Discussions

I'm working on getting my credit score better. I just applied for and got a credit card, and I was wondering. Is it better to buy a few things and pay off the balance at the end of the month, or should I carry a small balance every month? Which is better to increase your credit rating?

Paying it off each month gets you a better credit rating or else you are paying interest on top off the balance that is carried over to another month

I''ve heard to keep the balance at less than 10% of your available credit by statement time.  
 
For example, say that you have a credit limit of $1000 and your statement ends on the 10th of the month, with the new transactions starting on the 11th. Make sure that your balance is less than $100 on your statements.  
 
Just remember that if you use your CC, keep that amount in your bank account to be able to pay off your CC every month. CC interest is very high, let''s say 20%. To keep it simple, if you borrow and buy something for $1000, at 20% interest, in a year, that item is now "worth" $1200.  
 
Good luck.  
 
Edited by ZachT, 2017-06-21 08:15:53

Keep a small balance. If you pay it off every month, the CC company has nothing to report to the credit bureau. They only make reports and get you a credit rating if you carry a balance from one month to the next.  
 
Also, don't bother with the "prepaid" cards where you put a cash deposit down and that is your credit limit. Because you are effectively spending your own money, nothing is reported to the credit bureau about those cards.  
 
Good luck!

I was told by the bank to get a 3rd party card. I got a Canadian Tire card. Paid off every month. This helped my credit. Did that for a year and was able to get my mortgage from the bank. Canadian Tire did report every 3 months that I maintained a zero balance.

Pay it off. Don't keep a balance. That could be the start of all your trouble again.

Do not carry a balance. That does nothing but cost you money and has zero impact on your credit rating.

Pay off balance every month. It is crucial that you pay the amount owing on time, every time.  
It is wise to have something on your credit card at all times, but pay it off as soon as it is posted. To make it more clear, lets say you bought $50 of groceries on your credit card. It will be "posted" in about 1 week. You can check on the credit card company website when you log into your account.  
Once the transaction has been posted, pay it off. Then buy something else in your credit card. Repeat process.  
That is what I did. Got a $5000 increase on my credit card in 1 yr and have an awesome credit rating now.  
Hope that helps.

AndreaD. said "Pay off balance every month. It is crucial that you pay the amount owing on time, every time.   It is wise to have something on your credit card at all times, but pay it off as soon as it is posted. To make it more clear, lets say you bought $50 of groceries on your credit card. It will be "posted" in about 1 week. You can check on the credit card company website when you log into your account.   Once the transaction has been posted, pay it off. Then buy something else in your credit card. Repeat process.   That is what I did. Got a $5000 increase on my credit card in 1 yr and have an awesome credit rating now.   Hope that helps. "

Andrea is right, never ever never ever carry a balance. carrying a balance means you can''t pay your bill!  
 
She is right, purposely buy stuff on credit (when you have the money in your bank account. Go home, pay it off through online banking. ALWAYS pay by the due date.  
 
Something that built our credit really fast: If you have car insurance, put it on monthly payment and get MPI to charge your credit card each month. Pay that as soon as you see it post. This way you are paying a bill that you needed to anyway and building credit. We built our credit from not great to qualifying for a mortgage in 2 years that way.  
 
Also, if you get a "secured" card, paying that off every month does improve your credit rating. Secured is in your name and you get a bill each month, as opposed to a "prepaid" card that is generic and is more like a gift card.  
 
Oh, and...  
 
Never! ever! Never carry a balance!  
 
Edited by PuddleJumper, 2017-06-21 23:38:42