Credit Score Question
 

Say someone with bad/no credit got a (secured/guaranteed) card with a small limit. They want to build a good credit score to be able to get a mortgage a some point.

Would it be better to pay the balance off promptly each month? Or better to pay most of it off and keep say 10% on?

I just caught the end of some BS on Fox while I was flicking thru trying to find a non shit news channel the guy was saying don't pay it all off?

on a secured card it really doesn't matter at all. The entire point of this is to use it like 6-8mnths and get your first REAL card.

I opened up a $500 card and left it open for 2 years but by time that 2 years came around I had over $10k in credit available in other places...

Get that secured card and make sure its one that reports to the 3 CC places monthly... then wait 6-12mnths before even APPLYING for a real card and 2 years before you bother going for a mortgage. This isn't a fast thing but even 2-3 years after a BANKRUPTCY you can have real good credit...

I never carry a balance, I never pay interest, and I have a great credit score.
I think you should only carry a balance on a car loan or 1st. home mortgage. If you have to pay monthly payments on a TV you need to get a better job.

What farkedup said.... and then, yes... on the "real" cards never pay them in full. Keep about 10% on each one, but be prepared to pay them completely off after going in for the mortgage. And, don't have a car payment when you go in for the mortgage either (or expect to have to pay it completely off).

Since those parts were covered. A simple way to help boost your score a bit faster than a secured card is by using your local bank or credit union. You will need a bit of cash, I personally would go for anywhere between 5 and 10k worth. Do not fret it will be available again in moments. Then talk to your bank and tell them you want to open a secured line of credit backed a CD. What they have you do is deposit that cash, which is then put into an interest bearing CD. They then use that CD as collateral and instantly give you a secured line of credit for the same amount that you deposited. Now just proceed to use as much of it as you need to (though I say only use up to 25% of it at any one time) and make your payments back to the bank. Of course pay back way more than the minimum amount due, yet just keep floating a small amount at a minimum.

Assuming you never pay late this will start to put on time payments on your credit score every month and for as long as you keep this line of credit open. It will also show an available credit balance that is as much as you deposited which is often a shit load more than any secured card will be giving you. Lastly is even if the bank wants to anal rape you on the interest rate which is off set some by the CD interest rate, it still will be greatly lower than any secured credit card rate.

Now lenders do want to see more available credit than credit in use. That is why I say do not use more than 25% of it at any one time. So if you could deposit 10k, and did use 2,500.00 it still would show 7,500.00 of available credit on your report with just the 2,500.00 in use. That alone helps boost the FICO score.

Keep this up with your bank for a bit and specially if its a more local style bank or credit union where they actually have customer service and know their customers. They will soon get you hooked up with one of their own cards or lines of credit without it being secured.

So true.

some good advice thanks everyone

>> Then talk to your bank and tell them you want to open a secured line of credit backed a CD.

Is a home equity loan considered secured credit they would give to someone with a Zero credit score?

I would recommend a Credit Union over a bank.
:2 cents:

:thumbsup Any day of the week !

Start with a secured card from your bank. Pay in full every month. Carrying a balance does nothing for your credit, it will actually lower your score because you have less available credit. Graduate to a real credit card when your bank offers, and continue to pay every month. Payment history is the biggest factor in your credit score.

The old secured loan trick might help, get a small secured loan for 6 months. Pay ontime and you will see a small increase. It will cost you the interest, but gain a few points. 12 month loan would be better. Dont pay it off early, you want the payment history.

Paying your home loan on time will help the most. You dont want to go overboard requesting credit to try and gain credit. Dont get more than 1 or 2 credit cards. Dont get credit cards from places like Target or Best buy. Dont carry a balance, it doesnt raise your score to be paying interest. Its just based on your on time payments, available credit, length of account, etc

Lastly, make sure you try to remove anything negative from your credit report. Go to each of the 3 credit credit bureaus online, buy a $9 report from each, then dispute anything you see wrong. Improving your credit will take at least 12 months of on time payments.