Best way to build credit
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What is the best way to build credit – pay my credit cards before the end of the month, or wait for the statements and only then pay them?
And another question. Is it best to keep balance on the credit card, or pay it in full every month?
tnx
Re: Building good credit
Always wait for the statement. Always pay in full.
Paying the credit card company before they send the statement is actually not a good idea, because it won’t build any credit for you.
Credit card companies usually report every month to the credit bureaus. Each report includes your current balance, and how you’ve paid the previous month’s balance.
Paying before you get the statement in the mail will cause the statement to have a zero balance, and a $0 is what will show on your credit report. This has the same effect as not using the card, which doesn’t build any credit history. If you want to build good credit, you need to show that you actually use credit.
Carrying balance, on the other hand doesn’t help either. Having a balance of $1 is as good as $1,000, but you pay unnecessary interest payments.&
The best way to build credit is to use the card, wait for the statements and pay them in full every month before the due date (1 day or 15 days before the due date is exactly the same, but allow at least 7 days for mailed checks).
P.S. When you pay before you get the statement, you miss out on one of the benefits of using a credit card — the interest free grace period between the purchase date and the statement due date.
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