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What will help my credit score more?

Contributor

What will help my credit score more?

Thank you to the community because it has provided very helpful answers to all of my questions.

Like so many of us in this community, I am trying to rebuild my credit. Currently I have 3 credit cards. Wells Fargo (secured $10,000 limit), US Bank (secured $5,000 limit) and Capital One (graduated to unsecured $2,500 limit). I use them but keep them at zero balance every month when they report.

I am a bit confused because I hear different things when it comes to managing credit cards:

1) use them but pay them off immediately so you always show a zero balance.
2) use them but don't pay them off entirely. Maintain less than 10% balance to show that you're able to manage having debt?

Which of the 2 options above will impact my credit score positively the most?

Thank you in advance for your responses
Starting Score: 638

Current score:
Equifax 680
Trans Union 718
Experian 714

Target Score: 725 Across the Board
Message 1 of 3
2 REPLIES
Epic Contributor

Re: What will help my credit score more?

During rebuilding, to obtain the optimum FICO score, have all but one CC report a 0 balance, the other one at 9% or less.  Then pay in full before the due date to avoid interest charges.  YMMV with the % reported as your entire credit profile is used for scoring.

 

This method is also used by those not rebuilding.

 

FICO does not like to see all cards with a balance nor do they like to see all cards reporting 0.

Message 2 of 3
Senior Contributor

Re: What will help my credit score more?


guiness56 wrote:

During rebuilding, to obtain the optimum FICO score, have all but one CC report a 0 balance, the other one at 9% or less.  Then pay in full before the due date to avoid interest charges.  YMMV with the % reported as your entire credit profile is used for scoring.

 

This method is also used by those not rebuilding.

 

FICO does not like to see all cards with a balance nor do they like to see all cards reporting 0.


+1


Message 3 of 3