|Quote, originally posted by tjl »|
|Paying the whole bill within the grace period (not paying interest) looks as good on the credit report as paying on time but letting a balance carry over (costing interest).|
Charging a little every month and paying the whole bill within the grace period builds up a good payment history on that account without costing any interest.
bingo! i'm glad someone knows this.
you have a $1000 limit on your card... whether you charge and pay off $300 every month, or you charge $25 and pay off $25 every month, it doesn't matter. also, it doesn't matter if you keep it at $1000, as long as it's brought down before you apply for something.
around 30% credit usage is ideal, however the only time it matters is WHEN THE REPORT IS PULLED. if you have no need to apply for anything for six months, keeping a high balance is fine. just pay it down about two months before you plan to apply.
as for obtaining the elusive 850 (or whatever the highest happens to be for the scale being used) it takes at least 30 years of credit history on the report. many people ask me why they don't have an 830 (the highest on our scale, the plus score) because they've NEVER MISSED A PAYMENT. that's NOT the only factor.
paying balances off sooner, whether it's installment or revolving, does not instantly raise your score like many think. it WILL effect the score, just because numbers have changed.
now, about those TIERS. they're not a guarantee. you can go to five lenders in one day and walk out with five different scores. not every lender uses FICO, there's about 25 different scoring models. this is why people shop around, and why one company may offer you a credit card with a $5k limit while another might only offer you $2k. each lender has it's own criteria and will rate you differently.
in the same light, you may go to a lender and receive a 700, someon else may also receive a 700, with a completely different history. you both go to another lender, you get a 720, they get a 670.
credit scoring is VERY complicated, and there's a lot of myths and bad information out there. it makes my job very hard