coffeegrl
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Joined: Dec 25, 2010 0:33:29 GMT -5
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Post by coffeegrl on Dec 31, 2014 12:59:28 GMT -5
Hello and Happy New Year's Eve to everyone!
I have a question regarding the responsible use of credit cards to help rebuild credit. This year, I really want to focus on getting my financial house back in order, including boosting my credit score. I know it will take time and won't happen overnight. I am going to start using my credit card for only purchasing gas. I know how much I spend within a dollar or two every week on gas, so I can budget for that to pay it off and not let it sit on my card and accrue interest. My question is in the best way to pay it off every month.
Does it make a difference in boosting your credit score if you:
A. Pay off the charge as soon as it posts to your account?
OR
B. Wait until the cycle closes and then pay it off after you receive the official statement?
Does it matter in terms of rebuilding credit if you pay things off immediately or wait for the statement? Or does it not make a difference as long as its paid in full each month?
Thank you in advance!
Coffeegrl
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Deleted
Joined: Mar 29, 2024 3:52:44 GMT -5
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Post by Deleted on Dec 31, 2014 13:01:22 GMT -5
I don't think it matters. Just pay it off before the due date.
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ArchietheDragon
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Post by ArchietheDragon on Dec 31, 2014 13:02:09 GMT -5
choosing A or B will not effect your credit. For simplicity sake, paying one a month is easier.
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justme
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Post by justme on Dec 31, 2014 13:04:05 GMT -5
I think you need to wait until it posts on the statement. On every credit report I've pulled the reported amount equaled my statement balance. If they always reported a 0 statement balance it looks like you aren't using it.
Some credit cards may report differently though.
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Happy prose
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Post by Happy prose on Dec 31, 2014 13:11:20 GMT -5
Can you think of something other tan gas? Your cell phone maybe? In my area, gas is more expensive on credit.
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Angel!
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Post by Angel! on Dec 31, 2014 13:48:42 GMT -5
I think if you pay it off as soon as the charge posts, then when they report to the credit report companies it will always show as a zero balance.
I would wait until the statement is prepared and pay off the entire balance.
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coffeegrl
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Joined: Dec 25, 2010 0:33:29 GMT -5
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Post by coffeegrl on Dec 31, 2014 15:28:01 GMT -5
Thank you to those who have responded. I will be waiting until I actually have a statement each month before paying the cc off, rather than as soon as it posts. What Angel and JustMe said makes sense, in terms of the balance being reported to credit agencies.
HappyProse, the reason I chose gas is because all of the stations in my area are either pay-at-the-pump or pre-pay inside now. There is no fill your tank then go in to pay anymore. And no matter how you pay, the price is the same, at least at the stations I use. Since I have been using a card to pay for gas for several years now because of this, I figured this would be one of the easiest things to start with.
Again, thanks to all who responded.
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Tiny
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Post by Tiny on Jan 2, 2015 13:53:57 GMT -5
I just wanted to say that I think what balance shows on your credit report depends on WHEN the credit card company reports it's data to the credit report companies. there's no gaurentee the CC will report the totals on the account's close date (when the bill is generated). It's a snapshot in time. It's about the Utilization (how much balance on the card to the cards limit - in addition to how much balance(s) across all your cards to all your credit limits) that effects your Credit Score. It doesn't really care when you pay the bill as long as you make atleast the minimum payment each month AND it isn't late. And a balance showing on your credit report mostly effects the 'utilization' part of your credit score. The Credit Report doesn't really care if you charge stuff or not during the month. It cares about the 'utilization' how much debt you have to credit limit on a card (and then the overall debt you have compared to the over all credit limits you have). It also cares about late payments - and maybe some of those other fees like overlimit charges (but at that point your utilization is 100% which is a big 'ding'on your score). I guess to really answer the OPs question is if the Utilization part of her score is what's bringing her score down. We'd need to know if she's currently carrying a balance (paying down the balance each month) and wanting to use the card for gas (which she'd pay in full along with her regularly scheduled payment to pay down the bigger balance on the card). OR if she's got a card with a zero balance that she wants to use AND pay in full each month. In the latter case (card starting out with a zero balance) I don't think it really matters at all when charges get paid off (day after they were incurred OR after the close date when the 'bill' is generated) - as long as the 'balance' is paid in full by the Due Date - it's all good. Ok, maybe it does matter - if the CC has a 500 dollar limit and she's charging $300-$400 in gas a month... that's a bad 'utilization' - she'd be better off paying the credit card after every fill up or two. ...
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Tiny
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Post by Tiny on Jan 2, 2015 14:07:41 GMT -5
One more thing... if you start using a card with a zero balance, and you pay it in full each month, BUT routinely USE the card - there's a good chance going forward that you will ALWAYS have a 'balance' on the card. Because say you may make a $30.00 charge the day after your 'close date' and then pay the 'amount due' a few days later - you'll still have a balance of $30.00 (which isn't incurring interest and doesn't need to be paid until after the next close date.) The only way I get to a zero balance on my 'everyday' credit card(s) is to literally stop using the card until after the next close date for that card. I've always got a balance on the whatever card I'm using as my 'day to day' one. I always pay the balance in full each month - so I never pay interest - but it's always got a balance.
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cronewitch
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Post by cronewitch on Jan 2, 2015 14:42:50 GMT -5
Long term it doesn't matter it only matters the day that you need more credit. I sometimes prepay my credit card and might have a negative balance and my credit is fine. On a day you apply for credit you should owe a tiny bit so they can do a ratio. I applied for a refinance once and owed 2.27 on a credit card the lender said it was good. So if you charge a tank say every 10 days and pay once or twice a month you will pretty much always owe a tank or two worth. If you had a limit of $300 you wouldn't want to owe more than $100 so paying 2-3 times a month would keep it low. But if you owe zero for a year then charge $10 just before applying for credit it would be just as good.
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Deleted
Joined: Mar 29, 2024 3:52:44 GMT -5
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Post by Deleted on Jan 2, 2015 14:45:10 GMT -5
I just wanted to say that I think what balance shows on your credit report depends on WHEN the credit card company reports it's data to the credit report companies. there's no gaurentee the CC will report the totals on the account's close date (when the bill is generated). It's a snapshot in time. Mine all seem to report mid-cycle.
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