Pay in full or carry a balance?
Okay all, I need some advice. My credit is *finally* starting to improve a lot, and my fiance and I decided it would be a good idea for me to get one major credit card to create a "recent good history" for unsecured loans (I have a very good credit history for secured loans like my house and truck - just not so good for the credit cards). So I applied for, and got a mastercard with a limit of $1000. Honestly, I'm scared to use it, but I really, really want to build my credit rating as high as possible in then next year or so.
Now, I know that in order for it to affect your credit report, there has to be activity on the account occasionally. And I plan on not charging anything I don't have the money to cover in my account. But I've read in some places that for building credit you should pay the balance in full each month, and other places say you should carry a small balance from month to month to build credit. My primary goal is to raise my credit score by using this responsibly, so in your experience, does it help your credit more to pay in full each month, or carry a small balance? I have no problem doing it either way - I just want to know what seems to have worked best for most people in raising credit scores. :-)
I'm planning to use this card for monthly gas and pet supplies only, so there will never be a huge amount put on it at once (maybe $200 every month - $150 pet budget which I'm generally under, and $50 gas budget). The money will be in my account (receipts will be treated as duplicate checks - subtracted from my checking acct balance every few days just like I do with checks), so I figure if I need to pay in full to build credit, no problem. If I need to carry a small balance, I figure I'll pay everything down to $20 every month, so there is a $20 balance left on the card each month that I'll have to pay interest on. I figure I can get the interest rates lowered in 6 months of good, on-time payments, then again in another 6 months.
So any advice, comments, and well-wishes are certainly appreciated. I'm hoping to start this in July, if I can get over my fears of actually using the card - might start very small with just gas budget only. I'm determined to make this work for me though! Thanks a bunch... :-)