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- Your $500 limit means you can charge, in total, up to $500.
- Every month, you will get a bill that includes the minimum amount you have to pay. It will be lower than the total amount actually charged, BUT doing this means you'll pay A LOT of interest, and never pay off the card. Also, if your debt-to-credit ratio is too high (over 30%) it starts hurting your credit score. ALWAYS pay more than the required minimum payment.
- I started with a $500 limit as well, several years ago, and within four months I had a credit score over 700 (anything above 650 is considered good, and over 720 is excellent). I did this by charging an amount to the card, paying above the required minimum, then eventually paying the card off. HOWEVER, just because you get a good credit/fico score DOES NOT mean you have good credit, in the sense of qualifying for a loan.
Basically, when you apply for an auto loan, mortgage, etc, they will look to see 1) if you had at least 1 previous loan before, 2) do you have multiple lines of credit -- this means multiple credit cards, 3) do you have LONG credit history (several years), etc.
When I applied for an auto loan, I had a 760 FICO/Credit score, 4 credit cards, and no loan history. I needed a cosigner to qualify for the loan. That was even with me trading in a car that was paid off and worth over $5,000 PLUS about $3000 in cash.
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