|You do want to establish a small debt and be able to show you can service it responsibly. A common myth that many old timers carry is that you must always pay back the exact amount of money that you’ve borrowed at the end of the month. That is a good rule to understand but not always the best practice to apply when building credit to establish the highest rating on the credit score scale.
Many credit advisers will suggest not going over 30-35% of your credit limit to get the greatest credit score scale. This is another very important tip to keep in mind. But if you can pay everything off, you should to avoid paying interest rates. As long a you leave a small debt on there consistently such as one dollar or so, you’ll be well on your way to building credit in no time!
Pulling your credit is important because a credit profile can change on a regular basis going up or down. If you’ve carried a lot of debt and then pay off your credit cards it will raise many points, which is great. But did you know that carrying a little debt is a good thing for a nice FICO on the credit score scale? The credit bureaus look for several factors when giving you a FICO score. One of the factors is if you can show the responsible usage of debt. What I do to show this and also not have to pay hefty interest rates, is leave one dollar on my cards every month after I pay them down. This way it shows that I can service my cards, and still carry debt responsibly.
Do you know what your highest rating on the credit score scale? When was the last time you checked it? If it’s been a while you may want to consider pulling it again, but not from a loan officer because that is what is considered a hard pull. When you first receive a credit card there are many rules you must understand such as servicing the debt, and that you should not charge up more credit than you can afford to pay back.�
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