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martin08
Posts: 2
Registered: ‎07-30-2012
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What is better, to carry a balance or pay off credit card monthly?

I have two credit cards and normaly I pay them off and have zero balances by the end of the billing cycle.. But, last month I carried balances on both cards.. One balance was $48 and the other was $16. When I carry a 0 balance my scores go up any where from 12-18 points but this time carring balances my scores went up 22-24  points in one month..

 

My credit consist of one car payment, two student loans, two credit cards and the rest are all paid closed accounts.. I was late on my car payment and student loan July of 2011. Since then I have been on time and consistant. :smileyhappy:

 

Should I always carry a balance or should I just pay in full??

 

Thank you in advance. :^)


Starting Score: 566
Current Score: Tu 690, Ex 665, Eq 657
Goal Score: 720 across the board


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tboy1977
Posts: 221
Registered: ‎07-11-2012
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Re: What is better, to carry a balance or pay off credit card monthly?

[ Edited ]

According to Eq score estimator, the highest scores are actually when you carry a nominal balance.  2% is IDEAL!!  It's been said long term zero balance makes you look like you just don't use the card.  But others say keep all at zero.  I strive for under 10%

Starting scores: EQ 420, EX 421, TU 405 (Jan 2011)
Bk Ch 7 Discharged Mar 2011
Current scores: EQ 456, EX 534, TU 411 (Aug 2012) FICO (8/2012 -- EQ 564, EX 584 (from BofA) TU 551)
Goal scores: EQ 700+, EX 700+, TU 700+

Credit accounts: 30% APR auto loan (Jan 2012), Secured [CapOne (3K), PNC (1300), NFCU (1K), Coke (2500)] and Target (200)
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pizzadude
Posts: 9,674
Registered: ‎01-28-2010
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Re: What is better, to carry a balance or pay off credit card monthly?


martin08 wrote:

I have two credit cards and normaly I pay them off and have zero balances by the end of the billing cycle.. But, last month I carried balances on both cards.. One balance was $48 and the other was $16. When I carry a 0 balance my scores go up any where from 12-18 points but this time carring balances my scores went up 22-24  points in one month..

 

My credit consist of one car payment, two student loans, two credit cards and the rest are all paid closed accounts.. I was late on my car payment and student loan July of 2011. Since then I have been on time and consistant. :smileyhappy:

 

Should I always carry a balance or should I just pay in full??

 

Thank you in advance. :^)


If you are trying to tweak your FICO revolving utilization, then the best starting point is to let one card report a small balance ( less than 9% ), and to let other cards report zero balances.    You can increase/decrease the size of the balance that reports to find the best spot for your FICO scores.

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
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MarineVietVet
Posts: 14,084
Registered: ‎07-14-2009
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Re: What is better, to carry a balance or pay off credit card monthly?


tboy1977 wrote:

According to Eq score estimator, the highest scores are actually when you carry a nominal balance.  2% is IDEAL!!  It's been said long term zero balance makes you look like you just don't use the card.  But others say keep all at zero.  I strive for under 10%


Everyone's situation is different and there is no one size fits all approach to this and therefore no ideal number but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.




New Member
martin08
Posts: 2
Registered: ‎07-30-2012
0

Re: What is better, to carry a balance or pay off credit card monthly?

Thank you for your time and advice.:-)

Starting Score: 566
Current Score: Tu 690, Ex 665, Eq 657
Goal Score: 720 across the board


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