My Apple Card is my first credit card and I am getting conflicting information on using it to build credit

[zooby]

I have been going off my savings/checking account but decided that I needed to build credit. I can pay it off whenever, but I usually try to pay it in part and then when I get the notification to "make payments by ____ date" I pay it off. Apparently this is fine, and I am do not want any interest so this avoids it. However, I am hearing that paying full before my statement cuts is bad because nothing gets reported. That I need to allow the statement to close, then pay it off.

I spoke to Apple Support / Goldman Sachs various times and they all told me to keep paying it off like I am and credit will be built. My % did go down a 0.50%... but IDK

 

[Erehy Dobon]

Whoever is telling you that is dead wrong.

I have six cards with a total credit line over $100,000 with a credit history dating back into the Nineties. I pay off all of my cards before they are due. My credit score is 822.

Go search for "FICO score" and read official FICO primers from reputable sources (like the official myFICO site), not some cockamamie B.S. that "people on the Internet" often say. "I read online that..." "My sister's boyfriend's cousin told me that..."

Internet Rule #1: Don't ask medical questions on the Internet.

Internet Rule #2: Don't ask personal finance questions on the Internet.

Internet Rule #3: Don't solicit investing advice on the Internet.

 

[Böhme417]

I would say it really depends. Everything I've read about the Apple Card says that the reporting is sporadic, so I don't know if anyone can say with certainty that paying your balance at a given point will affect your credit history. On most other cards, balances seem to be reported on a regular basis on a specific date. One of my cards has the balance reported on the statement date. All of my other cards seem to have reported balances at different times in the billing period. Just my pair of pennies, but you want usage reported; you just don't want your utilization to be too high. With it being your first and only card, you need to show activity and your ability to pay it off, but don't abuse it.

Example: Say your limit is 10k, and you charge 5k on your card. I would definitely pay off some mid-cycle, so your utilization isn't 50%. (Again, this really depends on when your balance is reported, though.)

Early on in your history, higher utilization shouldn't be a huge deal, but don't make it a trend. At six months, if you are responsibly using a lot of your credit limit, if you don't automatically get an increase, you should request one. That will help your credit.

 

[colodane]

I do not have (or want) the Apple card but can answer your question for credit cards in general.

Your "score" is based on the percentage of credit used along with never missing any payments. I have good credit ratings and for many years paid off the entire balance on the statement after I got the statement and before it was due. Using this method, my credit score varied between 823 and 826.

A few months ago I started paying off any balance (and a little extra) on each card a few days before the the statement was issued. Since I've been doing this my credit score has consistently been 828.

So either method will give you reasonable credit scores. Carrying any balance will give you a lower score.

 

[TheIntruder]

1) Pay your bills. Pay them on time. Don't be late, don't skip payments. The biggest factor in determining your credit score.

2) Use the credit lines you're given, but in moderation.

3) Resist the urge to open new lines of credit, in response to fleeting discounts, or other offers that return small one-time benefits, like 15% off your purchase if you apply for our credit card today. Especially not before you plan to apply for a large loan for a home or a car. It doesn't sound like this would be a problem for the OP, but still good to note.

Do those things, especially #1, and the rest will take care of itself.

Your credit score rates how responsibly you borrow money, through your payment history, and not overextending yourself with the lines you're given. And, since it's a such a common misconception, note that credit scores do not use income as a factor. A person who makes relatively little, but still pays their bills, will score more highly than someone who makes a lot, but doesn't.

Also resist the urge to obsess over your score, and sweat about every point. It fluctuates naturally, and the lenders who will give your the largest sums of money you'll likely ever borrow, for your home, or a business, look at far more than your credit score.

 

[cynics]

Building up credit is a process, there are 6 factors that effect your score. You can find this information with credit bureaus and financial institutions.

1. Payment history, never have a late payment on anything. You generally get 60+ days before a lender will turn you into collections. If you forget to make a payment on anything call the lender immediately and explain it being an honest mistake, a lot of time they will waive the late fee. While gym memberships, taxes, parking tickets, rent, utility bill payments, don't positively affect your credit they will negatively effect it if you don't pay them.

2. Credit card utilization. Pay your cards off every month at the minimum. Try to keep the combine total of purchases less than 30% of your total credit card availability. The real goal is to keep total usage below 10% if possible. So if you have 2 cards with 4,000 dollar limits x 2 = 8,000 dollar dont spend more than 800. If you need to then make a payment mid cycle to keep the total less than 800.

3. Derogatory Marks. Don't take a loan your not absolutely sure you can't pay back. Life happens and we can't predict the future but filing bankruptcy will stay on your credit for 7 or so years. Lenders would like to avoid someone that is known too default on their responsibilities and you will have a really hard time buying a house, car, etc for that 7 years.

4. Credit history duration. 9+ years of established credit averaged across all your lines of credit is the goal. Clearly something that doesn't happen overnight.

5. Total accounts/credit mix. 11+ lines of credit that are a mixture of different types of loans, like student loans, car loans, mortgage, credit card, etc is preferred because it shows you know how to handle money

6. Hard inquiries. This is a hard inquiry run on your credit by a lender to verify your credit is good before a loan or line of credit is issued. You don't want too many of these and its easy to get them without actually getting a line of credit or a loan. For example I called Verizon to inquire about Fios, they needed to do a credit check before they could quote me a price. I allowed it and it was a hard inquiry and I didn't like the price so I didn't get it. Also just assume everyone that says they need to run your credit is going to do a hard inquiry even if they specifically say otherwise. If you are making a big purchase multiple hard inquiries for the same thing (ex. mortgage) will generally count as 1.

1 through 3 have the biggest impact on your credit score. 4 is medium impact. 5 and 6 are low impact.

Honestly its common sense. Imagine you were going to loan someone money only knowing the above information. Don't do something that would make you hesitate.

 

[themoemoth]

Be EXTREMELY careful with Apple Card as they do not report regularly to the credit bureaus. I made a large purchase months ago with the intent to pay it off at month's end and claim the 2% cash back. I paid it as planned, but Apple Card did not bother to report that payment to the credit bureaus for 120 days. When I challenged them on this, GS told me, and I quote, "that's not our problem and we can report when we want." My credit took a 75 point dip due to this; thank God I wasn't trying to buy a house or get anything done financially at the time. I had to call at least five times, open a dispute with the credit bureaus and still I get nothing until I finally reached a compassionate person at GS who took responsibility and solved the problem. I will NEVER use this card again for anything and I highly recommend that you do not either, at least until they address the reporting issue. It's really quite shocking.

 

[takeshi74]

when I get the notification to "make payments by ____ date" I pay it off. Apparently this is fine, and I am do not want any interest so this avoids it. However, I am hearing that paying full before my statement cuts is bad because nothing gets reported. That I need to allow the statement to close, then pay it off.

It sounds like you're confusing the due date with the statement date. When you get the notification the statement has cut. The statement balance is then due the following month. In other words the notification is letting you know the statement balance and when it is due.

You can confirm your statement balances by tapping on the Card Balance section in Wallet. You'll see your statement balances there under Statements.

I spoke to Apple Support / Goldman Sachs various times and they all told me to keep paying it off like I am and credit will be built. My % did go down a 0.50%... but IDK

What you're worrying about impacts utilization which doesn't build. Utilization is based on your currently reported balances and limits for revolving accounts like credit cards. Loans are a bit different. Balance to loan ratio matters but isn't weighted as heavily as revolving accounts.

Your payment history, however, does build. It's really more of a matter of whether or not you've paid on time.

 

[Erehy Dobon]

Like pretty much every single credit discussion from a rookie, this thread displays a profound void of understanding about credit.

A credit score is a numerical value that primarily reflects the likeliness that you will pay your debts on time.

You have have multiple cards with a combined credit total into the six figure range.

The credit industry recognizes that people who have high credit utilization (how much they owe vs. their maximum credit limit) are more likely to have problems paying back their obligations.

Paying off your cards in full several times during a billing cycle is not a detriment to your credit score. It proves you are able to manage your cash flow and pay off your obligations.

The credit card industry has a special internal name for these people; they're known as "deadbeats" in the credit industry. These are cardholders who won't generate any finance charge revenue.

If I have a $100 bar tab on a combined credit line of $100K between six cards, that's 0.1% credit utilization. If Person B has the same bar tab on their sole card with $1000 credit line, that's 10% credit utilization. The credit card industry thinks their debt is more risky.

Let's say two people with only one card with a $1000 credit limit rack up $100 in charges. Person A pays off their card in the full; Person B makes the minimum payment, let's say $20. The following month, they both rack up $100 in charges again. Person A pays off the card. Person B makes the minimum payment, now $22. Person B is generating finance charges for the credit card company. Person A is indeed a deadbeat. They generate no finance charges.

I've seen online personal finance discussions for nearly three decades and the main common denominator is that people who are new to credit don't really understand some basic concepts about personal finance and often quote people ("I read on the Internet...", "Someone told me...", "My sister's boyfriend's cousin said that...") who have barely any more knowledge than themselves.

 

[ZipZap]

Be EXTREMELY careful with Apple Card as they do not report regularly to the credit bureaus. I made a large purchase months ago with the intent to pay it off at month's end and claim the 2% cash back. I paid it as planned, but Apple Card did not bother to report that payment to the credit bureaus for 120 days. When I challenged them on this, GS told me, and I quote, "that's not our problem and we can report when we want." My credit took a 75 point dip due to this; thank God I wasn't trying to buy a house or get anything done financially at the time. I had to call at least five times, open a dispute with the credit bureaus and still I get nothing until I finally reached a compassionate person at GS who took responsibility and solved the problem. I will NEVER use this card again for anything and I highly recommend that you do not either, at least until they address the reporting issue. It's really quite shocking.

What site indicated a 75 point drop?

Its true, there is no obligation to report to the bureau so Goldman was correct, and you utilization could be an impact if you have a low credit total and are using most of it month to month. Be wary, however, of sites with scores. Most are not as accurate as you would think. If you look closely they will say their scoring is for educational purposes.

Experian/Beacon are the only real FICO scores. Beacon being the most accurate. For the big buys....car, house they will use these services.