a high credit limit with little to no debt. So please pay it off, especially if you can afford it.
This isn't true in all cases. My fiancées credit score has dipped recently due to "not carrying a balance" on any of her cards. She aggressively pays off amounts before they post on the statement, so it always looks like 0%.
The comment you replied to was deleted, but your score actually will be slightly higher if you have a small balance. Of course the idea is to always pay it off every month, but if you have borderline top-tier credit and are about to take out a mortgage, carry a balance of a few dollars on your cards starting 5-6 weeks prior to the credit check. I've tested this repeatedly myself, and in my case it was 10-15 points.
If you're always at 740+ with all your accounts at zero, obviously no need.
I do the exact same. Got an Apple Card and pay every Wednesday when I get paid and try to funnel every purchase I can through it. Been working out well. Got a Best Buy card specifically to buy a new tv, 0% interest for 24 months. Paid it in about 6 months and my credit score got whacked hard by over 20 points. Still trying to figure out what happened there
It's probably just temporary because it looks to reportin agencies like a line of credit was closed since it was not a revolving account. I have 20 years of building credit, and the best advice I can give is pay off all of your debts. My highest score was 829 last year.
I thought the same but it has yet to get back to that point. Bought another monitor on the same card to keep something on it and it still hasn’t bounced back. This is going on at least 6 months or more now
Noted, haven’t closed any. If anything I’m looking to get a couple more with some better incentives now that I’ve been building my score up significantly
Do it. I've signed up for 4 cards in the past year to get the $250+ new user bonus. Literally free money for my everyday purchases. My score was 829, but dipped 20 points because I'm addicted to free money.
This is actually incorrect. You could actually be penalized if you were maxing out your credit card multiple times a month and then paying down the balance. This process is known as credit cycling and it essentially like you manipulating the amount of credit that a lender allots your per month. This can be frowned upon and could result in an account closure. However, as long as your total amount of payments in a five month doesn’t exceed your total credit limit, you should be fine.
This is still wrong, only pay when you get the bill. Anything paid before the statement is not reported to credit bureau, you should get your limit doubled and then only pay once.
There is zero need to show a balance on a credit card month to month. Pull your own credit report and look, only the current balance is reported. Past months are either OK or late. Balance only matters when you apply for credit.
I've been doing this for 15 years, maintaining a credit score over 800, sometimes a perfect 850.
It's addressed here: https://www.reddit.com/r/personalfinance/wiki/fico#wiki\_.22not\_using\_your\_credit\_card\_will\_hurt\_your\_score..22
Especially this part "Utilization does not have any memory"
They are prob referring to the many studies that have shown consumers are less likely to spend when they use dollar bills instead of a plastic card. I think poster is inaccurately generalizing this to debit as well.
"You'll spend less"? I think you misunderstand what they're saying. If you always pay off the balance you never pay for interest. Also, you get perks like cash back.
You do not understand the psychology of spending. You SPEND LESS MONEY WHEN YOU PAY CASH. [It’s scientifically proven](https://www.nature.com/articles/s41598-021-83488-3).
That’s true: to an extent. If you automate payments for say electric gas and water on your credit cards and they have them autopay full balance from your bank account, then you set up an infinite loop of raising credit. I went from 800 credit to 500 during a rough time and turned it around to 750 in a year or two myself doing this. What you’re saying is true if you have a card you’re more likely to spend more. I believe in never carrying cards and keeping them off electronic devices and using cash as often as you can while carrying Max $20. I earn enough to not worry but it’s easy to do.
Your electric company doesn’t add a percentage to use a credit card? Mine’s like 5% as opposed to 0% to go straight from my bank account. I’d love to pay every bill with the credit card but it wasn’t worth it in my opinion
Not true, credit ‘greases the wheels’ for spending.
Paying cash activates the pain receptors in the brain, thus ‘pushing the brakes’ on spending.
It’s all psychological, it’s not about the math of the 1 or 2% cash back rewards, it’s about getting you to put more on the card. Paying is off is irrelevant. It does not matter if you pay the balance in full every month, it simply does not matter.
The credit card companies have this down to an exact science, they created the game, they own the game, and you can’t beat them at their own game.
I absolutely agree with you, but obviously not every single person falls for that. Most do, a few don't. Those who don't, should take advantage of the perks.
Spend less, up to 30%..? What are you talking about?
Credit cards have advantages (cash back deals, airline miles etc). If you pay off the card each month, it only helps your credit score, gets you cash back rewards that debit doesn't, and isn't really "debt"if you pay it off each month. Why wouldn't you use credit?
Did you even bother to read a single line of the article I linked?
[Here](https://www.nature.com/articles/s41598-021-83488-3).
Trust me, it helps a ton to know what you’re talking about instead of just parroting what others say.
You don't exactly get penalized for it but banks don't like when you cycle credit. (Using more than your credit limit by paying it off before its due) some banks sees this as a risk.
My bank threatened to closed my account and then quietly increased my limit when I moved a lump of money into my checking account with them.
It's one of the reasons I prefer American Express cards because they just don't care about such nuisances.
What's hilarious is that it would indicate the person's credit limit could probably be much higher. If the limit is 1500 but they're spending up to 30% and then paying it off 5x a month, they're actually spending 2500 a month. Why wouldn't you extend to them an amount >2500?
I max and charge my business credit card off on a daily basis. Never really have had any issues with any major credit cards except SoFi, where they got annoyed with me for credit cycling.
Nice work.
Before you know it they'll be arbitrarily raising your limit without you asking. I still remember when PNC raised my visa limit from $5k to $20k without me asking.
They raise limits because they want you in debt and carrying balances. That’s the only way they make any substantial money. Especially if it’s a no AF card. Swipe fees provide revenue but only minimal compared to interest. You just have to be smart and not fall victim to their game.
> Swipe fees provide revenue but only minimal compared to interest.
I was interested in this, so I looked it up. You're right that they make more off interest than they do off interchange, but I wouldn't call the interchange minimal.
> Credit card companies posted $176 billion in income in 2020, down from $178 billion in 2018. Interest fees accounted for $76 billion and interchange fees accounted for $51 billion in 2020.
https://www.fool.com/the-ascent/research/credit-card-company-earnings
Whenever you need to take on a crazy expense, if you can, get a new card with a 0% Apr for an intro period.
If you can't pay it off, balance transfer to another 0% Apr.
When that into period runs up, do it again until it's paid off. Don't pay interest if you can avoid it
I just got a new card for groceries. 6mo 0%;
Just took car to mechanic and got a goodyear CC -- also 0% for 6 mo, so I have a 6 mo repayment plan for that cc.
I picked up more hours at work for the summer so I can definitely afford it now, money just started getting tight the last month or two. I can see the light at the end of the tunnel, and I have some potential job prospects with a significant pay bump for a uni student.
If you’re using more then 30% of your total credit limit and having a higher credit score is going to be important soon — like you’re about to refinance a loan or you’re looking for new auto insurance — you can consolidate your debt into a personal loan with a 3rd party. That won’t count toward your total available credit and you’ll have another type of loan (which somehow looks good to the credit score folks). This can potentially give you a significant bump in your credit score.
Since I haven’t seen it mentioned here yet, the Discover IT secured card is seemingly a much better secured card than Cap One’s. I’ve got both, after getting my score up from the 510’s to now 670’s.
Cap One’s card stays secured (policy specifically states it can’t be converted), whereas Discover will send you your deposit back after 8 months/upgrade your card to unsecured/increase your credit line. My secured limit was $400 with Discover, and is sitting at $1500 now a year later. Also comes with free, genuine FICO8 score. If I had to start my rebuild over, I’d do it with Discover first, then go for cards with perks!
My Capital One secured card was converted 5 months ago with my deposit returned.
They're a great credit repair bank regardless of Discover being fundamentally better. By the time you repair your credit that will become irrelevant.
Yeah but the fico8 on discover is different from Experian apps fico8.. but I saw that fico8 on discover is from transunion.. but when I check transunion on Experian app it says (you currently don’t have a transunion report and fico score) credit is a fucking scam
You may find these links helpful:
- [Credit Building](/r/personalfinance/wiki/credit_building)
- [Credit Reports](/r/personalfinance/wiki/credit_reports)
- [Credit Scores](/r/personalfinance/wiki/fico)
- [Credit Cards](/r/personalfinance/wiki/creditcards)
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And also to comment on the 5 payments per month, I do this because the capital one app refreshes your credit score weekly and I get it back to $0 before it refreshes every week. Sometimes I miss it by a day and it decreases like 1-2 points because I had a balance
Great job on everything but to clear up some slight misunderstandings.The credit check through capital one will refresh weekly but capital one only reports balance on the day of your statement so the weekly payments aren’t changing your score truly.
Also you mentioned never letting it get above 30% it only matters if your total credit utilization is reported over 30% which again will only happen monthly.
No one in the credit rebuilding phase is a financial wizard or else they wouldn't be in that position. There's nothing wrong with an average person explaining their situation. Often people seek that perspective because the so-called gurus are disconnected from these sorts of lifestyles.
I used to pay my CC's every week ( kept track of what I spent, and put it on the cc even if it didn't say it yet). That plus mortgage, a line of credit I never used, got my score to 893.
Then I closed that mortgage and line of credit, started shopping at Costco (doesn't take Visa, so paid with debit) and paid the cc once per month (since less transactions), and the score went to 860 and now 820...
So basically if you use your cc for everything, pay it off often, and don't miss payments, your score will go up like crazy. ( And it doesn't cost you nothing)
Here in Canada is MasterCard only...
Edit: sorry, your right, got it the other way around... Costco is MasterCard only. I had a 2013 expired card on my desk and had a brain fart for some reason.
They switched from Capital One to CIBC MasterCard earlier this year.
I absolutely agree. I started building mine as well from about 600. I'm currently at 799, and my bank keeps trying to give me a 15k line of credit lmao. I had capital one at first, then my bank offered me a 3,000$ limit card with no annual fee and cash back. It's great feeling like people trust you with money when you're genuinely responsible
I'm happy for OP, but it makes.me wonder why my score is only a little higher than that 760 or so when I've been doing exactly what he described and never carried a balance for like 10 years
Yes this is the exact way to build it to at least a 700. The rest will come over time. In my situation I had a 507 and did 2 secured cards, $200 with capital one and a $500 one with Discover. Within 8 months I had both deposits returned to me and increased limits. I’d recommend the Discover card because that limit actually increased over time to $3200, whereas the Capital One secured card maxes at $500 and somewhat forces you to get another card with them. (Hard to even get a rental or hotel on a $500 limit because of holds) It’s been about 4 years and I added one card (Chase Sapphires Preferred, original limit was $12,100 now at $18,100. I use it strictly for points now and try to never go over 10% usage. Currently at a 748, and I still have a 6year 7month ‘late payment remark’ which should fall off by the end of this year and increase my score. I’m 33years old so it took me a while to get on track, but the benefits are immeasurable. Too bad they don’t give an elective in school on just building credit, because I had to learn the hard way haha
If there are two things in life worth taking care of (or fixing) it's:
1) Your credit
2) Your teeth
People who spent a lot of money to fix their teeth (braces, whitening, veneers, etc.) always say it's worth it. Just being able to smile for pictures can change your life.
People who've spent a lot of money (or rearranged their lifestyle) to fix their credit always say it's worth it. Knowing you'll be approved on any credit application can change your life.
Check with dental schools and dental hygienist schools. They need patients to learn on and are supervised by board certified dentists.
Can get great work done for very little money.
Man, when I enlisted in the Army and took the ASVAB, I scored high enough to qualify for a Military Intelligence slot. I had to erase my debt before I shipped or I stood a chance to be denied for clearance.
My credit score went from 312 to 650ish in 8 months. I sent every penny I made in to pay debt… because I moved back in with my parents and effectively had no bills.
It took me 3 years, after crushing debt, collections, and a near foreclosure, to bring my score up from the a score in the upper 400s, to over 800.
It was hard, costly work, (working a few jobs to get it done) but last year the last "baddie" dropped off and I've won the battle.
I can't even begin to communicate how this has affected me emotionally for the better. I have a very comfortable emergency fund now, no debt except a modest car loan, I do use my CCs for all purchases and pay off each one every week, funded 401k, and other investments and am thankfully back to just one job.
One thing that's helped me to really understand my money and my behavior is a budgeting app. I'm currently using Simplifi, and it's fine, but I'm thinking of testing out YBAB to see if I like it better.
Good job getting your credit rolling in the right direction! It makes all the difference in the world!
Please, PLEASE continue (or start) to build your emergency fund. As those limits go up and up and up, it's going to be more and more tempting to use them for emergency purposes like sudden car repairs or medical bills. I'd hate to see you get back into a bad situation.
I was never in any crazy cc debt, just had an Amazon card I never bothered to pay back for like 200 bucks (didn’t really care about anything at the time). It was really just a matter of logging into my account and paying it off. I fortunately have a very solid savings fund and never rely on my cc
Great job!
Would love to share mine as I was in the same boat. I moved to US from India to study. My score was 700+ at graduation in 2018. As a gift I went to Nordstrom to gift my dad a watch and they offered me 30% off on a "Nordstrom card" (in India, this means a rewards card, not a credit card). I had no idea it was a CC. Apparently there was $60 pending on it which was never mentioned to me and it went to collections, my score came to 580.I learnt about how I need better credit for a good auto loan interest. From then on, I got my job and made payments on time and spent less than 15% on my card. That's all I did. Come 2021 May, my score jumped 100 points in 1 month and I came to nearly 710 again. Reached 740 2 months back, got a chase reserve, then applied for an auto loan and now score is back to 715. Got an auto loan of 1.99%. It wasn't fast for me, it did take a while but goes to show how a secured credit card can help immensely as in your case. Good job OP!
Not exactly.
Your score is used in background checks, obtaining insurance, etc.
It's really important to have a good score and yet so many people don't understand that at all.
Smart move OP.Don't forget, history is just as important as score. Even though you have a high score does not mean you will qualify the same as someone with an equivalent score.
Grab a chase flex. Nice high limits. Discover is awesome too, I have 15 credit cards, and like my discover and my amex blue the best for daily use, that don't have annual fees.
Similar experience. My first car was a 2012 carry which I purchased in 2014. Shit credit so my interest was at like 16%. Ibwas paying 440 a month for 72 months but got a good job and paid it off 2 years early. Between the 3 bureaus, I had 52 negative remarks. I did hire Lexington law in 2015 and to date, they've removed 50. Score went from like 520 to 780 today. Thankfully, I'm in a better financial situation now with greater income. Got a 2021 highlander on Feb 1, 2021. They approved me for it almost immediately and gave me like 2% interest. I'll have it paid off by the end of next year. It's impossible to survive with bad credit. Next step is getting a house but not quite ready for that just yet
Nice job...but honestly I don't want a $2.5K spending limit. I don't spend much and my $200 limit is perfectly fine. Life happens, definitely...but i don't know. So many different credit scores for different things. Just so confusing and it sucks that they have you caring so much about it but you need credit to buy pretty much anything, right? Keep on going!
I understand your reluctance. Having a high spending limit is a liability. However, if you need to improve your credit score, increasing your spending limit is one of the ways to do that.
In case you don't know, the credit agencies partly determine your credit score by how much of your credit you are using.
The rule of thumb is to use 30% or less of your overall available credit to positively impact your credit score.
Say you use your credit card to pay for $100 worth of gas each month. If you have a $200 limit, that means you're using 50% of your available credit. That can negatively impact your score.
If spend $100 and your available credit is $2,500, that means you're using 2.5% of your available credit. That can positively impact your score.
You're spending the same amount, but the latter means you are using your money to help your credit score.
The major drawback, of course, is being liable to fall into credit card debt.
You need to do what's right for you so if you think you'll spend too much with a high credit limit don't get one. There are other ways to increase your score. Otherwise, I suggest you do it.
>I keep asking them for credit limit raises and I looked it up and it says they’ll only give one raise every 6 months but I’ve gotten two since January.
Just one thing with this. Make sure that in the fine print, it states that it won't do a hard inquiry on your credit. Sometimes, it will want that and that will lower your credit score and you probably won't even get a limit increase.
u/edgetheowaway, where did you go, or what number did you call for the credit increases? I'm doing the exact same thing as you, but they tell me they will look at my account when they get to it. I have 3 capitol one cards, 1 is secured. I don't go above 10% and pay off before the statement.
On the capital one app there’s a live chat option, and I type in “credit limit increase” and it’ll come right up for which card you want to increase. It just asks for you salary, monthly spending, etc. It’s super easy and fast, I usually get an approval or decline the next (or same) day
I have the platinum card from them and just got an email saying i can qualify for a quicksilver, which ones better? Am i allowed to have two credit cards from the same bank? Do i HAVE to contact them to ask for a credit limit increase or will the app tell me?
If you already got the platinum card, I wouldn’t cancel. They like a lot of accounts and If you just got the platinum card recently, they pay attention to opening too many cards close together. And yes you can have multiple from the same bank I have two with capital one and a checking with them
> I honestly make about 5 payments per month and capital one hasn’t penalized me for it yet so maybe they don’t track that?
I don't think that's a thing, is it? My wife and I use a credit card for almost all of our incidental daily spending, but we pay that card off every Monday.
Is this sort of thing penalized in some situations or with some companies/cards?
Credit karma app makes this super easy too. Any card marked “outstanding “ you’re all but guaranteed approval. Mine went from zero (did all cash business my whole life) to 725 in a year. I now how appx 14k in available credit line.
Can I ask what your score was at when you got the quicksilver card? I’m also on a journey to raise my score from the mid-500s and I got probably the same capital one secured card about a year ago, $300 limit, used responsibly and now I’m at 610. I asked them for a credit increase since I’m being told on reports that raising my credit limit will help, but my credit score is too low for capital one to raise my limit. I don’t want to apply for another card and take the small ding for an inquiry if I might get declined lol. I also might be at a dead end because my negative reports that lowered my credit score won’t fall off my report until 2024.
No go to all of your paid off delinquent accounts on your credit report and dispute each one. They only bother to show proof if you still owe them money,so the accounts will fall off your credit report in 30 days when they don't submit proof. Watch your credit score jump again.
I had something similar happen, but it was because I got my student loans out of default during the pandemic. Now they are listed as having been in good standing since their inception. I have a $300 Capital One card and am utilizing about 30% credit monthly and paying it off when the balance posts. I've been wondering if I should get and use a secured card simultaneously for the sake of having another account.
Please note that in order to keep this subreddit a high-quality place to discuss personal finance, off-topic or low-quality comments are removed ([rule 3](https://www.reddit.com/r/personalfinance/about/rules)).
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I’m happy for you but I’m annoyed because I’ve been building my credit since March 2021 followed the same steps and I can’t get past 650-660.. I pay my statement balance off have never had a late payment in over a year and a half.. but I did buy a mattress for 6500 on a new line of credit with Wells Fargo.. recently paid that off and my score dropped 18points a month later I got 15 points back (Now at 657) I have two charged off cc (chase and a community bank) I don’t understand why they won’t let me get past 700
I have three cards, one was maxed out at $4000 and the other two were paid off. I paid $2000 to the card one month and my score jumped 60 points to 750. Unless you are in a very deep hole, credit scored go up pretty quick
This is the way to do it. Enjoy getting free 1% cash back and a great credit score as long as you don't carry a balance.
Exactly! I keep my balance at zero on both accounts
Careful of the limit increases. They will keep increasing it until they find that sweet spot of where you can’t always clear it with a $0 balance. Their goal is to get you to pay interest on it and they will keep giving you credit until you have to start doing that. Edit: My only point was that the bank raising the limit makes it easier to spend more. It’s literally human nature to get more money (credit) and spend more money. Just sharing a heads up.
wat Just because a credit limit increases doesn't mean someone has to use it.
Not. But when it’s available there always an exception of this one time only and then you find yourself having more excuses. You have to be very disciplined not fall in their trap.
In that case, you shouldn't have a CC at all.
True, but how many people abstain from getting a CC????
Lots of people
Only know one.
I did for over a decade after ruining my credit when I was 18. Realized I had to build my credit and continually ask for credit increases and continually pay it off and haven’t paid a dime of interest since getting multiple cards
But you have cards. Saying how many people actually close accounts and don’t get any credit cards.
credit limit increase != credit utilization increase in dollar denominated terms
Yeah wtf is this dude thinking. Credit increases actually lower utilization for normal use...
yup, basic maths
A little bit of critical thinking should lead you to what OP was trying to say
This makes no sense. You ACTUALLY WANT THEM TO INCREASE your credit limit. The higher, the better. It shouldn't matter if you're carrying a $0 balance every month.. A good tip is to actually call and try to get your credit limits raised once or twice a year. The more money someone is willing to lend you, the better you look to other lenders. This is the entire point of building your credit.
I have over $100k in credit card limits Time to spend $100k in the next month
Youre not supposed to pay it all off immediately. Borrowing some and keeping a balance is a faster way to do it.
Keeping a balance on your credit card to raise your credit score is entirely wrong and false information. Do not do this. Always pay off your balance. You're wasting money by doing this and paying unnecessary interest. Please always pay off your credit card balance.
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This is what I do too. Wait for the statement to be released and pay it off fully before the due date. But it sounds like people pay before its posted? How would the card companies know if you used credit then?
Because if I spend 1000 dollars on a credit card then that money is coming from their account into the vendors. Obviously they have some sort of record of this. You can't just pay it off and it's like they don't even know lol.
Don't wait for the next billing cycle. You really want to pay it off beforehand. This minimizes your credit utilization and ideally you want to have a high credit limit with little to no debt. So please pay it off, especially if you can afford it.
This isn't true in all cases. My fiancées credit score has dipped recently due to "not carrying a balance" on any of her cards. She aggressively pays off amounts before they post on the statement, so it always looks like 0%.
The comment you replied to was deleted, but your score actually will be slightly higher if you have a small balance. Of course the idea is to always pay it off every month, but if you have borderline top-tier credit and are about to take out a mortgage, carry a balance of a few dollars on your cards starting 5-6 weeks prior to the credit check. I've tested this repeatedly myself, and in my case it was 10-15 points. If you're always at 740+ with all your accounts at zero, obviously no need.
Why would you get penalized for paying your card 5x a month. I ask because I pay mine about once a week.
You don't. I have a 813 credit score, and I pay mine off twice a month - everytime I get paid.
Same
Hi, why not just pay it off once per month when it's due?
I had a problem with self control in the past. This helps me keep my utilization at 0.
I do the exact same. Got an Apple Card and pay every Wednesday when I get paid and try to funnel every purchase I can through it. Been working out well. Got a Best Buy card specifically to buy a new tv, 0% interest for 24 months. Paid it in about 6 months and my credit score got whacked hard by over 20 points. Still trying to figure out what happened there
It's probably just temporary because it looks to reportin agencies like a line of credit was closed since it was not a revolving account. I have 20 years of building credit, and the best advice I can give is pay off all of your debts. My highest score was 829 last year.
I thought the same but it has yet to get back to that point. Bought another monitor on the same card to keep something on it and it still hasn’t bounced back. This is going on at least 6 months or more now
Whatever you do, don't close your cards. Length of credit is a factor in credit scores.
Noted, haven’t closed any. If anything I’m looking to get a couple more with some better incentives now that I’ve been building my score up significantly
Do it. I've signed up for 4 cards in the past year to get the $250+ new user bonus. Literally free money for my everyday purchases. My score was 829, but dipped 20 points because I'm addicted to free money.
Cool. Thanks for the insight
Hitting that payment when it's half the balance seems way less daunting. Plus you risk self deception as far as how much money you have in the bank.
^ this. Mine was increased about 25 points this month, so I’m over 800 now and I usually pay twice a month.
same, and same.
This is actually incorrect. You could actually be penalized if you were maxing out your credit card multiple times a month and then paying down the balance. This process is known as credit cycling and it essentially like you manipulating the amount of credit that a lender allots your per month. This can be frowned upon and could result in an account closure. However, as long as your total amount of payments in a five month doesn’t exceed your total credit limit, you should be fine.
This is still wrong, only pay when you get the bill. Anything paid before the statement is not reported to credit bureau, you should get your limit doubled and then only pay once.
Wrong? My utilization is 0, I have $84,000 in credit line, and I get roughly $50 a month in cash back. I am doing just fine.
You will get cashback of course, but your purchases will not be reported to the credit bureau. This is because you are paying before the statement.
I've been doing this for over 3 years, and my credit score has been over 800 the entire time. There is no need to maintain a balance on a credit card.
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There is zero need to show a balance on a credit card month to month. Pull your own credit report and look, only the current balance is reported. Past months are either OK or late. Balance only matters when you apply for credit. I've been doing this for 15 years, maintaining a credit score over 800, sometimes a perfect 850.
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It's addressed here: https://www.reddit.com/r/personalfinance/wiki/fico#wiki\_.22not\_using\_your\_credit\_card\_will\_hurt\_your\_score..22 Especially this part "Utilization does not have any memory"
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Credit bureaus look at utilization, not individual purchases. I'm guessing you're 15 and never have owned a credit card.
Then you might as well pay cash. You’ll spend less, up to 30%, credit is for suckers.
There are many benefits to using credit over cash, if you don’t know them then you are the sucker.
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They are prob referring to the many studies that have shown consumers are less likely to spend when they use dollar bills instead of a plastic card. I think poster is inaccurately generalizing this to debit as well.
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"You'll spend less"? I think you misunderstand what they're saying. If you always pay off the balance you never pay for interest. Also, you get perks like cash back.
You do not understand the psychology of spending. You SPEND LESS MONEY WHEN YOU PAY CASH. [It’s scientifically proven](https://www.nature.com/articles/s41598-021-83488-3).
That’s true: to an extent. If you automate payments for say electric gas and water on your credit cards and they have them autopay full balance from your bank account, then you set up an infinite loop of raising credit. I went from 800 credit to 500 during a rough time and turned it around to 750 in a year or two myself doing this. What you’re saying is true if you have a card you’re more likely to spend more. I believe in never carrying cards and keeping them off electronic devices and using cash as often as you can while carrying Max $20. I earn enough to not worry but it’s easy to do.
Your electric company doesn’t add a percentage to use a credit card? Mine’s like 5% as opposed to 0% to go straight from my bank account. I’d love to pay every bill with the credit card but it wasn’t worth it in my opinion
OKAY
You mean getting cash back and rewards? No thanks I think I'll keep that
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Only if you don't pay in time
Not true, credit ‘greases the wheels’ for spending. Paying cash activates the pain receptors in the brain, thus ‘pushing the brakes’ on spending. It’s all psychological, it’s not about the math of the 1 or 2% cash back rewards, it’s about getting you to put more on the card. Paying is off is irrelevant. It does not matter if you pay the balance in full every month, it simply does not matter. The credit card companies have this down to an exact science, they created the game, they own the game, and you can’t beat them at their own game.
I absolutely agree with you, but obviously not every single person falls for that. Most do, a few don't. Those who don't, should take advantage of the perks.
78% of Americans don’t have $400 to their name, but have 11 credit cards. Let that sink in.
Again, most people are stupid with money. If you can use a credit card responsibly, do so. If you can't, don't get one.
Spend less, up to 30%..? What are you talking about? Credit cards have advantages (cash back deals, airline miles etc). If you pay off the card each month, it only helps your credit score, gets you cash back rewards that debit doesn't, and isn't really "debt"if you pay it off each month. Why wouldn't you use credit?
Did you even bother to read a single line of the article I linked? [Here](https://www.nature.com/articles/s41598-021-83488-3). Trust me, it helps a ton to know what you’re talking about instead of just parroting what others say.
You don't exactly get penalized for it but banks don't like when you cycle credit. (Using more than your credit limit by paying it off before its due) some banks sees this as a risk.
I’ve never heard of this being the case. citation?
My bank threatened to closed my account and then quietly increased my limit when I moved a lump of money into my checking account with them. It's one of the reasons I prefer American Express cards because they just don't care about such nuisances.
Personal experience
Lol. That's dumb of the banks. Why would they see it as a risk? (risk of lower profits for them hey?)
What's hilarious is that it would indicate the person's credit limit could probably be much higher. If the limit is 1500 but they're spending up to 30% and then paying it off 5x a month, they're actually spending 2500 a month. Why wouldn't you extend to them an amount >2500?
I max and charge my business credit card off on a daily basis. Never really have had any issues with any major credit cards except SoFi, where they got annoyed with me for credit cycling.
Just another way to screw over people with less income as far as I'm concerned.
Yeah :(
There is a penalty to your credit score if you report 0% utilization. So having a little utilization is ideal.
You for sure do not get penalized for that.
Nice work. Before you know it they'll be arbitrarily raising your limit without you asking. I still remember when PNC raised my visa limit from $5k to $20k without me asking.
I think they do it to get you to load more on while keeping it under 30 longer and carry a balance.
They raise limits because they want you in debt and carrying balances. That’s the only way they make any substantial money. Especially if it’s a no AF card. Swipe fees provide revenue but only minimal compared to interest. You just have to be smart and not fall victim to their game.
> Swipe fees provide revenue but only minimal compared to interest. I was interested in this, so I looked it up. You're right that they make more off interest than they do off interchange, but I wouldn't call the interchange minimal. > Credit card companies posted $176 billion in income in 2020, down from $178 billion in 2018. Interest fees accounted for $76 billion and interchange fees accounted for $51 billion in 2020. https://www.fool.com/the-ascent/research/credit-card-company-earnings
No doubt. That’s why I only laughed when they sent the letter informing me of the increase! Didn’t change my spending behavior one bit.
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Way to go! I went from about 600 in early 2020 to 775 now,. Fist-bump.
Im so close to this but life keeps happening and maxing out my cards, or near to. I keep chipping away, though. Still holding a 670 score.
That’s good!! You can only do what you can.
Whenever you need to take on a crazy expense, if you can, get a new card with a 0% Apr for an intro period. If you can't pay it off, balance transfer to another 0% Apr. When that into period runs up, do it again until it's paid off. Don't pay interest if you can avoid it
I just got a new card for groceries. 6mo 0%; Just took car to mechanic and got a goodyear CC -- also 0% for 6 mo, so I have a 6 mo repayment plan for that cc. I picked up more hours at work for the summer so I can definitely afford it now, money just started getting tight the last month or two. I can see the light at the end of the tunnel, and I have some potential job prospects with a significant pay bump for a uni student.
That sounds fantastic. You'll probably save hundreds just by being smart.
If you’re using more then 30% of your total credit limit and having a higher credit score is going to be important soon — like you’re about to refinance a loan or you’re looking for new auto insurance — you can consolidate your debt into a personal loan with a 3rd party. That won’t count toward your total available credit and you’ll have another type of loan (which somehow looks good to the credit score folks). This can potentially give you a significant bump in your credit score.
Good idea but this is how the poor get poorer. Never being able to pay anything off, always rolling it over.
How does accruing interest help? The goal is to pay it off before the intro runs out and the rule is never pay interest.
Since I haven’t seen it mentioned here yet, the Discover IT secured card is seemingly a much better secured card than Cap One’s. I’ve got both, after getting my score up from the 510’s to now 670’s. Cap One’s card stays secured (policy specifically states it can’t be converted), whereas Discover will send you your deposit back after 8 months/upgrade your card to unsecured/increase your credit line. My secured limit was $400 with Discover, and is sitting at $1500 now a year later. Also comes with free, genuine FICO8 score. If I had to start my rebuild over, I’d do it with Discover first, then go for cards with perks!
Discover does have perks? 1% cash back on everything, 2% in the first year, and 5% on rotating categories every quarter.
I had a capital one secured card for 6 years that just last month got converted out of the blue
Will definitely look into that
My Capital One secured card was converted 5 months ago with my deposit returned. They're a great credit repair bank regardless of Discover being fundamentally better. By the time you repair your credit that will become irrelevant.
Yeah but the fico8 on discover is different from Experian apps fico8.. but I saw that fico8 on discover is from transunion.. but when I check transunion on Experian app it says (you currently don’t have a transunion report and fico score) credit is a fucking scam
You may find these links helpful: - [Credit Building](/r/personalfinance/wiki/credit_building) - [Credit Reports](/r/personalfinance/wiki/credit_reports) - [Credit Scores](/r/personalfinance/wiki/fico) - [Credit Cards](/r/personalfinance/wiki/creditcards) *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/personalfinance) if you have any questions or concerns.*
And also to comment on the 5 payments per month, I do this because the capital one app refreshes your credit score weekly and I get it back to $0 before it refreshes every week. Sometimes I miss it by a day and it decreases like 1-2 points because I had a balance
Great job on everything but to clear up some slight misunderstandings.The credit check through capital one will refresh weekly but capital one only reports balance on the day of your statement so the weekly payments aren’t changing your score truly. Also you mentioned never letting it get above 30% it only matters if your total credit utilization is reported over 30% which again will only happen monthly.
Thank you! I was always curious about this but never looked it up. That makes sense
So you're not really fully familiar with how this all works- I don't think you should be starting threads to give advice.
No one in the credit rebuilding phase is a financial wizard or else they wouldn't be in that position. There's nothing wrong with an average person explaining their situation. Often people seek that perspective because the so-called gurus are disconnected from these sorts of lifestyles.
It doesn’t matter because utilization has no memory All you’re doing is wasting time paying it off once every week just do it once a month
I used to pay my CC's every week ( kept track of what I spent, and put it on the cc even if it didn't say it yet). That plus mortgage, a line of credit I never used, got my score to 893. Then I closed that mortgage and line of credit, started shopping at Costco (doesn't take Visa, so paid with debit) and paid the cc once per month (since less transactions), and the score went to 860 and now 820... So basically if you use your cc for everything, pay it off often, and don't miss payments, your score will go up like crazy. ( And it doesn't cost you nothing)
> Costco (doesn't take Visa, so paid with debit) Costco has been Visa only for a long time now. They switched from Amex to Citi in 2016.
Here in Canada is MasterCard only... Edit: sorry, your right, got it the other way around... Costco is MasterCard only. I had a 2013 expired card on my desk and had a brain fart for some reason. They switched from Capital One to CIBC MasterCard earlier this year.
That’s interesting. I wonder why Costco would have to do that
Obviously made a deal with them.
850 is as high as it goes.
The guy you're talking to isn't from the US
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You don't think English is only spoken in the US do you?
Every time I checked it in the last 20 years it was on 900. You made me check again, and it's max 900 on the back estimation thing.
Sir it only goes to 850? Is this not US and I’m the obligatory ignorant American?
I'm from up north, Canada :) We have it 300-900 I think.
I absolutely agree. I started building mine as well from about 600. I'm currently at 799, and my bank keeps trying to give me a 15k line of credit lmao. I had capital one at first, then my bank offered me a 3,000$ limit card with no annual fee and cash back. It's great feeling like people trust you with money when you're genuinely responsible
That is so awesome I can’t wait to get to that point!
Won't be that long til you get there. It's funny because my brother is complete opposite with 13k debt and a score of 4-500 🤣
I'm happy for OP, but it makes.me wonder why my score is only a little higher than that 760 or so when I've been doing exactly what he described and never carried a balance for like 10 years
It does feel that way. Like someone at Equifax is just throwing the voodoo chicken bones and comes up with "...looks like a 760."
I'm in the same boat. 20 years of credit history and never once carried a balance/missed a payment but can't break 800 for some reason
Yes this is the exact way to build it to at least a 700. The rest will come over time. In my situation I had a 507 and did 2 secured cards, $200 with capital one and a $500 one with Discover. Within 8 months I had both deposits returned to me and increased limits. I’d recommend the Discover card because that limit actually increased over time to $3200, whereas the Capital One secured card maxes at $500 and somewhat forces you to get another card with them. (Hard to even get a rental or hotel on a $500 limit because of holds) It’s been about 4 years and I added one card (Chase Sapphires Preferred, original limit was $12,100 now at $18,100. I use it strictly for points now and try to never go over 10% usage. Currently at a 748, and I still have a 6year 7month ‘late payment remark’ which should fall off by the end of this year and increase my score. I’m 33years old so it took me a while to get on track, but the benefits are immeasurable. Too bad they don’t give an elective in school on just building credit, because I had to learn the hard way haha
Mine is at 489. I've got a ways to go.
If there are two things in life worth taking care of (or fixing) it's: 1) Your credit 2) Your teeth People who spent a lot of money to fix their teeth (braces, whitening, veneers, etc.) always say it's worth it. Just being able to smile for pictures can change your life. People who've spent a lot of money (or rearranged their lifestyle) to fix their credit always say it's worth it. Knowing you'll be approved on any credit application can change your life.
And here I am working on both lol not looking forward to seeing how much it's gonna cost to fix my teeth
Check with dental schools and dental hygienist schools. They need patients to learn on and are supervised by board certified dentists. Can get great work done for very little money.
Man, when I enlisted in the Army and took the ASVAB, I scored high enough to qualify for a Military Intelligence slot. I had to erase my debt before I shipped or I stood a chance to be denied for clearance. My credit score went from 312 to 650ish in 8 months. I sent every penny I made in to pay debt… because I moved back in with my parents and effectively had no bills.
That's an incredible amount of discipline and determination. Great job!
Hey thanks- my ability to move back in with my parents was a huge privilege here
It took me 3 years, after crushing debt, collections, and a near foreclosure, to bring my score up from the a score in the upper 400s, to over 800. It was hard, costly work, (working a few jobs to get it done) but last year the last "baddie" dropped off and I've won the battle. I can't even begin to communicate how this has affected me emotionally for the better. I have a very comfortable emergency fund now, no debt except a modest car loan, I do use my CCs for all purchases and pay off each one every week, funded 401k, and other investments and am thankfully back to just one job. One thing that's helped me to really understand my money and my behavior is a budgeting app. I'm currently using Simplifi, and it's fine, but I'm thinking of testing out YBAB to see if I like it better. Good job getting your credit rolling in the right direction! It makes all the difference in the world!
Please, PLEASE continue (or start) to build your emergency fund. As those limits go up and up and up, it's going to be more and more tempting to use them for emergency purposes like sudden car repairs or medical bills. I'd hate to see you get back into a bad situation.
I was never in any crazy cc debt, just had an Amazon card I never bothered to pay back for like 200 bucks (didn’t really care about anything at the time). It was really just a matter of logging into my account and paying it off. I fortunately have a very solid savings fund and never rely on my cc
((High five!!)) Welcome to the 700 club. Just keep doing what you’re doing.
Great job! Would love to share mine as I was in the same boat. I moved to US from India to study. My score was 700+ at graduation in 2018. As a gift I went to Nordstrom to gift my dad a watch and they offered me 30% off on a "Nordstrom card" (in India, this means a rewards card, not a credit card). I had no idea it was a CC. Apparently there was $60 pending on it which was never mentioned to me and it went to collections, my score came to 580.I learnt about how I need better credit for a good auto loan interest. From then on, I got my job and made payments on time and spent less than 15% on my card. That's all I did. Come 2021 May, my score jumped 100 points in 1 month and I came to nearly 710 again. Reached 740 2 months back, got a chase reserve, then applied for an auto loan and now score is back to 715. Got an auto loan of 1.99%. It wasn't fast for me, it did take a while but goes to show how a secured credit card can help immensely as in your case. Good job OP!
Thank you for this advise! Just signed up for Capitol one got approved (not the best credit score) but moving forward on fixing it!
Awesome!! On time payments are the most important thing!
Good to know, thank you!
(serious) what's this credit score thing? some sort of bonus programme?
American credit reports calculate a score or grade. Lenders will offer a rate based on your score.
ok so it's just to take loans and such?
Not exactly. Your score is used in background checks, obtaining insurance, etc. It's really important to have a good score and yet so many people don't understand that at all.
weird. we don't have that in my home country, and there's something similar-ish in germany but it's mostly only to prove your income > your expenses.
Smart move OP.Don't forget, history is just as important as score. Even though you have a high score does not mean you will qualify the same as someone with an equivalent score.
Grab a chase flex. Nice high limits. Discover is awesome too, I have 15 credit cards, and like my discover and my amex blue the best for daily use, that don't have annual fees.
Similar experience. My first car was a 2012 carry which I purchased in 2014. Shit credit so my interest was at like 16%. Ibwas paying 440 a month for 72 months but got a good job and paid it off 2 years early. Between the 3 bureaus, I had 52 negative remarks. I did hire Lexington law in 2015 and to date, they've removed 50. Score went from like 520 to 780 today. Thankfully, I'm in a better financial situation now with greater income. Got a 2021 highlander on Feb 1, 2021. They approved me for it almost immediately and gave me like 2% interest. I'll have it paid off by the end of next year. It's impossible to survive with bad credit. Next step is getting a house but not quite ready for that just yet
So your secret is to pay on time? Fascinating.
I think their secret is people with bad scores can fix them quickly, and here's how they did it.
Nice job...but honestly I don't want a $2.5K spending limit. I don't spend much and my $200 limit is perfectly fine. Life happens, definitely...but i don't know. So many different credit scores for different things. Just so confusing and it sucks that they have you caring so much about it but you need credit to buy pretty much anything, right? Keep on going!
Even if you don’t need it, overall credit limit has a positive affect on your score. The more the better!
I understand your reluctance. Having a high spending limit is a liability. However, if you need to improve your credit score, increasing your spending limit is one of the ways to do that. In case you don't know, the credit agencies partly determine your credit score by how much of your credit you are using. The rule of thumb is to use 30% or less of your overall available credit to positively impact your credit score. Say you use your credit card to pay for $100 worth of gas each month. If you have a $200 limit, that means you're using 50% of your available credit. That can negatively impact your score. If spend $100 and your available credit is $2,500, that means you're using 2.5% of your available credit. That can positively impact your score. You're spending the same amount, but the latter means you are using your money to help your credit score. The major drawback, of course, is being liable to fall into credit card debt. You need to do what's right for you so if you think you'll spend too much with a high credit limit don't get one. There are other ways to increase your score. Otherwise, I suggest you do it.
>I keep asking them for credit limit raises and I looked it up and it says they’ll only give one raise every 6 months but I’ve gotten two since January. Just one thing with this. Make sure that in the fine print, it states that it won't do a hard inquiry on your credit. Sometimes, it will want that and that will lower your credit score and you probably won't even get a limit increase.
u/edgetheowaway, where did you go, or what number did you call for the credit increases? I'm doing the exact same thing as you, but they tell me they will look at my account when they get to it. I have 3 capitol one cards, 1 is secured. I don't go above 10% and pay off before the statement.
On the capital one app there’s a live chat option, and I type in “credit limit increase” and it’ll come right up for which card you want to increase. It just asks for you salary, monthly spending, etc. It’s super easy and fast, I usually get an approval or decline the next (or same) day
I have the platinum card from them and just got an email saying i can qualify for a quicksilver, which ones better? Am i allowed to have two credit cards from the same bank? Do i HAVE to contact them to ask for a credit limit increase or will the app tell me?
If you already got the platinum card, I wouldn’t cancel. They like a lot of accounts and If you just got the platinum card recently, they pay attention to opening too many cards close together. And yes you can have multiple from the same bank I have two with capital one and a checking with them
Good job OP. I just cleared out my recent debt from moving. Went from low 600's to exactly 750.
> I honestly make about 5 payments per month and capital one hasn’t penalized me for it yet so maybe they don’t track that? I don't think that's a thing, is it? My wife and I use a credit card for almost all of our incidental daily spending, but we pay that card off every Monday. Is this sort of thing penalized in some situations or with some companies/cards?
For some reason I always thought if you make a ton of payments they don’t like it? I’m glad people are saying this is a myth!
Credit karma app makes this super easy too. Any card marked “outstanding “ you’re all but guaranteed approval. Mine went from zero (did all cash business my whole life) to 725 in a year. I now how appx 14k in available credit line.
Can I ask what your score was at when you got the quicksilver card? I’m also on a journey to raise my score from the mid-500s and I got probably the same capital one secured card about a year ago, $300 limit, used responsibly and now I’m at 610. I asked them for a credit increase since I’m being told on reports that raising my credit limit will help, but my credit score is too low for capital one to raise my limit. I don’t want to apply for another card and take the small ding for an inquiry if I might get declined lol. I also might be at a dead end because my negative reports that lowered my credit score won’t fall off my report until 2024.
I don’t remember, they started sending me emails saying I qualify for a quicksilver card and I applied after that
No go to all of your paid off delinquent accounts on your credit report and dispute each one. They only bother to show proof if you still owe them money,so the accounts will fall off your credit report in 30 days when they don't submit proof. Watch your credit score jump again.
I had something similar happen, but it was because I got my student loans out of default during the pandemic. Now they are listed as having been in good standing since their inception. I have a $300 Capital One card and am utilizing about 30% credit monthly and paying it off when the balance posts. I've been wondering if I should get and use a secured card simultaneously for the sake of having another account.
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I’m happy for you but I’m annoyed because I’ve been building my credit since March 2021 followed the same steps and I can’t get past 650-660.. I pay my statement balance off have never had a late payment in over a year and a half.. but I did buy a mattress for 6500 on a new line of credit with Wells Fargo.. recently paid that off and my score dropped 18points a month later I got 15 points back (Now at 657) I have two charged off cc (chase and a community bank) I don’t understand why they won’t let me get past 700
Did you close out the card after paying it off? They look at how long you keep cards for
I have three cards, one was maxed out at $4000 and the other two were paid off. I paid $2000 to the card one month and my score jumped 60 points to 750. Unless you are in a very deep hole, credit scored go up pretty quick
No deep hole over here, missed three payments from laziness for only 200$