Capital Investment Advisors

Don’t wait until due date to pay first credit card bill

Dear Opening Credits,
I just received my first credit card from Discover, the Discover it for Students card, this month with a limit of $500. The due date isn’t until July 14. Should I keep a utilization rate under 30 percent this month and next month, then pay off the balance before the due date?

I currently have spent $43.25 on the card, which is an 8.6 percent utilization rate. Should I keep it this way until July? Would that show credit responsibility and hopefully give me a strong credit score? I currently don’t have a credit score with any credit bureau.

I’m just trying to see the perfect way I should manage this card. What other things should I do to build credit at 18? I already was turned down for three other student credit cards, so I don’t think applying for another one is OK now. Just trying to get a excellent credit score by 26.  – Kelendria

Dear Kelendria,

Congratulations on becoming a first-time credit card owner! It’s an important milestone. With this one card you can start to create a marvelous credit history, which will eventually translate into the credit score you seek. Here’s how – and why it’s wise to send $43.25 to Discover right away instead of waiting until the first bill is due.

Adopt a charge-and-delete habit

For years, financial and credit experts have been touting the “owe less than 30 percent of your credit limit” rule. It was supposed to ensure a healthy credit utilization ratio, which is the difference between what is owed and what can be borrowed. However, that 30 percent rule has been somewhat debunked. No debt is always best.

An easy method to make sure your scores are not affected by any charged amount, large or small, is to pay what you’ve charged immediately, especially since your credit limit is so low. You can do this in a couple of ways.

Download your bank’s mobile banking platform to your phone, then use the bill pay system to delete the charge with the money in your checking account. Or use Discover’s mobile app or go to and make the payment. Either way is fine, as the funds will quickly be applied to your balance, which will soon read as zero.

Use your card every month

You can’t have a credit history without reportable data, so if you know you’ll have enough in your checking account to repay the bill that day, take your credit card when you go shopping.

On a monthly basis, Discover will send detailed information about your account to the three consumer credit reporting agencies – TransUnion, Experian and Equifax. Credit scorers will input the financial activity that is listed on your reports into an algorithm designed to predict lending risk. The scores range from a low of 300 to a high of 850. Anything in the mid-700s and above is usually perceived as excellent.

Wait a year before applying for another card.

The two weightiest credit scoring factors are payment history (so always pay on time) and credit utilization (remember, no to very little debt is ideal), but there are a few other considerations. For example, your scores will steadily rise the longer you’ve positively used credit products. Keeping older accounts active will also give your scores a boost.

You’ve already been rejected for a few credit cards. Those hard inquiries can shave some points off your credit scores. Because this is exactly what you don’t want, stop applying for credit cards and concentrate on using the credit card you have in the way I described.

Check your credit scores to see what they are after six months of using the card (you can get your VantageScore for free here on and then again in about 12 months. You should see a significant rise in your credit scores. After 12 months (and assuming you have a steady and verifiable income), consider applying for another credit card. Two accounts will multiply the data that appears on your credit reports. As long as you manage both credit cards responsibly, your credit scores will rise at a quicker clip.’s CardMatch tool will lead you to accounts that suit your credit profile, and the tool doesn’t create a hard inquiry until you actually apply for a credit card. Eventually you may want to take out a loan, perhaps for a car. That, too, will increase your credit scores, since “credit mix” is another important factor contributing to a higher credit score.

Just remember to always pay your bills by the due date.

Follow this plan, and the credit score of your dreams will be a reality long before you turn 26!

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