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Regular Contributor
Posts: 206
Registered: ‎12-20-2012
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How does carrying a balance impact score/ approval odds?

Any wisdom would be appreciated here. My Citi branch manager swears that Citi actually prefers to see people carry a balance on their cards but that seems to contradict the forums...

I finished grad school in May, and landed a job by July. However my first paycheck didn't come in until Sept... so to keep the groceries flowing, etc. I had to use my credit card more than I wanted to. My CitiForward has a 2,000 limit but on the last few statements I've carried about $900 on there (I have actually used it nearly to max but paid it down below 50% utilization before the statement cut). The balance has hovered around that amount since July statement.

As of this month I can pay the whole thing down to zero, but my question is- will this util hurt me when apping for other cards? Or when asking Citi for an increase? Because now that I have income I am trying to app for a new card or two to expand my thin file...

-thanks myFico members!

CareCredit opened 4/11, balance 0 /$3,000
CitiForward opened 2/13, balance $900 /$2,000
Macy's opened 2011 balance $88/$1,000
Nordstroms opened 7/2013, balance $0/$500


Starting Score: EXP 615 | TU 610 | EQ 635
Current Score: EXP 719 (lender pull 10/15) | TU 707 | EQ 700 (lender pull 10/25)
Goal Score: 740
Valued Contributor
Posts: 1,702
Registered: ‎01-23-2013
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Re: How does carrying a balance impact score/ approval odds?

There are really two issues involved. One is whether the individual card vendor likes balances or not. The other is how balances affect FICO scores.

 

First issue: Some card vendors like balances, some don't. Discover and Barclays like balances. Amex would rather see zero on every statement. It varies and is a huge topic of discussion on these forums as people try to figure out the magic formulas for each card. I don't know about Citi, but if someone connected with Citi says they like balances, then assume they do.

 

Second issue: For credit scoring purposes, everybody around here will tell you that your best bet is to keep a balance of 9% or less on ONE card, and you choose which card. For scoring purposes you may want a balance on Citi this month and on BofA (or whatever) the next.

 

If you're aiming for the best CLI you can get with Citi, do what you think Citi prefers. If you're aiming for a good score to app for other cards, do what FICO likes best.

 

Valued Contributor
Posts: 1,145
Registered: ‎04-13-2013
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Re: How does carrying a balance impact score/ approval odds?

Your branch manager is full of crap. Of course Citi prefers people to carry a balance because they make money off that. But the question is, are you going to do something to solely benefit the bank or yourself? There is absolutely no need to carry a balance i.e. pay interest, in order to benefit your credit report - score or approval wise. 


Gardening since 7/16/14
Current: EQ 711 7/13/14; EX 724 TU 721 6/19/14
Goal: 760+
Valued Contributor
Posts: 1,702
Registered: ‎01-23-2013
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Re: How does carrying a balance impact score/ approval odds?


parakleet wrote:

Your branch manager is full of crap. Of course Citi prefers people to carry a balance because they make money off that. But the question is, are you going to do something to solely benefit the bank or yourself? There is absolutely no need to carry a balance i.e. pay interest, in order to benefit your credit report - score or approval wise. 


The bank manager may not be full of crap IF the question is "What's the best way to get long-term luv from Citi."

 

Certainly there is no need to carry a balance from month to month or to pay interest (though for scoring purposes there IS a need to have a balance report on at least one card every month to show credit activity; you can then PIF after the statement date to avoid paying interest). But if the OP specifically wants to get growth from his Citi card and-or a good FICO score, then he's got a valid question to which the bank manager might have a valid answer.

 

Valued Contributor
Posts: 1,994
Registered: ‎01-24-2012
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Re: How does carrying a balance impact score/ approval odds?

If you plan to apply for new cards then pay the card down. A card at almost 50% doesn't look good. It's only 900 though, so it may not be a big deal. I have never carried  a balance with Citi and have gotten increases. My mom has been carrying a balance almost to the limit while it's at zero percent and Citi raised her limit by 4000 or something after six months, so they do appear to like carrying balances.

Regular Contributor
Posts: 206
Registered: ‎12-20-2012
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Re: How does carrying a balance impact score/ approval odds?

Really?? Citi does auto CLI?? Cool! Maybe I can just wait it out then and that will turn up in the mail...

Starting Score: EXP 615 | TU 610 | EQ 635
Current Score: EXP 719 (lender pull 10/15) | TU 707 | EQ 700 (lender pull 10/25)
Goal Score: 740
Regular Contributor
Posts: 206
Registered: ‎12-20-2012
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Re: How does carrying a balance impact score/ approval odds?

I DO think it sucks that Citi pulled so many inquiries to give me that card... my EQ score is 30pts lower than the other ones and that's why.. WIll that just be forever? How long do those take to fall off?

Starting Score: EXP 615 | TU 610 | EQ 635
Current Score: EXP 719 (lender pull 10/15) | TU 707 | EQ 700 (lender pull 10/25)
Goal Score: 740
Established Contributor
Posts: 522
Registered: ‎07-18-2013
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Re: How does carrying a balance impact score/ approval odds?


loviedovie wrote:
I DO think it sucks that Citi pulled so many inquiries to give me that card... my EQ score is 30pts lower than the other ones and that's why.. WIll that just be forever? How long do those take to fall off?

The inquiries have less of an impact after 6 months, stop affecting your score after 1 year and drop off after 2 years.  Citi seems HP in my opinion.  Good luck with your account.

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Regular Contributor
Posts: 206
Registered: ‎12-20-2012
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Re: How does carrying a balance impact score/ approval odds?

thanks Gunnar, navigate this, parakleet, missjae! Smiley Happy

Starting Score: EXP 615 | TU 610 | EQ 635
Current Score: EXP 719 (lender pull 10/15) | TU 707 | EQ 700 (lender pull 10/25)
Goal Score: 740
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