Submitted by BraveCheesecake6090 t3_zxayvm in personalfinance
certifiedintelligent t1_j1zclwa wrote
Reply to comment by BraveCheesecake6090 in How to incorporate credit into budget? by BraveCheesecake6090
Using the card more does not build more credit. Don’t fill up the card, do pay it off every month and your credit will slowly rise.
BraveCheesecake6090 OP t1_j1zd4ga wrote
Right! I just meant I want to make sure I’m keeping the card active every month rather than treating it as a “last option” and ending up with holes and dry spells in my credit history
FleetAdmiralFader t1_j1zgf8c wrote
From a credit risk perspective it is best to use <3% of your total credit line at any time. For you with only one card with a $3k limit this means $90. So if you consistently have a balance above that, let's say $200 you will get slightly dinged for "high utilization".
Your goal should be to always pay off the card fully each month and keep the card active. Active does not require a purchase every month but rather once a year or so, whatever prevents the card from being closed by the issuer.
You should put a Netflix subscription or something similar on the card and then use it however much or little as you want as long as you pay the balance each month.
certifiedintelligent t1_j1zjci4 wrote
Holes and dry spells aren’t a thing so long as the account is open. I have 14 credit cards (sign up bonus collecting), I use 1 on a regular basis, maybe 3 in a given month (depends on perks and types of purchases). The rest rarely if ever get used but consistently report “paid as agreed” to the credit agencies every month.
IF you can be responsible with it and pay it off every month, the credit card should be your first choice to pay for things because of the protection and perks (if any). For example, if someone skims your debit card and steals from your bank account, it’s a pain to fix that takes time. If someone skims your credit card and racks up false charges, you simply tell the card company you didn’t make those purchases and you don’t lose a cent.
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