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Anonymous
Anonymous asked in Business & FinanceCredit · 1 month ago

What is better for building credit?

I acquired a credit card with only a $300 limit. Every month, I pay the entire balance off to help build my credit after a divorce.

A friend told me it's better to not use the full $300 and pay it off every month since it makes it appear I'm living off of my credit card. Is that true?

Should I, instead, use about $100 each month, still paying it off every month, leaving the other $200? Or, am I doing the right thing all ready?

5 Answers

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  • 1 month ago

    You should use less than $100 and preferably less than $30. When you want to build credit, your should keep your balance below 10% (1/10th) of the limit at all times.

    If you go above 30% or 1/3 of the limit, then you lose some of the credit that you were trying to build.

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  • 1 month ago

    Credit utilization is important here, using the full amount monthly is not preferable.  I'd stick to a third a month, or $100.  

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  • 1 month ago

    You should never use more than half of your credit limit. It will lower your credit score. 

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  • Goerge
    Lv 7
    1 month ago

    While making payments is important and can increase your score it needs to be done responsibly remembering your balance-to-limit ratio. Should your ratio be at 100% in favor of of your limit, like you've been doing, that can negatively impact your score. It's best to keep your purchases at $100(30% B2L) or less and keep your debt paid off as soon as you purchase something. . 

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  • 1 month ago

    You build your credit better if you charge things and pay them off in total at the end of the month. Charge as much as you can pay. It looks good, not bad.

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