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Utilizing Credit Cards to Build Credit - WITH NUMBERS!
Okay, so this isn't a question. After frittering around for a while and trying to figure out how to use my secured card to improve my credit, here's what I've figured out.

You have to carry a balance when the statement is GENERATED. For instance, my card statement cycle runs April 23 - May 22 and the payment for that cycle is DUE on June 19. When the May 23 - June 22 statement is generated (on May 22), I should be carrying a balance of 10-15% of my limit (my limit on this specific card is $200, so I spend $25). AFTER the statement is generated, I pay the balance from the previous cycle (anywhere between May 23 - June 18). With my schedule I pay the previous balance on the 6th and use my card again on the 14th. Voila! You're carrying a balance, but not paying interest.

I'm up 63 points in eight weeks. My credit was TERRIBLE, though, so I started out with the secured Capital One card. I hope to be able to buy a house in the next six months ... which will improve my cash flow significantly after the initial out-of-pocket expenses and help build more credit. Hooray!

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I followed this plan and it worked.

Helpful to 35 out of 40 people

I followed the advice of the original poster and it worked.  I had practically no credit history and a very low score.  I got a Capital One secured card with a $350 limit.  I used it for 6 months, staying in the 20-30% utilzation range each month.  The most important part of this plan is to make sure that you are carrying a balance at the time of your monthly statement.  Then, pay off the balance in full shortly after your statement becomes available.  Exactly 6 months later, Capital One offered me an unsecured card with a $3000 limit.  I am very pleased.  Thanks to the original poster for the good advice.

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Helpful to 31 out of 35 people

My attempts to rebuild my credit seem to be on a favorable path ... though it did involve a mystery denial.

I filed a Chapter 13 bankruptcy in 2006, discharged properly in 2011 - 2 months before I retired.  In March of 2013, I started rebuilding my credit by acquiring a secured VISA through my credit union with a $1,000 credit limit.  The credit union's policy stated that if I made 12 on-time monthly payments, my card would be converted to an unsecured card and my security deposit would be returned to me.

A Chapter 13 disappears from your credit file 7 years following the filing date.  And, mine did in June 2013.  Later, in December with only 9 months of credit history on the VISA, I decided to apply for 3 other credit cards - a PayPal Extras MasterCard issued by GE Capital Retail Bank (aka GECRB), a Walmart Discover card issued by GECRB, a Texaco/Chevron credit card issued by GECRB, and a Discover IT card issued by  This is where the mystery comes in.

I was approved for the Discover IT card ($750 credit limit), the Texaco/Chevron card ($300 credit limit), and the Walmart Discover card ($800 credit limit).  But GECRB denied my PayPal Extras MasterCard application for an odd reason, quote, "Unfortunately, we were unable to confirm your identity with enough confidence to issue the card."  The reason this was odd is because GECRB approved both the Walmart Discover card and Texaco/Chevron card immediately - without any apparent "identity" issue.

For the next 3 months, I peppered GECRB with letters and phone calls trying to solve the mystery of why "identity" issues caused them to deny the MasterCard while, at the same time, approving two other cards without a similar issue.  And their replies to me didn't come close to solving the mystery.  They sent me one final letter on April 4th, standing by their odd denial reason.

I'm 63 years old, living on a pension and Social Security with a total annual gross income of $31,524.  And when I discussed my denial with friends, they suggested to me that certain credit issuers (or their co-branded partners) give cryptic denials like that because they have unwritten policies to not give credit to people without income from "employment" (ie., retirees, elderly people).  In short, they suggested that I might be the victim of a subtle form of age discrimination.  These are just the opinions of similarly-aged friends, however, and may have no basis in fact.

In any case, I decided to forget the PayPal/GECRB application and "move on" - using the "spit-wad" approach to credit acquisition (grin) ... that if you throw enough spit-wads at a wall, some of them will stick.  So, I submitted a "flurry" of applications for different cards.  Applications are still pending for a Chase Freedom card (VISA), a Chrysler MasterCard, and a Capital One MasterCard.  But (grin), two of the spit-wads stuck immediately.  In the last few days, I received a Slate VISA card from Chase Bank ($3,000 credit limit) and an approval for a Diamond Preferred MasterCard from CitiBank ($3,500 credit limit) that should be arriving no later than next week.

My current Equifax credit score is 725.  But, I'm sure my flurry of applications will bring that down a bit.  However, the reason for the "flurry" is because I plan on moving later this year.  And everyone knows that if you want credit, applying "before" a move is easier than "after" a move.  I'm certain my score will take another dive after I do.  But I'm hoping that, with proper utilization of credit, my score will be back up to the high 700s (at least) by the end of 2015.

P.S.  By "proper utilization," I mean this.  It's my intention to charge "something" to each card at least once a month ... but only for things I'd normally pay cash for (or use a debit card).  And each billing period for each card, I'll pay off the balances in full.  This will require card issuers to issue "glowing" reports on my utilization once monthly.  So, by the end of next year, I'll have an over-\2-year record of good credit with the first VISA card (became unsecured on April 1st as promised) and an over-1-year of good credit on the others.

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Something else you can do

Helpful to 37 out of 42 people

Some banks help you jump into the "secured" card faster, if besides what you are doing right now, you use your credit card a little bit more (i.e. that instead of having a single purchase of $25 in your statement, you have several purchases and payments, let's say $400 in purchases and $375 in payments). So, when they check this information they not only will try to secure your card faster, but it is more probable that they will offer you an increase in your credit line.

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Helpful to 8 out of 9 people

Thank you, I have been doing just what you are talking about, and I was wondering wether that was a good game plan. It is, Thanks

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31 People Helped

So Helpful

Helpful to 31 out of 36 people

Needed this very much.

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Good Job!!

Helpful to 16 out of 20 people

While you MIGHT not be able to buy a house in 6 months (lots of factors go into okaying a mortgage) you are at least on the way by careful use of and judicious payment of the credit card, which is building your credit score.  Keep it up!!!

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Statememt Cycle

Helpful to 9 out of 11 people

How do you know when your cycle is? I know my payments are DUE on the 26th of the month, but how do I figure out when I can pay it off without paying interest?

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Helpful to 19 out of 21 people

you typically have 21 days to make your payment from the end of the cycle. i.e. statement closed on the 5th. 

to make sure my payment is always on time, I have e-bill sent to my Ebanking accout. I have it set up to pay the minimum payment 5 days before the due date.

generally i will go in and schedule another payment so i can pay more of the balance off.  But if you don't at least the min payment will be paid and you won't incur any late fees or have a missed payment.

another good idea is to use the card only for things you will be paying cash for anyway, Gas, Electric bill cable tv etc.  you already have this in your budget to spend so you are using the card to spend money you were going to spend anyway.

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Enter Your ReplyContact the Issuer of the Card. there is a Telephone Number on your Card or statement

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Helpful to 1 out of 1 people

you are exactly right!! I have blogged about this on this forum before, I will say that i started to rebuild my credit with a secured card about two years ago .I chose capital one and it has been the smartest move I have ever made.After  6 months they gave me a $100 increase and after a year and a half they have in total given me a $500 increase! I have also gone on to apply for other cards and been approved!! And it all began with my secured card and responsible usage!!!! Good luck to you on your journey to good cedit health!

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Helpful to 1 out of 1 people

I have one more question. I too have secured cards, and my concern is.. what happens after you've accomplished getting unsecured credit cards with better interest rate? Do you just let the money sit in those "secured" credit cards or how do we reclaim the money? do I close down the secured cards? Can anyone tell me what's the best approach?

Thanks :)

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Don't need a balance

Helpful to 13 out of 24 people

I have yet to carry a balance in the 2+ years of having CCs and according to CK my score is at 745. When I did my research I read that your balance isn't reported to the Bureaus, so it's optional to have a balance. 

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Helpful to 15 out of 15 people

BlueL - it's great that you do not carry a balance on your cards. I just wanted to clarify that credit companies actually do report your balance to the credit bureaus each month. The balance reported is based on whatever date your specific credit company chooses to is not necessarily the balance you see on your monthly statement. The best thing is to ask your credit card company what date they report balances each month. :)

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Helpful to 3 out of 6 people

As a comment to BlueL you can also check the date CC companies report to the credit bureaus by checking info on CreditKarma.   If you double click on individual accounts, it will bring up additional info such as date acct was opened and date balance was last reported to the bureaus.

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Balances are definitely reported.  Whatever your due date is, the balance will be reported a few days afterwards.  If you pay at least your amount due by the due date, you will be safe for the reporting or "Statement Date"  That is the the one reported to the bureaus.

Here are some examples:  Capital One reports about THREE days after due date.  Chase reports about THREE days after due date.  American Express reports about SIX days after due date.  Discover reports about FIVE days after the due date.  The others are very similiarly reported.  So, to be on the safe side, figure that the balance you will be carrying after your "due Date" will be the one reported to the credit bureaus.

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Improving credit report card

Helpful to 1 out of 1 people

I have five credit cards, ThreI have five credit cards, Three of them have zero balances and not being utilized should i canceled them ?

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Helpful to 2 out of 2 people

Never cancel a credit card if you can help it. The decrease in available credit and length of accourts will take a hit. Even if you don't use them. 

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Oops (grin).  In my earlier response, 2nd paragraph, I said I applied for 3 other cards.  It was 4 actually.

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