best credit card to increase credit rating?
Hi,
I've heard about good habits to increase my credit rating. I'm just wondering if there is a specific credit card to have to build good credit - i.e. they frequently report to the credit agencies etc… Is Bank of America or chase freedom any good as these are the only 2 cards I have?
Thank you very much for your help.
It used to be that Capital One didn't report your full credit line amount to the credit reporting agencies. Instead they would report your balance as your available credit, so it would look like you had utilized 100% of your line of credit through them, which hurt your FICO score. However, Capital One doesn't do that any more.
So all credit cards are about equally good for building your credit; the important thing is to use them properly. My strategy is to funnel all/most of my normal spending through rewards credit cards and then pay the balance in full and on time every month. That way I build a clean credit history, avoid interest, and earn rewards.
If you're interested in knowing which rewards card will pay you the most for your normal spending profile, you can use this rewards calculator:
http://www.creditcardtuneup.com/
If you're interested in knowing the details of how your FICO score is calculated, see the June 30th posting at http://www.uthunk.com/ .
Comments
As far as building credit, they are all the same.
Score is based on the following;
1. Payment history 35%
2. Time in bureau 15%
3. Type of credit 10%
4. New credit 10%
5. Debt to credit ratio 30%
For the second poster, debt to income doe's not factor into your credit score, only debt to credit. The credit bureaus have no idea how much money you make.
References :
Finance Manager for over 7-years.
If you want to have a good credit rating, the most important thing is not how many cards you have, but paying them on time. If you make say $40,000 per year and the amount of possible credit line on your cards are $30,000, then the credit agencies take that into consideration when determining your credit rating. Have two or three cards, use them carefully, never miss a payment, and try to pay the credit cards off in two or three payments at the most.
References :
It used to be that Capital One didn't report your full credit line amount to the credit reporting agencies. Instead they would report your balance as your available credit, so it would look like you had utilized 100% of your line of credit through them, which hurt your FICO score. However, Capital One doesn't do that any more.
So all credit cards are about equally good for building your credit; the important thing is to use them properly. My strategy is to funnel all/most of my normal spending through rewards credit cards and then pay the balance in full and on time every month. That way I build a clean credit history, avoid interest, and earn rewards.
If you're interested in knowing which rewards card will pay you the most for your normal spending profile, you can use this rewards calculator:
http://www.creditcardtuneup.com/
If you're interested in knowing the details of how your FICO score is calculated, see the June 30th posting at http://www.uthunk.com/ .
References :
http://www.uthunk.com/
The following 5 critical factors affect your credit score in a major way. By knowing these you can keep a check on them and make your credit score a healthy one.
1. Re-payment history
This factor carries the highest weight in your credit report. How steadfast are you in repaying your loans, makes your credit report shine. Experts claim that this factor alone accounts for 35% of points in your credit score. So, if you falter on repayment front it is sure to be reflected poorly on your credit score.
2. Outstanding debt
The next comes your debt burden. How much you owe is a factor that according to experts carries about 30% weight in your credit score. This is
30% is based upon outstanding debt. To get a better score it is advised that you keep your outstanding debt to a minimum.
3. Length of your established credit history
The time for which you have a credit history also matters. The longer your established credit history the more credit reporting agencies believe in you. This could be simply because of the fact that they have more data to analyze your financial position. Experts give it a 15% weight in determining your credit score.
4. The state of your financial accounts
How much money do you have in your bank account, your income levels, your house, car, your assets etc. comes the next. A healthy bank account reflects a healthy credit score. Experts find that credit reporting agencies give this factor 10% weight while determining your credit score. Read more from: http://www.credit-card-gallery.com/article/204,5_critical_factors_affecting_your_credit_score
References :
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