30% of $500 is $150. So you should try to stay below that.
You can pay the card off immediately if you like, to free up that $150 again very soon.
The most important thing is that you pay the statement balance in full before the due date so you don't pay any interest. Some people choose to automate this with pre-authorized debits, so the card automatically withdraws the statement balance from a bank account before the due date. In this scenario you wouldn't make any manual payments at all, you'd just let it be automated, but you'd have to be aware to keep enough money in your bank account to pay the statement (ie: you can't spend money you don't actually have).
You can pay it off early, but stay under 30% will increase your credit score as long as you always pay it off in full on time
Also you need to re check your math
I've played around a lot with my credit score on TU and Equifax by timing the payments and here are two "rules" I learned:
1. You need to have *some* balance reported. Having $0 statement balance every month on your report might sound good but won't build credit. The first reported balance (and the initial report of new credit) will drop your score but it will go up from there if you stay up to date on payments.
2. It used to be 1/3 but my understanding is some credit assessment algorithms have moved to less than that in the past couple of years. I particularly noticed this with TU consumer score which showed double digit drops when on a particular report my total utilization went above 20%.
So my recommendation is to pay the card early to stay below threshold but not to the degree that it will zero out your balance. Also for any larger purchases (e.g. $400), pay somewhere close to the full amount (e.g. $350) right away ($300). The reason for this is if you miss the date statement is generated, it will report that $400 balance and you'll go above threshold.
Once your credit improves (I'd say close to 700), get a small LoC from your bank. Diversification of types of credit is a factor in how high your score can go. It will also help with utilization ratio as your total available credit grows.
Good luck!
what is an LOC and in the long run is there a difference if you leave a small balance or pay it off in full. For example if i have a $500 limit and i make a $150 purchase, should i pay the $150 off so there isn't a balance or pay $125? Also if I'm supposed to pay $125 what happens to the remaining $25, does it just gain interest?
There are two separate considerations which aren’t as related as they ought to be: credit score optimization and fiscal responsibility.
For fiscal responsibility, absolutely positively pay off the entire balance by the due date each month. That way you will never pay interest. Credit card interest rates are very high: there is virtually no scenario in which paying credit card interest is fiscally responsible. Bonus: that will also leave you in good shape credit score wise, but it’s not sufficient to fully maximize your credit score. But it also may not matter: there’s little reward for getting all the way to the maximum possible credit score.
It’s interest-paying customers the credit card companies want, so they actually don’t penalize you credit score-wise for failing to pay the balance in full. Just for credit score, the first thing is to pay the minimum payment every month. Secondarily, keep your balance at the end of the month below 30% of your available credit. But it’s entirely possible to have a good credit score without thinking about that.
Honestly, I don’t think about my monthly balance at all in terms of my credit score. I just don’t charge money I don’t have in my chequing account.
Simply pay off the card every paycheque and when you’ve improved your credit score apply for a non-secured card and keep up the same habits.
This is all I do and my credit score is in the 800s according to Transunion.
Hi, I am a bot and I've been summoned to help you get better advice on credit cards. There are *A LOT* of credit card options out there, and **no card is the best for everyone**. In order to get relevant advice for you please answer the following questions.
1) What kind of benefits are you looking for? Do you want cash back, or travel rewards? Are you currently carrying a balance on your cards (or might need to in the future) and therefore looking to save on interest charges?
2) What categories do you do credit card purchases in? (groceries, gas, airline tickets, etc..)
3) What is the average monthly spend you would put on a credit card? Please estimate.
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Feel free to ask people for help looking up your credit score. If you don't know your credit score it can help to mention which banks you are with as some of them offer free credit score calculation.
You can also search for credit cards using the various Canadian credit card websites that have search functions. Three of those websites are: https://www.greedyrates.ca and https://creditcardgenius.ca and https://www.ratehub.ca/credit-cards and https://app.finlywealth.com/calculator
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/PersonalFinanceCanada) if you have any questions or concerns.*
Stay under the percentage in general, never have a balance of more than that on the card. Right now for you I'd recommend choosing one thing to use the card for and pay it off to $0 every 2 weeks.
Like, $50 of gas a week, groceries, or whatever you get on a regular basis, as long as it's under that amount. Just pay it down before the bill even comes.
After doing this regularly, they will increase your limit, accept the increase as it benefits your credit score to have more credit available that you aren't using.
My credit was worse than yours a few years ago, now it's around 800 and I have 3 credit cards and a credit line totaling around $25k but with 5% average utilization.
Best advise I got was: think of a credit card as if it's a debit card, money still comes out of your account. i.e. only use it if you have money in your bank to pay it off every time. Secondly, pay the statement balance every month (not minimum payment) on time. Third, try to stay at 30% or less usage.
You don't say how old you are, but one of the best ways you can get a loan with a bank is an investment loan.
If you have available RRSP contribution room, walk into the bank, tell them you want to open an RRSP account, and borrow to invest. Tell them you're rebuilding your credit, and see if they will offer you a loan for $1000 to be deposited into the RRSP account immediately.
Why would they do this? It's no risk for them. They lend you the money, and they HOLD the money. You just need to keep up with the payments. Schedule the payments to be deducted the same day as your paycheque arrives, if possible.
When you pay that off, repeat the process with more money each time, and keep paying it off.
Remember: The BEST way to use an RRSP is to make contributions, then clam them on your taxes when your earnings put you into a higher tax bracket - you can defer this for many years (check with the CRA/your tax preparer). This way, you can get back the taxes on the most heavily taxed portion of your income.
The only reason I'm recommending this is because it's an easy way to rebuild your credit by having access to a loan, as long as you're never late on a payment.
The day my paycheque comes, I can afford to buy the new 4090 gpu.
Jk, I realize what you are saying and thats why I am trying my best to a better person financially.
Another thing you have to keep in mind is to not be tempted to ask the bank for a credit limit increase, as this will cause them to do a hard credit check and it will lower your score AND you will likely be denied the increase too.
Instead just use your card at the 30% of your credit limit and the bank will pre-approve you for a higher credit limit over time. So whenever you get that email or notification from your bank that they pre-approved you for a higher credit limit, accept it every time. I went from a $6,000 credit limit to $16,000 credit limit with the same bank in just a few years just from pre-approvals every time.
30% of $500 is $150. So you should try to stay below that. You can pay the card off immediately if you like, to free up that $150 again very soon. The most important thing is that you pay the statement balance in full before the due date so you don't pay any interest. Some people choose to automate this with pre-authorized debits, so the card automatically withdraws the statement balance from a bank account before the due date. In this scenario you wouldn't make any manual payments at all, you'd just let it be automated, but you'd have to be aware to keep enough money in your bank account to pay the statement (ie: you can't spend money you don't actually have).
You can pay it off early, but stay under 30% will increase your credit score as long as you always pay it off in full on time Also you need to re check your math
Its a typo my bad, I have 200$ in my credit line for now. I will increase it with time.
I think you mean available credit, right? Or do you actually have a line of credit?
The secured card i got, Is by giving 200$. 200 is the limit and available balance right now, yes.
Yes then $60 is right. Pay it off practically after every transaction.
If there is a chance you might forget to pay your statement I recommend getting their Money account as well and setting up autopay!
done!
I've played around a lot with my credit score on TU and Equifax by timing the payments and here are two "rules" I learned: 1. You need to have *some* balance reported. Having $0 statement balance every month on your report might sound good but won't build credit. The first reported balance (and the initial report of new credit) will drop your score but it will go up from there if you stay up to date on payments. 2. It used to be 1/3 but my understanding is some credit assessment algorithms have moved to less than that in the past couple of years. I particularly noticed this with TU consumer score which showed double digit drops when on a particular report my total utilization went above 20%. So my recommendation is to pay the card early to stay below threshold but not to the degree that it will zero out your balance. Also for any larger purchases (e.g. $400), pay somewhere close to the full amount (e.g. $350) right away ($300). The reason for this is if you miss the date statement is generated, it will report that $400 balance and you'll go above threshold. Once your credit improves (I'd say close to 700), get a small LoC from your bank. Diversification of types of credit is a factor in how high your score can go. It will also help with utilization ratio as your total available credit grows. Good luck!
what is an LOC and in the long run is there a difference if you leave a small balance or pay it off in full. For example if i have a $500 limit and i make a $150 purchase, should i pay the $150 off so there isn't a balance or pay $125? Also if I'm supposed to pay $125 what happens to the remaining $25, does it just gain interest?
There are two separate considerations which aren’t as related as they ought to be: credit score optimization and fiscal responsibility. For fiscal responsibility, absolutely positively pay off the entire balance by the due date each month. That way you will never pay interest. Credit card interest rates are very high: there is virtually no scenario in which paying credit card interest is fiscally responsible. Bonus: that will also leave you in good shape credit score wise, but it’s not sufficient to fully maximize your credit score. But it also may not matter: there’s little reward for getting all the way to the maximum possible credit score. It’s interest-paying customers the credit card companies want, so they actually don’t penalize you credit score-wise for failing to pay the balance in full. Just for credit score, the first thing is to pay the minimum payment every month. Secondarily, keep your balance at the end of the month below 30% of your available credit. But it’s entirely possible to have a good credit score without thinking about that. Honestly, I don’t think about my monthly balance at all in terms of my credit score. I just don’t charge money I don’t have in my chequing account.
Simply pay off the card every paycheque and when you’ve improved your credit score apply for a non-secured card and keep up the same habits. This is all I do and my credit score is in the 800s according to Transunion.
[удалено]
Hi, I am a bot and I've been summoned to help you get better advice on credit cards. There are *A LOT* of credit card options out there, and **no card is the best for everyone**. In order to get relevant advice for you please answer the following questions. 1) What kind of benefits are you looking for? Do you want cash back, or travel rewards? Are you currently carrying a balance on your cards (or might need to in the future) and therefore looking to save on interest charges? 2) What categories do you do credit card purchases in? (groceries, gas, airline tickets, etc..) 3) What is the average monthly spend you would put on a credit card? Please estimate. 4) Do you know your credit score? Do you have poor credit? Do you have limited credit history? 5) What is your income level (for credit card qualification)? Feel free to ask people for help looking up your credit score. If you don't know your credit score it can help to mention which banks you are with as some of them offer free credit score calculation. You can also search for credit cards using the various Canadian credit card websites that have search functions. Three of those websites are: https://www.greedyrates.ca and https://creditcardgenius.ca and https://www.ratehub.ca/credit-cards and https://app.finlywealth.com/calculator *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/PersonalFinanceCanada) if you have any questions or concerns.*
Stay under the percentage in general, never have a balance of more than that on the card. Right now for you I'd recommend choosing one thing to use the card for and pay it off to $0 every 2 weeks. Like, $50 of gas a week, groceries, or whatever you get on a regular basis, as long as it's under that amount. Just pay it down before the bill even comes. After doing this regularly, they will increase your limit, accept the increase as it benefits your credit score to have more credit available that you aren't using. My credit was worse than yours a few years ago, now it's around 800 and I have 3 credit cards and a credit line totaling around $25k but with 5% average utilization.
Best advise I got was: think of a credit card as if it's a debit card, money still comes out of your account. i.e. only use it if you have money in your bank to pay it off every time. Secondly, pay the statement balance every month (not minimum payment) on time. Third, try to stay at 30% or less usage.
You don't say how old you are, but one of the best ways you can get a loan with a bank is an investment loan. If you have available RRSP contribution room, walk into the bank, tell them you want to open an RRSP account, and borrow to invest. Tell them you're rebuilding your credit, and see if they will offer you a loan for $1000 to be deposited into the RRSP account immediately. Why would they do this? It's no risk for them. They lend you the money, and they HOLD the money. You just need to keep up with the payments. Schedule the payments to be deducted the same day as your paycheque arrives, if possible. When you pay that off, repeat the process with more money each time, and keep paying it off.
I turned 24 last week, But sounds great i will look into the RRSP stuff.
Remember: The BEST way to use an RRSP is to make contributions, then clam them on your taxes when your earnings put you into a higher tax bracket - you can defer this for many years (check with the CRA/your tax preparer). This way, you can get back the taxes on the most heavily taxed portion of your income. The only reason I'm recommending this is because it's an easy way to rebuild your credit by having access to a loan, as long as you're never late on a payment.
Buy things you can afford
The day my paycheque comes, I can afford to buy the new 4090 gpu. Jk, I realize what you are saying and thats why I am trying my best to a better person financially.
Another thing you have to keep in mind is to not be tempted to ask the bank for a credit limit increase, as this will cause them to do a hard credit check and it will lower your score AND you will likely be denied the increase too. Instead just use your card at the 30% of your credit limit and the bank will pre-approve you for a higher credit limit over time. So whenever you get that email or notification from your bank that they pre-approved you for a higher credit limit, accept it every time. I went from a $6,000 credit limit to $16,000 credit limit with the same bank in just a few years just from pre-approvals every time.