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how bad is carrying balance in terms of Credit history?

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user5387
Valued Contributor

Re: how bad is carrying balance in terms of Credit history?


@Feather_Hat wrote:

hey guys, i was paying my credit card today and one question popped up .

so far, i've been paying in full before the due day, but what would happen if i just pay miniume amount instead of full amount?

i know it sounds really REALLY stupid but i am new to credit card so please excus my foolish question..

so, IF i pay just miniume amount, would that look really bad to my cureent/future lenders?

could it possibly put down my credit score?


thanks !

 


Your current score is a reflection of your current utilization, and there's no "memory" in your score.

 

So if you carry a balance for a while, suffer a score hit, and then pay the balance off, your updated score will reflect that.

 

However, a given lender does have memory of what your balance has been at various times.  One example of negative action is balance chasing, where the lender lowers your limit as a high balance is paid down.  This does happen to some people who carry a high balance for a period of time.

 

Message 11 of 19
jamesdwi
Valued Contributor

Re: how bad is carrying balance in terms of Credit history?

it is wise to always pay more than the minimum, i like to always pay double the minimum, while paying the minimum will not effect your fico score no one knows if its a red flag in one of your current or future lenders internal scoring method. There is a reason lenders use EX reports, they get a lot of details about how you pay every month. Than can effect future approvals, CLI and auto-CLI.

 

 

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Message 12 of 19
longtimelurker
Epic Contributor

Re: how bad is carrying balance in terms of Credit history?


@Feather_Hat wrote:

hey guys, i was paying my credit card today and one question popped up .

so far, i've been paying in full before the due day, but what would happen if i just pay miniume amount instead of full amount?

i know it sounds really REALLY stupid but i am new to credit card so please excus my foolish question..

so, IF i pay just miniume amount, would that look really bad to my cureent/future lenders?

could it possibly put down my credit score?


thanks !

 



@Feather_Hat wrote:

hey guys, i was paying my credit card today and one question popped up .

so far, i've been paying in full before the due day, but what would happen if i just pay miniume amount instead of full amount?

i know it sounds really REALLY stupid but i am new to credit card so please excus my foolish question..

so, IF i pay just miniume amount, would that look really bad to my cureent/future lenders?

could it possibly put down my credit score?


thanks !

 


Are these in a 0% APR period?  Because apart from credit history impacts, the usual bad thing about carrying a balance is the high interest charges.  Obviously doesn't apply if you are in a 0% period, but then you need extra discipline to make sure you can pay off before the 0% ends.

Message 13 of 19
FinStar
Moderator Emeritus

Re: how bad is carrying balance in terms of Credit history?


@bonehead88 wrote:

Finstar, what do you mean by "scores could drop if your utilization stays stagnant?" My understanding is that UTIL reflects only the last month's reported data. Is there a lasting effect from a high UTIL of over >20-30% down the line after they've been paid down?

 

Reason why I ask - currently sitting on a couple 0% APR balances until Aug/Nov respectively.


Stagnant in the form if the OP were to incur incremental debt for all/most CCs long term (raising utilization accross the board) without reducing those balances in a given timeframe. 

Message 14 of 19
Feather_Hat
Established Member

Re: how bad is carrying balance in terms of Credit history?

currently my card is on 0% intro APR.
but I wont go too crazy Smiley Happy but thanks guys for all the thoughts and advices !!
Message 15 of 19
Feather_Hat
Established Member

Re: how bad is carrying balance in terms of Credit history?

while i'm at this topic, i have another question;

i  see many people get a card for one year for perks (0% into AF for first year, bounus points etx), then get rid of the card before one year..


is it okay to do that ? i mean, wouldn't it show on credit history and when lenders see it, it could come as negative?

Message 16 of 19
Stralem
Established Contributor

Re: how bad is carrying balance in terms of Credit history?


@Feather_Hat wrote:

while i'm at this topic, i have another question;

i  see many people get a card for one year for perks (0% into AF for first year, bounus points etx), then get rid of the card before one year..


is it okay to do that ? i mean, wouldn't it show on credit history and when lenders see it, it could come as negative?


Few people actually get rid of the cards. What most people do is simply downgrade (or "product change") their card to one with similar benefits but no annual fee.

 

For example, many people get a Sapphire Preferred from Chase to get the bonus points, but then downgrade to the normal Sapphire to avoid the annual fee. It's a sound strategy, even though it might make a lender think you're a churner.

I Have Way Too Many of These.

American Express - No CLI or Appreciation Gift in 7 Years

Citibank - Handing Out Credit Limits Like Candy

Chase - Surprisingly, Still Tolerating My Credit-Chasing Ways

Bank of America - My Newest Bae.

Everyone Else.
Message 17 of 19
Feather_Hat
Established Member

Re: how bad is carrying balance in terms of Credit history?


@Stralem wrote:

@Feather_Hat wrote:

while i'm at this topic, i have another question;

i  see many people get a card for one year for perks (0% into AF for first year, bounus points etx), then get rid of the card before one year..


is it okay to do that ? i mean, wouldn't it show on credit history and when lenders see it, it could come as negative?


Few people actually get rid of the cards. What most people do is simply downgrade (or "product change") their card to one with similar benefits but no annual fee.

 

For example, many people get a Sapphire Preferred from Chase to get the bonus points, but then downgrade to the normal Sapphire to avoid the annual fee. It's a sound strategy, even though it might make a lender think you're a churner.


ohh i see..so that's what people does lol

never thought about downgrading...

thanks for info =)

Message 18 of 19
longtimelurker
Epic Contributor

Re: how bad is carrying balance in terms of Credit history?


@Feather_Hat wrote:

@Stralem wrote:

@Feather_Hat wrote:

while i'm at this topic, i have another question;

i  see many people get a card for one year for perks (0% into AF for first year, bounus points etx), then get rid of the card before one year..


is it okay to do that ? i mean, wouldn't it show on credit history and when lenders see it, it could come as negative?


Few people actually get rid of the cards. What most people do is simply downgrade (or "product change") their card to one with similar benefits but no annual fee.

 

For example, many people get a Sapphire Preferred from Chase to get the bonus points, but then downgrade to the normal Sapphire to avoid the annual fee. It's a sound strategy, even though it might make a lender think you're a churner.


ohh i see..so that's what people does lol

never thought about downgrading...

thanks for info =)


And people do close as well (to reduce overall credit or credit with one issuer if you want something else from them).   Generally, doing it a "little" is OK, there are always valid reasons why someone wants to close a card (their needs/plans changed etc).   Just don't do it to often with a single issuer!

Message 19 of 19
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