General Credit Topics

[diann744]

I have a credit card that I only carry a balance on for a few months out of the year, generally when I am paying off a vacation.  The rest of the time I pay it off in full.  Most often, I pay the account 3 or 4 times a month, sometimes making a charge and paying it off online the same day.  So here’s the question:  If the card reports to the credit agencies on the 15th and I have a zero balance on March 15 and again on April 15th, even though I’ve charged and paid off $1000 in between those dates, what is being reported?  Does my card appear inactive?

I’m afraid in my zeal to pay everything off instantly, I may be hurting myself.

Thanks for your help.

[okrogius]

As long as you have activity, the card will be reported that month. If the balance is reported is zero, that's not hurting, and only helping.

[diann744]

Thanks.

But even if the zero balance is a positive, wouldn't it mean I'm missing out on the positive aspect of paying on time and in full since it looks like there was no activity?

[masdeocho]

Diann - You get the benefit of paying on time because you get a credit report with no 30/60/90 day late notations.

You don't get extra points for paying the balance in full.  I know, it seems counterintuitive.

In fact, you do want evidence of activity on the account.  You have to prove that you can handle it responsibly rather than having credit but never using it.

I'm not suggesting you carry a balance, but find out what date your credit card issuer reports to the credit bureaus.  Then pay your bill after that date (but still on time, of course!).

[diann744]

Thank you both for the replies/advice.  Credit repair really is a minefield, isn't it?  '-)

[HouseHunter]

...and all of the landmines are spaced mere inches apart.

[okrogius]

"

But even if the zero balance is a positive, wouldn't it mean I'm missing out on the positive aspect of paying on time and in full since it looks like there was no activity?"

You get the activity since the card was reported by the creditor. 0 balance doesn't hurt you.

Paying anything less than the full amount on your bill is essentially giving away extra money without any benefit to you. You do not get any positive effects as far as your credit score if you're carrying a small balance.

[terri]

Have you actually looked at your free/complimentary credit report? (you can get one each year from each company).

I remember seeing on mine the maximum balances. I never paid close enough attention to know if those were highest balances at the end of a billing cycle or between them...but if you know the way you have been using that card, you should be able to tell pretty easily for those in between times when you are paying down to $0 rapidly if the max shows up as $0 or $300 etc for those types of months.

[masdeocho]

Terri - The maximum balance is the highest amount historically -- since you opened the account -- and not the max balance during the current cycle.

I've never understood why this information is included, except for those rotten issuers like CapOne who don't report your credit limit.  If the credit limit is reported, and your balance at the time the report was pulled is shown, then you can calculate your utilization which is a factor in the FICO score.  Who cares what your max balance was 2 years ago?

[BMax]

Well done managing that credit account! Actually, to boost your FICO, you want to show about a 15% utilization on the cbr for that account each month. For example if the credit line is $3,000.00, you want a balance of $450.00 to be reported each month...that will help the score out better than a zero balance....the creditor won't report the account as inactive since it's not inactive.

Try paying it off 3-4 days after the creditor reports your account to the bureaus. Also, call the creditor once or twice a year, some change the date they report their accounts to the credit reporting agencies. Some report the day your account cycles, others on the 3rd Thursday of every month, etc....and some change monthly so the more knowledge you have, the more effectively you can manage it, boost your FICO and still avoid finance charges!