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jlc68

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No credit cards equals bad credit.???
From my understanding of the report you gave me ..because I do not have any credit cards and therefore show no balance or usage of one then I am automatically penalized with a very poor credit rating. I'm sorry but that is a bit backwards if you ask me and a big load.

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It can seem counter-intuitive, but...

I once was in the same situation, and felt the same way. While I still agree that there is a certain logical dissonace in someone's score being penalized because they don't have debt, there is also another side to it. 

When the bureaus generate credit scores, they do so by observing people's past and current behavior in regards to credit utilization. The credit score is, at the end of the day, generated as a tool to help lenders in risk assesment. By not having open credit cards, it leaves the creditors doing more guesswork. The purpose of the score is to try and predict your behavior. You are inherently viewed as a higher risk by virtue of providing less information to assess.

It's important to note, however, that keeping balances on credit cards does not help your score. Keeping a couple of lines of credit open, using them, and just paying them off before any interest accrues is the best way to stay ahead and keep your score up.

Hope this clears it up a little!

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Yes, keep the credit card paid in full every time the statement comes in.  That shows responsibility, and that you can be trusted with loaned funds.  In actuality, a credit card is a loan.

Also, no matter what your credit limit, keep the usage below 30%, and preferably no higher than 20% every month.  So, if you have a $1500 credit limit, spend no more than $300/month.  Creditors love to see that you always have "credit to spare" in case of emergency.

I'm a bit older than dirt so remember when credit cards were used only by the RICH.  But now, it's very difficult to do much without some sort of credit available. 

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