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I know the basics of how the credit scoring system works (read the entry on wikipedia).
I got a credit card about a year ago to build credit. Only 1k limit but I charge like 50$/month to the card and then pay it off like two weeks later. I've done this like 3-4 times now. Most of the time it has a zero balance.
How much will this build my credit.
Also if I did a credit check what would my credit look like? I've never missed a payment but I have no revolving balance (negative) and the credit history is small probably like a year.
Would my credit be bad, average or good?
I am only building credit to buy a home and just to have good credit when someone checks (like to rent an apartment or whatever).
I'm not sure what the score would be. But when my husband had only a couple years of credit history, he had a hard time getting a car loan. Every place declined him siting reason as 'insufficient credit history.'
I know the basics of how the credit scoring system works (read the entry on wikipedia).
I got a credit card about a year ago to build credit. Only 1k limit but I charge like 50$/month to the card and then pay it off like two weeks later. I've done this like 3-4 times now. Most of the time it has a zero balance.
How much will this build my credit.
Also if I did a credit check what would my credit look like? I've never missed a payment but I have no revolving balance (negative) and the credit history is small probably like a year.
Would my credit be bad, average or good?
I am only building credit to buy a home and just to have good credit when someone checks (like to rent an apartment or whatever).
I would say that since you have a limited history of credit, your credit score would be average at best, that's if you aren't delinquent on any payments. As you get older and start taking out loans for major purchases such as a car, and make payments consistently, then you may see your credit rise.
Or, you could always ask for an increase in your credit limit on the card that you have now; that might bump up your score.
You should put more money on the card a few times and then take a couple of months to pay it off. It sucks to pay the interest but that will help to build the credit. Maybe put some groceries on there and make sure you keep the cash to pay it. also you could try to get a small personal loan (although I dont know if you will be able to in this economy).
I had a friend with no credit except the typical cell phone stuff. He tried to buy his mom's house for 75k (it was worth 200k), had the income but got denied because of insufficient credit.
You should put more money on the card a few times and then take a couple of months to pay it off. .
I don't know about that. You do not need to carry a balance to build credit! I have never carried a balance ever and have the top tier credit score. You should, however, keep charging and paying off your card.
We filed bankruptcy about three years ago. Since then we have been trying to rebuild our credit. We each got a capital one credit card and used it and paid it off. It wasnt doing much. DH got an offer in the mail from capital one for a personal loan and he tried it. They gave us $7500. We cashed the check and immediately paid 4K back on it. Then for the next couple months we made large payments on it until the balance got to where the monthly payment amount would pay it off in about six months. Next month is the final payment. We didn't spend any of the money either. We put it in savings and we draw from it to make the payments. Anyway, it helped our credit scores a lot. We are both back above 650 now. It's not great but it's getting there. We've been approved for a home loan and will hopefully buy another house sometime this year.
If you're trying to build credit, I'd also suggest a personal loan. I did this when I was in my 20s. I took out a small ($1500) unsecured personal loan and just paid it back over a short term (don't remember how long, but I think it was around a year). That helped my credit score a lot.
I disagree about the balance... no need at all to carry one.
Like stan4, I never, ever carry a balance and have scores over 800. Carrying a balance is a huge waste of money!
Factors used to compute FICO score:
payment history 35%
amount you owe 30%
credit history length 15%
new credit 10%
types of credit 10%
In college I had a credit card, after 3 years of having very minimal purchases (like your example) my score was above 750 and I was 22. Never had an issue after that. I'd say just keep doing what you are doing and over the next 18 months or so you should see an increase.
Maybe try using it some more, if you are worried about the interest just prepay onto the card and use it like a debit card.
Also there are two types of credit, revolving (credit card) and reoccurring (car loan/student loan). It might be good to have a mix of both. But I never had reoccurring payment until after I graduated because I never had a car loan, so it's not needed.
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