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I am a new permanent resident in the US (originally from the Netherlands) and married to an American citizen. I am not used to the credit score system as they use it in the US, so this is all new to me.

Since not having a credit score in the US has about the same effect as being a ghost I would like to start building one. In some instances it has already proved to be a pita - i.e. trying to put our internet connection on my name at our new address was not possible because of having no credit score/history.

At first I tried the piggyback technique by adding me to my wife's credit card as she has a good credit score, only to find out later that Chase does not report this to the credit score agencies... great.

So now I recently signed up for a secured credit card at Capital One, deposited $200 and got a credit line of $351. I thought it would be good to actually utilize the card and pay off the balance every few days. Then I found out that credit utilization actually has a large impact on credit score. The general idea is to keep the utilization below 20% which in my case would be around $70.

Since Capital One has a pretty extensive online environment I am able to pay off the balance any time I want. Would it be beneficial for my credit score to pay it off anytime there is a small balance on it? Also how is the utilization ratio being determined? Is it just being reported once a month and based on the utilization ratio of that specific date? Or is it being averaged out over the whole month?

  • Related: money.stackexchange.com/a/31066/11865 – user11865 Jun 21 '14 at 22:01
  • On a sidenote: I added $100 to my deposit to increase the credit limit a little bit and give me some more leeway when using the card. I also got the first credit score update and the initial score is 716. Not too bad I think. – Ruben Jul 17 '14 at 20:17
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    Very nice! I highly recommend you follow the statistics in my linked answer. Your score can plummet quickly, but it takes time to build it back up again. With a score like that, banks will be falling all over themselves to offer you credit, especially now, near the peak of the economic cycle. – user11865 Jul 18 '14 at 4:17
  • @quantycuenta I checked it out, very useful answer +1. In my case I noticed that they listed the joint Chase card (the piggyback one) all of a sudden. So instead of my credit being just $450 for the secured card my total credit is a little over $14k so the utilization is considered very low. Maybe that's why the initial score came out reasonably high? – Ruben Jul 18 '14 at 5:59
  • Wow, that's quite a jump! Keeping the utilization low probably got you the limit increase. 20%, the rate you specified in the question, according to the chart in my answer puts you right around your current credit score. Now, if you can keep utilization at 10% and other credit in check, you can happily watch your score drift higher. Congratulations! – user11865 Jul 18 '14 at 13:13
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From my observations, CapitalOne reports balance on the statement. I.e.: to keep 20% utilization, you should strive to have your statement balance to be 20% of your credit limit. CapitalOne does seem to be reporting the credit limit, some issuers don't and then utilization goes by the current balance/highest balance. You should see that on your report.

As to reporting secondary users - Chase doesn't, as you've noticed. American Express and Discover both do. If your wife has one of those and adds you as an authorized user - it will show up on your report in a couple of months.

  • Thanks. So by statement balance you mean the balance on the date the monthly statement is being generated? – Ruben Jun 21 '14 at 20:24
  • @Ruben I mean the balance on the actual statement. – littleadv Jun 21 '14 at 20:26
  • Does Chase never report secondary users? My husband is a user on my credit card and Credit Karma found my card's debt on his credit report -- does the type of card matter or maybe did I set up the account differently than the OP described? – Yamikuronue Jun 25 '14 at 17:43
  • @Yamikuronue See my comments on the OP. It looks like they are able to 'see' the line of credit on the joint card. That way it still works in your advantage because of your higher line of credit. I think Chase just doesn't report the payment behavior, so you'll never start building your score if you only piggyback on a joint card. – Ruben Jul 18 '14 at 17:06
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Newer credit reporting models diminish/eliminate the effect of secondary users on the piggy backing user's credit score.

Specifically FICO 08 , which most institutions are switching toward from FICO 04. A lot of suggestions for optimizing (read: manipulating) one's score are based on FICO 04 observations.

One major difference between FICO 08 and the previous model is that authorized user accounts will no longer be used in calculating credit scores

Since FICO 04 is still being used there may be some utility in being a secondary user SOLELY for credit score reporting, in the near term, but you can expect a major drop in your credit score once the institution switches to FICO 08 credit models, so this may be more detrimental to you than just ignoring piggy backing on someone else's credit score.

Don't try to game utilization reporting, just float 10% utilization ($20, with some wiggle room) on the card and pay the minimum each month OR pay it off each month. Paying more than the minimum is only something your one institution can look at and find you in more favor, it is not reported to the credit score.

  • Put the reference for you. I'll remove the -1 once you remove the last paragraph. – littleadv Jun 21 '14 at 22:44
  • what about the last paragraph? – CQM Jun 22 '14 at 7:39
  • it doesn't make sense whatsoever. You claim that the OP has to carry balance to get positive effect on his credit report? Why? – littleadv Jun 22 '14 at 8:02
  • @littleadv the OP talked about utilization of the line and this was a reply to that, not how you interpreted it – CQM Jun 22 '14 at 13:42
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I wasn't sure whether to post this as an answer (it is an answer in a way), a comment to my question or an edit of my question. If an answer isn't the right way to go, please correct me.

So a lot has changed in the past two years. I now have a pretty decent credit score of 768.

After opening the secured card I mentioned in my question I first got a regular Discover card (not secured). This was possible due to the fact that there was now a record of me and my credit score. Then two months after that I opened another regular card at Capital One. Three months after that I opened a BoA credit card that gave me a better starting credit line (about $5k).

In the meantime I also closed the secured card since they start charging an annual fee after the first year.

After that I also opened two more cards on both me and my wife's name. My wife's great credit score gives us access to some really good cards with high credit lines and I noticed that once I 'existed' in the credit score agencies' records these accounts are being registered as well and the credit lines are counted towards my total line of credit as well.

I've been using all of these cards while still keeping my credit utilization low. And over time my credit score has been growing gradually. I also noticed that Capital One and BoA automatically increased my credit line over time, which in effect has a positive effect on your credit score.

So I'd say that starting out with a secured card to make yourself known does work for a new resident. The only figure that you have no real control over is the average account age, which is still a big factor for your credit score. But of course that will take care of itself, so I'm expecting another bump in my score in about three years from now.

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