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I use to be a mortgage loan officer. The way I understand it, you should only use 30% of whatever your limit is on any card you hold. If you have a limit of $1,000.00 for example, you want to keep your balance at or below $300.00. Totally ignore the real limit and treat the card as if your limit is just $300.
To avoid paying high interest, pay off all but $5.00 of your balance (or as much as you can afford) each billing cycle. Leaving a $5.00 balance will automatically register with all three credit bureaus that your manageing the card at less than 30% usage. Bottom line, never allow your limit to go over $300.00 /or 30% of your actual limit. If you do this with each of your cards, you should have an "A" for credit card usage within a years time.
jambababe's response was:
Be sure to pull you actual credit reports through Equifax, Experian and / or Transunion every year. Look them over closely and file an online dispute for anything that is reporting incorrectly. Real credit reports are available for free once per year and when you order them on line the dispute process can be done on line fast and easily as well. If you want your true credit scores, you'll pay a fee for that but its like $7 bucks and well worth it IMHO.
jambababe's reply was:
Not necessarily true. 5% or 6% are still low rates and for someone with so/so credit, they're not bad rates at all. After the buyer improves his credit he can refi for a better deal. Also, if he's a Vet, he qualifies for a VA loan's 100% financing and his realtor can help him get the seller to pick up CC's. Never say never untill you seek the help of professionals.
Try always leaving a balance of $5.00. Just enough to trigger the credit bureaus that your keeping your limit below 30% of the limit on the card but not so much as to have to pay a lot of interest.