I do not recommend carrying any sort of balance. It does not build your credit history any faster than paying it in full each month.mjmjr25 wrote: If your intent is to just build "some" credit - then pay it off in full each time you get a bill. You'll build "some" credit and not pay any fees.
If your intent is to get out of bad credit, or build credit "faster" - then pay the minimum each month. You will pay a percent of the remaining balance, which will show up as a finance charge on your next bill. Just keep up with the minimum and you'll keep building up credit - the longer you have it, the better of course. Just be sure to not miss any payments. Maybe every now and then pay off the entire balance to keep things manageable and in perspective. Then start up again by paying the minimum due each time.
If you look at a credit report, there's no indication that shows a person is carrying a balance. It shows the credit limit, on-time history of payment, when account was opened.
You're entitled to a free credit report on an annual basis from each of the three major vendors (experian, transunion, equifax). Some people recommend getting 1 from an agency every 4 months (e.g, equifax in Jan, TransUnion in May, experian in Sept, and then equifax again in Jan of the following year).
You can get a free FICO score by signing up at myfico.com and cancelling before the 15 days are up (otherwise, you're charged a monthly fee).
Here are some factors that go into a FICO score:
What the FICO Score Measures
The five main categories of information that the FICO score evaluates, along with their approximate weightings, are:
Payment history (35%)-Aside from extreme events, like bankruptcy or tax liens, late payments have the greatest negative impact on your score. Recency and frequency of late payments count too. In other words, even though a 60-day late payment is not as risky as a 90-day late payment in and of itself, a 60-day late payment made just a month ago will count more than a 90-day late payment from five years ago.
Outstanding balances (30%)-Evaluation of your total balances in relation to your total available credit on revolving accounts is one of the most important factors in the FICO score. Owing a great deal of money on many accounts or "maxing out" on various credit cards can indicate that a person is overextended, and is more likely to make some payments late or not at all.
Length of credit history (15%)-Your score takes into account how long your credit accounts have been established in general, how long specific credit accounts have been established, and how long it has been since you used certain accounts.
New Credit (10%)-Research shows that opening several credit accounts in a short period of time does represent greater risk-especially for people who do not have a long-established credit history. Multiple requests will reduce your score because it looks like you are either trying to get a high amount of credit (possibly because of a cash flow problem) or that you are being rejected by lenders and having to apply elsewhere.
Types of credit (10%)-The score will consider your mix of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. Your score takes into account what kinds of credit accounts you have, and how many of each. The score also looks at the total number of accounts you have.
Didn't help that I skipped mowing last weekend and payed for it big time today.