topic Re: Can Somebody Nice Explain "Don't Carry a Balance?" in Credit Cards

Can Somebody Nice Explain "Don't Carry a Balance?"

Johnny_Favorite — Fri, 12 Oct 2012 23:58:41 GMT

So you have a credit card with a $2000 limit.

You charge $200 bucks on it.

You pay it off.

It reports as zero when it hits because there's no balance.

How exactly do you build credit if it never shows you have a balance due? What am I missing and sorry if this is a dumb question (it probably is)

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

TeeandDee — Sat, 13 Oct 2012 00:02:42 GMT

Johnny_Favorite wrote:
So you have a credit card with a $2000 limit.

You charge $200 bucks on it.

You pay it off.

It reports as zero when it hits because there's no balance.

How exactly do you build credit if it never shows you have a balance due? What am I missing and sorry if this is a dumb question (it probably is)

Hi! It's not a dumb question at all. From what I've learned on here, it is recommended that you let all credit accounts report zero balances except one, and keep that one at atbout 9%. This keeps utilization down and helps your FICO score. People can still see you are using your accounts becuase it reports the "Highest Balance" so they know you are using it, but keeping utl down is always recommended, especially when you may be apping for new accounts, mortgages or cars. Just my two cents..hope it helps!:smileyhappy:

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

Duncanrr — Sat, 13 Oct 2012 00:11:50 GMT

There are other reasons other than FICO scores. It keeps you from over-extending yourself with credit card debt. You will be less likely to be paying high interest to CC companies and if you have financial trouble, like losing a job, you will not have to worry about making high payments on CC's.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

webhopper — Sat, 13 Oct 2012 00:15:36 GMT

I don't agree with never letting a card report a balance. The fact is that your highest balance is reported. I have allowed a 4k balance to report on chase. A 4890 balance has reported on discover and a 8625 balance has reported on nfcu.

I also paid in full immediately after statement cut.

I personally think that manual reviewers and computers give me bonus points for actually using my cards.

For the most part I don't carry balances but if one months spend is rather high on a card I will let it report just to increase my "high balance"

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

webhopper — Sat, 13 Oct 2012 00:18:03 GMT

I also let a 5780 balance report on zync.

That being said I don't let balances report on all cards at the same time that would be stupid. I also don't let any balances report if I'm planning for an app

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

Link2k — Sat, 13 Oct 2012 00:19:25 GMT

I think there may be some confusion here.

Don't carry a balance means simply pay your account in full every month no matter how much you charge.

That is completely different than don't let a balance report. A balance can report even if you pay it in full. The last three months a balance has reported on my cards but I pay all my new charges meaning no interest is charged.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

Johnny_Favorite — Sat, 13 Oct 2012 00:30:16 GMT

Okay thank you all. I think I'm understanding a little better now.

Credit newbie here.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

nicholasyud — Sat, 13 Oct 2012 01:13:14 GMT

If you had fund to paid then using it as much as you want but then paid most of them off before statement cut off .....leave 1 or 2 to report to balance........that s how I do.....

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

shadow2k — Sat, 13 Oct 2012 20:11:54 GMT

webhopper wrote:
I don't agree with never letting a card report a balance. The fact is that your highest balance is reported. I have allowed a 4k balance to report on chase. A 4890 balance has reported on discover and a 8625 balance has reported on nfcu.

I also paid in full immediately after statement cut.

I personally think that manual reviewers and computers give me bonus points for actually using my cards.

For the most part I don't carry balances but if one months spend is rather high on a card I will let it report just to increase my "high balance"

Highest Balance is the largest balance that's been on the card at any time. If you charged $5k, pay it the next day, and then the statement cuts showing a $0 balance, that $5k high balance will still be reported as your Highest Balance. You don't need to let the statement cut for that to show. And no, you get no bonus points for that.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

seigex — Sat, 13 Oct 2012 23:10:20 GMT

shadow2k wrote:
webhopper wrote:
I don't agree with never letting a card report a balance. The fact is that your highest balance is reported. I have allowed a 4k balance to report on chase. A 4890 balance has reported on discover and a 8625 balance has reported on nfcu.

I also paid in full immediately after statement cut.

I personally think that manual reviewers and computers give me bonus points for actually using my cards.

For the most part I don't carry balances but if one months spend is rather high on a card I will let it report just to increase my "high balance"
Highest Balance is the largest balance that's been on the card at any time. If you charged $5k, pay it the next day, and then the statement cuts showing a $0 balance, that $5k high balance will still be reported as your Highest Balance. You don't need to let the statement cut for that to show. And no, you get no bonus points for that.

This, and also remember that credit reports don't have a memory, so nobody, not even fico, will know what your previous months balance was. However, you WILL lose points for having a maxed out card posted to your report (on statement cut date) even if you pay it off the day after, and will have to wait a month for it to recover.

Also the banks make their money on fees and I'm sure would rather have PIF your balances each month since to them it means less risk and less chance that you're going to default, and they're gonig to not only have to write off your debt, but spend money trying to collect. I'm sure they'll be more willing to extend you higher CLs and on the spot signature loans with lower interest if you have a hsitory with them of responsibly managing your money.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

webhopper — Sun, 14 Oct 2012 00:29:58 GMT

shadow2k wrote:
webhopper wrote:
I don't agree with never letting a card report a balance. The fact is that your highest balance is reported. I have allowed a 4k balance to report on chase. A 4890 balance has reported on discover and a 8625 balance has reported on nfcu.

I also paid in full immediately after statement cut.

I personally think that manual reviewers and computers give me bonus points for actually using my cards.

For the most part I don't carry balances but if one months spend is rather high on a card I will let it report just to increase my "high balance"
Highest Balance is the largest balance that's been on the card at any time. If you charged $5k, pay it the next day, and then the statement cuts showing a $0 balance, that $5k high balance will still be reported as your Highest Balance. You don't need to let the statement cut for that to show. And no, you get no bonus points for that.

That varies by lender unfortunately.... for Amex, they do not adjust your "high balance" without letting the statement show the balance. I beg to differ on gettng no bonus points for that... Discover always seems to give me CLIs after I've let a large balance report and then immediately pay it off before the next statement. This has happened 5 times.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

webhopper — Sun, 14 Oct 2012 00:36:22 GMT

seigex wrote:
shadow2k wrote:
webhopper wrote:
I don't agree with never letting a card report a balance. The fact is that your highest balance is reported. I have allowed a 4k balance to report on chase. A 4890 balance has reported on discover and a 8625 balance has reported on nfcu.

I also paid in full immediately after statement cut.

I personally think that manual reviewers and computers give me bonus points for actually using my cards.

For the most part I don't carry balances but if one months spend is rather high on a card I will let it report just to increase my "high balance"
Highest Balance is the largest balance that's been on the card at any time. If you charged $5k, pay it the next day, and then the statement cuts showing a $0 balance, that $5k high balance will still be reported as your Highest Balance. You don't need to let the statement cut for that to show. And no, you get no bonus points for that.

This, and also remember that credit reports don't have a memory, so nobody, not even fico, will know what your previous months balance was. However, you WILL lose points for having a maxed out card posted to your report (on statement cut date) even if you pay it off the day after, and will have to wait a month for it to recover.

Also the banks make their money on fees and I'm sure would rather have PIF your balances each month since to them it means less risk and less chance that you're going to default, and they're gonig to not only have to write off your debt, but spend money trying to collect. I'm sure they'll be more willing to extend you higher CLs and on the spot signature loans with lower interest if you have a hsitory with them of responsibly managing your money.

I already have this... so I'm not really sure that I'm in any danger of not getting this.... I was granted a 45k auto loan at 1.79% today, no verification of income required. I was granted a 15k LOC over the phone about a month ago..... and I have 13 year history of responsibly managing my money.... I don't plan on really applying for anything, so it doesn't really hurt anything to let a high balance report. Obviously before I apply for anything, I pay off all balances except for 1.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

shadow2k — Sun, 14 Oct 2012 03:14:34 GMT

webhopper wrote:
shadow2k wrote:
webhopper wrote:
I don't agree with never letting a card report a balance. The fact is that your highest balance is reported. I have allowed a 4k balance to report on chase. A 4890 balance has reported on discover and a 8625 balance has reported on nfcu.

I also paid in full immediately after statement cut.

I personally think that manual reviewers and computers give me bonus points for actually using my cards.

For the most part I don't carry balances but if one months spend is rather high on a card I will let it report just to increase my "high balance"
Highest Balance is the largest balance that's been on the card at any time. If you charged $5k, pay it the next day, and then the statement cuts showing a $0 balance, that $5k high balance will still be reported as your Highest Balance. You don't need to let the statement cut for that to show. And no, you get no bonus points for that.

That varies by lender unfortunately.... for Amex, they do not adjust your "high balance" without letting the statement show the balance. I beg to differ on gettng no bonus points for that... Discover always seems to give me CLIs after I've let a large balance report and then immediately pay it off before the next statement. This has happened 5 times.

Amex charge cards (like your Zync) and other NPSL cards (like Visa Signature) are different because they don't report limits to begin with....just High Balances. That is what gets used as a Credit Limit on your report for utilization purposes. So yeah, I guess you get "bonus points" in a sense for these cards, but not in the way that you are thinking. It's not because your showing use, it's because those cards need something to use as your credit limit because they don't report one to begin with.

Discover will auto-CLI people when they show heavy use of the card. That still doesn't mean you need to let it report high balances. I've been auto-CLI'd be them multiple times as well. My Highest Balance on my Disc More is just under $1k, an amount that never hit any statement because I pay off most balances before statements cut. They've auto-CLI'd me up to $10k at this point.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

SwampSystems — Sun, 14 Oct 2012 03:24:54 GMT

webhopper wrote:
shadow2k wrote:
Highest Balance is the largest balance that's been on the card at any time. If you charged $5k, pay it the next day, and then the statement cuts showing a $0 balance, that $5k high balance will still be reported as your Highest Balance. You don't need to let the statement cut for that to show. And no, you get no bonus points for that.
That varies by lender unfortunately.... for Amex, they do not adjust your "high balance" without letting the statement show the balance. I beg to differ on gettng no bonus points for that... Discover always seems to give me CLIs after I've let a large balance report and then immediately pay it off before the next statement. This has happened 5 times.

The highest balance I ever had on my Discover card was over $2,500, but the highest statement balance was only $967. My report shows $967 for the high balance.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

webhopper — Sun, 14 Oct 2012 03:26:28 GMT

Ahh I see. My discover started at 1200 back in 1999 but I didn't really use the card until 2006. I'm at 5k now. I don't use my discover card very heavily. Most of my spending is on amex. A lot of myfico forum members seem to think that having balances report is a terrible thing. Its only terrible if you've a) spent more than you can pay in full or b) financed a really large purchase on a credit card. Also; letting large balances report when you plan on apping is a terrible thing.

In my case it is sometimes impractical or impossible to PIF before statement cuts due to the way reimbursements work with my employer. We aren't allowed to get reimbursement until we've actually taken the trip. If the flights and hotels were purchased 2 weeks in advance and the trip lasts 1 week... it may be3 weeks until I turn in my expense form and another 4 days to receive the direct deposit... since they are only done on Thursdays.

My point being that its absolutely not the end of the world if a balance reports... but it is bad to "carry a balance"

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

shadow2k — Sun, 14 Oct 2012 05:44:33 GMT

webhopper wrote:

My point being that its absolutely not the end of the world if a balance reports... but it is bad to "carry a balance"

Carrying small balances on almost all my cards compared to just one of my cards is a 30pt difference for me. 770 EX FICO vs 800 EX FICO. But the things that I do with my credit affects my scores more because I don't have many things that are lowering them. So every little thing hurts me more than it would hurt someone with lower scores.

But to be honest, I let small balances report all the time. I only focus on my score at certain times during the year, like mini app sprees and insurance renewal time.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

webhopper — Sun, 14 Oct 2012 06:17:05 GMT

shadow2k wrote:
webhopper wrote:

My point being that its absolutely not the end of the world if a balance reports... but it is bad to "carry a balance"
Carrying small balances on almost all my cards compared to just one of my cards is a 30pt difference for me. 770 EX FICO vs 800 EX FICO. But the things that I do with my credit affects my scores more because I don't have many things that are lowering them. So every little thing hurts me more than it would hurt someone with lower scores.

But to be honest, I let small balances report all the time. I only focus on my score at certain times during the year, like mini app sprees and insurance renewal time.

wow that is a huge difference! I don't pull my myfico scores very often. I use credit secure by amex and do daily 3 bureau pulls. I have a few negatives holding me back. Primarily a medical collection from a physical therapist who sent the bill to the wrong address in 2008. I had bought my first home the day before I had a really bad car accident that required the physical therapy. I was young and dumb and didn't know I would still owe something even after insurance paid out. Luckily I learned from this and start looking for the bill after I visit the doctor. The other negatives are from a divorce in 2006. Ex husband got the truck and decided to stop paying for the truck.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

xboxrunner — Sun, 14 Oct 2012 07:52:20 GMT

shadow2k wrote:
webhopper wrote:
I don't agree with never letting a card report a balance. The fact is that your highest balance is reported. I have allowed a 4k balance to report on chase. A 4890 balance has reported on discover and a 8625 balance has reported on nfcu.

I also paid in full immediately after statement cut.

I personally think that manual reviewers and computers give me bonus points for actually using my cards.

For the most part I don't carry balances but if one months spend is rather high on a card I will let it report just to increase my "high balance"
Highest Balance is the largest balance that's been on the card at any time. If you charged $5k, pay it the next day, and then the statement cuts showing a $0 balance, that $5k high balance will still be reported as your Highest Balance. You don't need to let the statement cut for that to show. And no, you get no bonus points for that.

Pretty much this.

I pay my cards off as soon as I get a chance--usually a few days after a balance shows up online on them. It still shows you use them on your credit report even if the current balance is $0. If your going to purposely carry a balance do so on only one card and use less than 10% of your credit line, howver carrying a balance or letting it cut is not necessary.

Re: Can Somebody Nice Explain "Don't Carry a Balance?"

seigex — Sun, 14 Oct 2012 08:11:27 GMT

webhopper wrote:
seigex wrote:
shadow2k wrote:
webhopper wrote:
I don't agree with never letting a card report a balance. The fact is that your highest balance is reported. I have allowed a 4k balance to report on chase. A 4890 balance has reported on discover and a 8625 balance has reported on nfcu.

I also paid in full immediately after statement cut.

I personally think that manual reviewers and computers give me bonus points for actually using my cards.

For the most part I don't carry balances but if one months spend is rather high on a card I will let it report just to increase my "high balance"
Highest Balance is the largest balance that's been on the card at any time. If you charged $5k, pay it the next day, and then the statement cuts showing a $0 balance, that $5k high balance will still be reported as your Highest Balance. You don't need to let the statement cut for that to show. And no, you get no bonus points for that.

This, and also remember that credit reports don't have a memory, so nobody, not even fico, will know what your previous months balance was. However, you WILL lose points for having a maxed out card posted to your report (on statement cut date) even if you pay it off the day after, and will have to wait a month for it to recover.

Also the banks make their money on fees and I'm sure would rather have PIF your balances each month since to them it means less risk and less chance that you're going to default, and they're gonig to not only have to write off your debt, but spend money trying to collect. I'm sure they'll be more willing to extend you higher CLs and on the spot signature loans with lower interest if you have a hsitory with them of responsibly managing your money.
I already have this... so I'm not really sure that I'm in any danger of not getting this.... I was granted a 45k auto loan at 1.79% today, no verification of income required. I was granted a 15k LOC over the phone about a month ago..... and I have 13 year history of responsibly managing my money.... I don't plan on really applying for anything, so it doesn't really hurt anything to let a high balance report. Obviously before I apply for anything, I pay off all balances except for 1.

I think you're missing my point, it's nice you got a 45k loan @ 1.79%, but you're not the OP, and many other people on this forum who could be hurt by letting high balances report, who might not have other benefits to their credit file. Especially if these people have lower limit credit cards, or a lower total credit available, which will kill their UTI.

Letting balances (especially large balances, or on multiple cards) report with the intent to pay them off the next day is bad form. It will report as a maxed out card, and that is a factor in determining not only your FICO score, but also on a manual review, as it shows the creditor that you have an obligation that might take away from a new loan, and are more of a risk and higher util. There is no benefit to letting a hgih balance report, absolutely none at all.