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Posts: 65
Registered: ‎12-17-2009
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Carrying Over A Balance?

[ Edited ]

 Carrying over a balance and or making a minimum payment a good thing or a bad thing? I am confuse, i've have read dozens of articles stating that carrying a balance will affect you're score. And some say that having a $0 balance also hurts your score!? Could someone please educate me and point me in the right direction?



Starting Score: (8/06/2009) CHAP. 7 DISCHARGE 540 EQ
Current Score: (4/1/2010) 591 EQ / 598 EX/ 607TU
Goal Score: (END OF 2011) 660-680 EQ / EX / TU


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-increase credit into secure acc's

-keep low credit utilization

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h.e starks
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Posts: 5,279
Registered: ‎03-18-2008
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Re: Carrying Over A Balance?

Make sure you understand the distinction between carrying a balance and letting a balance report and paying in full before the statement date.

 

Carrying a balance: you receive a credit card statement (bill) for $100.  You pay $75.  In this case, you are carrying a balance of $25 over to your next statement.  This results in finance charges being added to your next bill.  The $100 statement balance is reported to the credit reporting agencies.

 

Letting a balance report: you receive a credit card statement for $100.  This $100 balance is reported to the credit reporting agencies, as above.  It demonstrates recent use of your credit cards.  However, you can pay this balance in full.  No balance is carried over to the next statement, and no finance charges are added to your next bill.

 

Paying in full before the statement date: Your statement normally is issued on the 20th of each month.  However, you make a payment of $100 on the 19th.  When the statement is issued, it has a $0 balance.  This $0 is what is reported to the credit reporting agencies.

 

 

Carrying a balance does not help or hurt your score, in and of itself.  If your utilization is persistently high because you carry balances, however, this will have a negative impact.  If you must carry a balance, as long as you make the monthly minimum payments then you credit won't suffer (i.e. no late payments will be reported).  However, the finance charges will continue to accrue.

 

Letting a balance report helps your score because it shows recent use of credit cards.  You can pay them off in full after the statement arrives and incur no finance charges, and the statement balance will report to the credit reporting agencies.  This is not necessarily a bad thing, but if you have high balances on each statement that cause your utilization to be high, or if you have too many cards reporting balances, then this will have a negative effect on your scores.

 

To avoid the scenario in the paragraph above, many of us use the strategy of paying off the balance before the statement is issued.  This results in a $0 balance reported to the CRAs, a lower utilization, and fewer cards reporting balances.  However, it's generally recommended that you allow at least one card to report a small balance, because this will indicate the recent use of credit cards.

 

 

New Contributor
Posts: 65
Registered: ‎12-17-2009
0

Re: Carrying Over A Balance?

 How often to carry over a balance in a year?



Starting Score: (8/06/2009) CHAP. 7 DISCHARGE 540 EQ
Current Score: (4/1/2010) 591 EQ / 598 EX/ 607TU
Goal Score: (END OF 2011) 660-680 EQ / EX / TU


Take the FICO Fitness Challenge

2010 GOALS

-deposit funds every quarter into secure acc's.

-increase credit into secure acc's

-keep low credit utilization

-obtain a cd secure loan

-no more inquiries for the year

SOL EXPIRATION DATES:

asset acceptance
11.2010

h.e starks
10.2012
11.2012
07.2013
08.2015
Moderator Emeritus
Posts: 17,409
Registered: ‎07-14-2009
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Re: Carrying Over A Balance?

 


striving_for_success wrote:

 How often to carry over a balance in a year?


 

Never carry over a balance if at all possible. All that does is add finance charges.

 

 

 

From a BK years ago to:
7/09 TU-742 EQ- 779
8/09 TU-765 EQ- 783
9/09 EX pulled by lender 802

You can do the same thing with hard work

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Moderator Emerita
Posts: 28,095
Registered: ‎04-01-2007
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Re: Carrying Over A Balance?

 


striving_for_success wrote:

 How often to carry over a balance in a year?


 

Just think of your credit card as being a very slow debit card, which must be paid off within the month. Plan on having enough money in the bank to cover it whenever you use it, or at least money available from the next paycheck.

 

* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Senior Contributor
Posts: 3,871
Registered: ‎01-10-2008
0

Re: Carrying Over A Balance?

+1

 

More great HTSU advice, par usual.

DCU EQ 5.0, Citi EQ 08 Bankcard, PenFed EX NG2
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Frequent Contributor
Posts: 449
Registered: ‎02-21-2009
0

Re: Carrying Over A Balance?

 


Lel wrote:

Make sure you understand the distinction between carrying a balance and letting a balance report and paying in full before the statement date.

 

Carrying a balance: you receive a credit card statement (bill) for $100.  You pay $75.  In this case, you are carrying a balance of $25 over to your next statement.  This results in finance charges being added to your next bill.  The $100 statement balance is reported to the credit reporting agencies.

 

Letting a balance report: you receive a credit card statement for $100.  This $100 balance is reported to the credit reporting agencies, as above.  It demonstrates recent use of your credit cards.  However, you can pay this balance in full.  No balance is carried over to the next statement, and no finance charges are added to your next bill.

 

Paying in full before the statement date: Your statement normally is issued on the 20th of each month.  However, you make a payment of $100 on the 19th.  When the statement is issued, it has a $0 balance.  This $0 is what is reported to the credit reporting agencies.

 

 

Carrying a balance does not help or hurt your score, in and of itself.  If your utilization is persistently high because you carry balances, however, this will have a negative impact.  If you must carry a balance, as long as you make the monthly minimum payments then you credit won't suffer (i.e. no late payments will be reported).  However, the finance charges will continue to accrue.

 

Letting a balance report helps your score because it shows recent use of credit cards.  You can pay them off in full after the statement arrives and incur no finance charges, and the statement balance will report to the credit reporting agencies.  This is not necessarily a bad thing, but if you have high balances on each statement that cause your utilization to be high, or if you have too many cards reporting balances, then this will have a negative effect on your scores.

 

To avoid the scenario in the paragraph above, many of us use the strategy of paying off the balance before the statement is issued.  This results in a $0 balance reported to the CRAs, a lower utilization, and fewer cards reporting balances.  However, it's generally recommended that you allow at least one card to report a small balance, because this will indicate the recent use of credit cards.

 

 


 

Someone please make this post available as a stickey in this forum.  It contains alot of informations for newbies.

 

TU - 737 - 02/21/09, 769 - 02/06/10, 795 - 09/08/10
EQ - 758 - 02/21/09, 783 - 02/06/10, 805 - 09/08/10
EX (PLUS) - 781 03/23/09, 787 - 02/06/10, 783 - 08/09/10
New Contributor
Posts: 65
Registered: ‎12-17-2009
0

Re: Carrying Over A Balance?

 let's say I have 5 credit cards, should I let a balance report on ALL 5 without jeopardizing my credit scores? Yes this should be sticked.



Starting Score: (8/06/2009) CHAP. 7 DISCHARGE 540 EQ
Current Score: (4/1/2010) 591 EQ / 598 EX/ 607TU
Goal Score: (END OF 2011) 660-680 EQ / EX / TU


Take the FICO Fitness Challenge

2010 GOALS

-deposit funds every quarter into secure acc's.

-increase credit into secure acc's

-keep low credit utilization

-obtain a cd secure loan

-no more inquiries for the year

SOL EXPIRATION DATES:

asset acceptance
11.2010

h.e starks
10.2012
11.2012
07.2013
08.2015
Moderator Emeritus
Posts: 5,279
Registered: ‎03-18-2008
0

Re: Carrying Over A Balance?

Generally, you want to have less than half of your tradelines reporting balances.  A lot of us like to try to boost our score by letting just one card report a small balance.

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