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i have HORRIBLE credit right now. around the low 500s i was thinking that maybe if i use a credit card for my every purchase, then pay the balance in full at the end of the month, so maybe at times be using up to 75% of my available credit then paying the amount in full. how would that effect my credit score?

6 Thoughts on how would this strategy work in improving my credit?
  1. Reply
    October 18, 2011 at 7:50 am

    Paying on time will always help in the long run…but it the effects will be long term and will not provide immediate repair of your credit.

  2. Reply
    October 18, 2011 at 8:06 am

    Its not the amount you charge onto your card, it’s that you are using it period. If you use it just once and pay it off or pay the minimum ON TIME, then you are helping your score. Paying it on time is key. Writing the check the day before it’s due isn’t going to cut it. The credit card companies don’t give you marks for being cute.

  3. Reply
    October 18, 2011 at 8:23 am

    Part of your credit score is based on how much of your available credit is used. Using 75% of your available credit will reduce your score. I have a score in the 800’s and the reason I do is that I have 1) relatively long credit history, 2) no late payments, 3) not more than 25% of available credit used, and 4) no recent inquiries. My usage is actually higher than people with “perfect” credit ratings have but I use my credit cards to pay bills so I can get the rewards from using it. I pay off the cards every month so I do not accrue finance charges.

    It’s good to maintain a good history so using the credit card responsibly is your best bet on improving your score. If you use it, pay on time and don’t use more than 25% of your limit unless you absolutely have to (it shows financial responsibility).

  4. Reply
    October 18, 2011 at 8:58 am

    Your credit is in the low 500’s for a reason. If this reason is collection accounts then nothing you do is going to help your credit score as much as taking care of those.

    If it is just because of a lack of history or a series of late payments, only consistent on-time payments is going to help you.

    As for using 75% of your credit limit, this could be seen as you are maxing out your card and actually backfire. If you want to do this you need to be careful not to go over about 30% of your total credit limits, and no more than about 50% on any single card.

  5. Reply
    October 18, 2011 at 9:32 am

    It MIGHT have a bad effect on your credit score. The 75% you used and payed off will be averaged and show that you used around half or 37.5%. It is best to keep the amount you use on your card below 30% and never over 50%.

  6. Reply
    October 18, 2011 at 10:25 am

    You don’t have to use it for EVERY purchase – just one or two small purchases per month and pay on time, every time. Keep your balance down to 30% of available limit. It is the record of on-time payments that counts – not the amount you charge.

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