Question- Building Credit

[toystory1130]

Quick question- my DS college student is trying to build his credit. He does have a credit card (no balance) -if he pays it off before he receives his bill does he still build credit? Or should he wait to pay it off when the bill comes in? TIA

 

[tvguy]

Quick question- my DS college student is trying to build his credit. He does have a credit card (no balance) -if he pays it off before he receives his bill does he still build credit? Or should he wait to pay it off when the bill comes in? TIA

Yes he does. DD is 24 and got a college credit card to build her credit. She always charges something then pays it off the same day. Her credit limit has gone from $1,000 to $5,000 in the past 6 years, and that credit limit is more than she has ever made in a year since she has never worked more than part time while a full time student.

 

[TippeeCanoe]

As long as he pays the minimum amount by the pay by date he is building credit.

 

[barkley]

we consistently pay our balances in full each month before they are due and have so for years-we've got a great score (and it's obscene how much we are constantly offered in increased lines of credit but I guess the companies make their money off the merchant fees since we haven't paid interest in years and all of our cards are no fee to us to have)-so I would say 'yes' if he pays it in full before the due date he will build credit.

 

[gofordrew]

He can pay it off in full before the bill even comes. He can pay it off each week if he wants. The main thing is that he is making payments on time and keep that same account open. Never close your oldest credit card account, as average age of credit is a big part of your credit score.

 

[DisneyMandC]

Yup, I pay my credit card every Friday. As PP said, just don't ever let him close it. The only "ding" on my credit report is that I have a low credit history since I am still in my mid-20s. That being said, my score is still excellent. I've thought about closing the card because it's not a cash rewards card and I'd rather have that, but I do get points from it and it's not worth the hit on my credit report to close it.

 

[davper]

As long as he pays the minimum amount by the pay by date he is building GOOD credit.

Fixed

You build bad credit if you are late or miss payment. Also bad credit if you keep your utilization too high.

 

[TippeeCanoe]

Fixed

You build bad credit if you are late or miss payment. Also bad credit if you keep your utilization too high.

There was no need to add words to my quote. It was perfectly understandable as is.

 

[davper]

If you decide you do not want a credit card, here is an alternative.

1. Deposits $1000 in his checking account
2. Buys a 1 year CD with the $1000 in his checking account
3. Takes out a secure loan for $1000 against the CD just purchased for a 1 year time period
4. Deposits the $1000 back into his Checking and doesn't touch it
5. Pays the monthly note with the $1000 in his checking. The last payment will require a little more due to interest.
6. Note is paid, CD matures and is paid pack to with interest.

Shortly after doing this, my wife qualified for a CC with a $19,000 limit.