upping credit score by carrying a balance

[Anonymous]

Hi,

Sorry to post something that is already posted somewhere but I remember reading one of the forum posts concerning NOT completely paying off CCs each month and carrying a small balance instead.  Then somehow timing it right to pay the small balance before the due date so I'm not charged interest.  This method would also increase my FICO score somehow.

I've looked high and low but I can't find that post again.  I don't remember the timing of payments.  I believe you needed to determine when the statement closed then pay the majority on that date and then pay the remainder by the due date.  Does that sound right?  Are there any other methods to pay CCs to increase my score?  Please let me know and thanks for your help!

BTW...I have a 744 score and currently use and pay off 5 CCs per month.  I also have 3 mortgages and never miss a payment on any.

[haulingthescoreup]

Every now and again, someone posts something like this, but it's incorrect.

Allowing a balance to report, rather than allowing $0 to report, won't help your scores. It might not hurt, but it won't help.

If they were saying that you owe $500, and you paid $450 of it before the statement date, letting the $50 report, and then pay the $50 before the due date, that would be better than letting all $500 report.

But in general, all your cards except one or possibly two should report $0, and the reporting cards should report less 1-9% of their individual credit limits, for optimum scoring. With those cards that do report, be sure to pay them off fully before the due date, so that you won't have to pay interest. With the cards that don't report, be sure to use them periodically so that they're not closed for non-usage.

This used to be knows as the "FICO util scoring game", and many considered it unnecessary and a waste of time, but with the recent actions by credit card companies, it turns out to be pretty helpful.

[Anonymous]

Checked my credit scores at the end of November and had 1 CC reprting a balance of $315, my others all reported zero. Checked my credit score yesterday, all CC reprting zero balances. My TU score dropped from 802 to 790.The reason stated was:

There are no recent balances on your revolving credit accounts.

Your credit report shows no recent balances on your revolving accounts. Your FICO score was hurt because you are not currently demonstrating active revolving credit management.

What to do about this: You might consider moderate and responsible use of your credit cards (such as charging low balances and repaying them on time).

Thought this might help.

[Anonymous]

Thanks for the quick replies!  OK, so if I understand right...it is in my best interest to show a small balance (1-9% of my CL) or pay-off my CC BEFORE the balance is reported each month.  What is the report date?  Is it when the statement closes or the due date?  Also you gave me the impression some CCs don't report.  How do you determine if it reports or not?

[SCF]

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@Anonymous wrote:
Thanks for the quick replies!  OK, so if I understand right...it is in my best interest to show a small balance (1-9% of my CL) or pay-off my CC BEFORE the balance is reported each month.  What is the report date?  Is it when the statement closes or the due date?  Also you gave me the impression some CCs don't report.  How do you determine if it reports or not?

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For MOST CCs, the report date is the statement date, so whatever figure shows up on your monthly statement is what will filter its way out to the CRAs.  HSBC cards generally report the balance on the last day of the month, and Amex cards report the statement balance, but they do so approximately 30 days later (so Nov's balance will show up in December).

There are two ways to figure out when your specific card is reporting, either #1 keep track of your balance and then compare it to your report and see when you had the balance that the report shows or #2 (much easier to my mind) do a search/ask here and see what the many people who did #1 before you have found out, there is also #3 call the company and ask, but the CSRs usually have no idea what you're talking about.

Hope that helps!

[theNavigator]

To Be honest, I had the same thing stated on two of my reports about not using my credit. I think a small balance probably does help the score as long as it's in the right percentage and is being paid on etc.. When you have an all $0 balance it's not really helping in my opinion, especially after the two agencies made that a very big issue in my report. for "Not using credit"... or whatever they worded it as.

[haulingthescoreup]

The FICO scoring formulas are looking to see how well we handle credit. If we don't handle it at all (all $0's month after month), there's nothing to evaluate us on. I suppose it looks like we're too scared to use our credit.

Gotta love mind games with statistical risk predictions!

[Anonymous]

Also don't confuse your balances and reporting with paying in full and on time to avoid finance charges. You can still let your cards report a small balance, just remember to pay in full before the due date to avoid the charges.

I only use my HSBC/Orchard once a month, to go out to lunch. It never reports a balance over 10 percent, and I PIF as soon as I get the statement to avoid the fees. Win/Win situation. The card gets used so no chance of closure for non-use, and a tiny balance reports showing responsible use of credit.

One thing I have noticed recently on these boards is if you don't use your cards, company's are beginning to take them away. HSBC is especially fond of this.

[MidnightVoice]

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@Anonymous wrote:

One thing I have noticed recently on these boards is if you don't use your cards, company's are beginning to take them away. HSBC is especially fond of this.

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This is why all my cards have monthy automatic payments on them (except my gas card, and if I manage a month without gas I will be a happy camper) 

[Anonymous]

Hey haulingthescoreup,

                          Can you help me with this question?. I have 17 crdit and charge accounts.is it gonna help or hurt my score  if i let only one credit card report a balance each month and the rest report $0 each month?