Less than a month ago I opened a CashRewards World MasterCard with USAA to help build my credit (I’m trying to get above 740 before I apply for a mortgage, and had a low variety of credit utilization on my report). I know that I need to keep my balances low and pay on time every month, but I am afraid that I may be going overboard in regards to these 2 strategies. I have detailed my strategy thus far below, and would really appreciate some insight (as far as whether or not it will boost my Credit Score), as well as any tips you may have.
Thanks in advance for any feedback, I really appreciate you taking the time to read over and respond to my questions.
I will try to answer your questions based on my own observations and experiences. I should note there are various factors that go into determining a credit score and they can and do differ depending the entity doing the calculation. You can find a good guide to how FICO scores are determined here. If you haven't already done so, I suggest you request your free annual credit reports. One thing to keep in mind, payment history and time are the biggest factors that will affect your overall credit score. Don't expect your score to move up very fast (though it can go down really quickly).
Definately could not hurt it. What your trying to do is manage your Debt to Credit Ratio. While there is not an exact number, the general consensus is that the ratio should be below 25%.
To maintain a lower debt to credit ratio, you should attempt to have your credit card show the lowest balance possible when reported. Your credit report will reflect that payments were made (and the amount), but that may not used to develop the credit score. It can though be used by lender when making the determination on a loan application.
I have both the MasterCard and American Express with USAA, both are on all three of my credit reports. The report dates reflected the date my statement is issued. Not sure if the billing periods are the same for everyone. I pay my credit cards several times through the month, so normally my statements show payment due as 0.00. But the balance due on the statement is what is reported to the credit bureau and appears to be what is used to determine your debt to credit ratio.
Thanks DSTexas, your reply is very helpful! It clears up a few points that I didn't understand as well as I thought I did. Based on what you have told me, I think I will continue to pay back my Credit Card purchases as soon as they post, so that I show a $0 balance when USAA reports to the bureau(s).