[Jorsoft]

Paying off your card right away is a bad way to build credit. It builds it slowly (if at all) because all it proves is that you can pay bills on time. Credit card companies and banks are only going to be interested in you if they can make a little money off of the interest on your balance. Any credit counselor will tell you that the best way to raise your credit score is charge a purchase (not a huge one) and then pay it off over a period of 6 months. For example, with my first credit card (also Visa) I bought a nice digital camera + accessories and pay it off over about a 6 month period. Continuing with this cycle will raise your credit score considerably and you'll receive higher limits, lower interest rates, etc.
Too many people are unable to handle credit responsibly and use it to their advantage and that's what leads to debt. Credit can be a valuable tool but only if you know what your'e doing and sadly most young people like me are pretty uneducated about it and not responsible enough to handle it properly.

[Nubius]

Jorsoft - You're only 18 right? So how much experience could you have had with credit at this point? Did you actually go see a credit counselor and obviously you do have a credit card and all so I'm asking in all seriousness, not saying it like "oh what does he know" so dont think that.

However, some credit is better than no credit. There is nothing wrong with making small purchases and paying it off over time. That's basically what my grandma did and by this point in her life her credit limit is freakin massive.

You are right about them wanting to make money off you, however, regardless if it's small payments, on time is on time and it still shows that you get the bills paid and when going for a house or something like that it'll matter.

[molsen]

ummm jorsoft.... that's a pretty retarded thing to do IMO. when you don't pay it off on time, you owe INTEREST. you should know this means you end up paying more back than what you actually paid in the first place. I don't know about you, but I'd rather pay off my credit card quickly for the amount I actually paid rather than paying more just to get a slightly better credit score. Paying your card off in time DOES build your credit score. If your credit counselor told you otherwise, it's time to find a new one.

I'll have you know that I've always paid my credit card off within a week or two of making purchases on it. I've never paid a dime in interest, and I've gone from a $800 limit to a $2000 limit and have a credit score of 780. This within 2 1/2 years.

[mikesgroovin]

Originally posted by molsen
Paying your card off in time DOES build your credit score.

Exactly, this is the reason why it's extremely common to see people raising their credit scores by 30 to 40 points per year just by having an American Express card. Your limit with AMEX is more or less non-exsistent, however you MUST pay off the entire balance at the end of each month. Having one of these cards and paying the balance off in full every month is very effective.

Having 1 Amex card or one other credit card (and using it using the method HAVOC2k5 described) is the best way to build credit the right way.

[molsen]

i'm doing that with a VISA, but yes AMEX works that way

[Jorsoft]

Originally posted by Nubius
Jorsoft - You're only 18 right? So how much experience could you have had with credit at this point?

I took two personal finance courses at school both of which had credit counselors as guest speakers. One I even took out to lunch because I really wanted to learn about credit, etc. and I found out a lot. I also did pretty much the same thing with my two bosses at work, both of whom have credit limits not to be believed, so I consider myself well informed. I got the same info from these counselors that people pay a lot of money to hear for basically nothing.

Originally posted by molsen
ummm jorsoft.... that's a pretty retarded thing to do IMO. when you don't pay it off on time, you owe INTEREST.

:rolleyes: Yes molsen I know what "INTEREST" is I'm not an idiot. I never said that paying it off over time doesn't cost you a little extra or that it doesn't raise your credit rating. You, for example, have never paid interest and have a credit rating of 780, which is darn good. But after 2.5 years your limit is only $2000? I've had my Visa for like 4 months and I just got a limit increase to $1000; my buddy did the same thing and he got the increase to $1000 after like 6 months. Total amount paid in interest? About $6 (13% apr). The lady over the phone also said it's pretty easy for me to get to a $2000 limit after another 6-8mos or so. So maybe might credit score isn't quite as high as yours, that's not all that matters. Creditors see me as a good risk so I will have higher credit limits and lower interest rates.

[molsen]

yea but how much do i use my credit card? ive never put more than $400 on it at a time, theres no need for a higher limit. the only thing I need credit for is for a higher rating so I can get good rates for a car or house, etc.

it seems we have different uses for credit, which makes the argument kind of silly i guess

[HAVOC]

Jorsoft03 _ Disagree with your post. IMO

For example, with my first credit card (also Visa) I bought a nice digital camera + accessories and pay it off over about a 6 month period. Continuing with this cycle will raise your credit score considerably and you'll receive higher limits, lower interest rates, etc.

Your Credit Score or FICO Score is based on Risky Levels. OR "How likely you are going to pay a loan back and when." The fact is that the higher your score is the lower your interest rates will be in most cases. "FORGET CREDIT CARDS - Think about getting a MORGAGE to buy a home. You want a dirty low interest rate...

Paying monthly minimums and retaining a high balance is a sure way to lower your credit score. Conituing the cycle you described is also a sure way to lower your credit scores... Banks and lending institutions check credit scores mainly to find out what the risk is in lending you money. If your score is high they will be more willing to lend you more money and at lower interest rates. The lower your score is, the less money and higher interest rates. Paying minimum payments is not responsible C/C usage. It proves that you don't manage money well and you spend more then you can afford.

TO MAINTAIN HIGH CREDIT SCORES
* Pay your bills on time. Delinquent payments can have a major negative impact on your score and the longer you pay your bills on time, the better your score. For example, someone with an average credit rating of 707 can raise their score by as much as 20 points by paying all their bills on time for one month.

* Keep balances low on credit cards. High outstanding debt can affect your score. Maxing out your credit cards could lower your average score by as much as 70 points.

* Don't open a number of new credit cards that you don't need. New accounts will lower your average account age, which could actually lower your score by up to 10 points.

* Have credit cards - but manage them responsibly. In general, having credit cards and installment loans (and making timely payments) will raise your score. Someone with no credit cards, for example, tends to be higher risk than someone who has managed credit cards responsibly.

* Closing an account doesn't make it go away. A closed account will still show up on your credit report and may be factored into the score.

[NewCents05]

debit cards blow i went .13 cents over what i had and they charged me 60bucks!!

[tajahem]

Credit card companies may make some money off of you, but you arenÂ’t their only source of income. They charge the business you purchase from a percentage of the transaction. Using your card makes them money regardless of whether you pay interest or not.

Couple that with the fact that most businesses aren't going to take any kind of loss in profit lightly and you have... you guessed it... HIGHER PRICES.

As an example the gas station down the road states right on its gas pumps that the prices on the sign are for cash or checks, and the credit card transactions will cost more.