Take Baby Steps to Boost Your Credit Score

Dear Credit Card Adviser,

I am trying to raise my credit score as much as possible. Is it better to charge around $5 per month on each of my four credit cards that have no balances, and pay them off before the statement cuts to show activity and on-time payments? Is using and paying off four credit cards before the statement cuts more effective at raising my credit score than only doing this with one of the cards?

-- Julie

Dear Julie, First, kudos to you for being a conscientious credit card holder. Not everyone takes the time to consider how to manage a pocketful of credit cards. The easy and general answer to your question is to keep charges low relative to credit limits and pay your bills on time every month to boost your credit score.

With that said, I went to the credit-scoring experts at FICO and VantageScore to get their thoughts.

"I'd say that charging and paying off more than one card each month is better than using only one, but the optimal number of cards showing a balance on the credit report (even though it's paid off each month) can vary," FICO spokesman Anthony Sprauve says.

For example, the average person with a FICO score above 780 -- considered a very good credit score -- has three credit cards that report a balance, Sprauve says. That same person also has a total of four to five cards, open and/or closed, on his or her credit report. With that in mind, Sprauve recommends using more than one card but no more than three to four each month.

Sarah Davies, senior vice president of product management and analytics at VantageScore Solutions LLC, also agrees with spreading the charges among several credit cards to avoid a high utilization ratio on one card.

Utilization is the percentage of how much of your available credit you use. It is calculated for each credit card individually and combined. A lower percentage -- generally below 10% -- lifts your credit score.

Of course, if your credit limits are high on each card and your monthly spending is very low, you could maintain a low utilization rate even if all the charges are on one card. If that's the case, you may consider rotating which card you use every month to maintain activity on each account but make bill-paying less cumbersome.

If you're determined to keep your utilization rate at an all-time low, here's a little secret courtesy of John Ulzheimer, president of consumer education at SmartCredit.com. Pay off your credit cards before the statement's closing date rather than the payment due date. That way, an issuer will report a zero balance to the credit bureaus. Issuers typically report the balance of the last statement to the credit bureaus.

In general, it's best to avoid micromanaging your credit score and instead focus on good financial habits overall, says Davies.

"Your credit score will take care of itself," she says.

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