Credit Cards Center Credit cards from our partners
Reply
Moderator Emeritus
Posts: 2,050
Registered: ‎04-17-2007
0

Re: For best results, how much balance should I carry, when should I pay??



craziemazies wrote:
"You do not need to carry a balance to improve your credit. In fact, if you do, you are hurting yourself because you have to pay finance charges to the bank. If at all possible, PIF or pay as much as you can afford to." masdeocho is only half right. Yes, you are paying finance charges to the bank...that is the down side. It is a win/lose situation really. And YES you need to carry a balance to improve your score. Primary example... I've kept track of my credit scores for the past few years. I had a balance of around $13,000 at one time on a combination of 2 cards. I paid them all of. So, I had a total of over $30,000 in available credit. Everytime I charged, I would pay it off in full at the end of the month. So, you would think my score would go up, right? wrong... Before I paid off the $13,000, My scores through all three lenders were 747, 780, and 757. Now? After paying the balances off, they became 685, 754, and 747. Now...check this out...I started taking out student loans, making the payments on my credit card. My balance is now around 8000 on my credit. Only one of my scores went up...757, still 757, and STILL 747. So, you need to have a balance...it's like saying you can bake bread. But, how is anyone going to know that if you don't bake the bread and show them? They have to SEE you are responsible with credit and they won't be able to see that if you aren't using it. BUT, you also have to make sure you aren't using TOO much. Someone posted around 1-9%. I would agree with that figure. Hope my experience helps!

Your balance is relevant only on the day that your CCC reports to the CRAs.  Some report on the end of statement date.  Some report a few days later.  Some report on a specifc date of the month. It is different for every card and sometimes for difference cardholders (my AmEx may be reported on a different day than yours).
 
The only way to show you are "baking bread" is to find out when each CC reports each month and make sure your balance is 1 - 9% on that date.  You can pay it off the next day which may mean you are carrying a balance into the next cycle or it may not.
 
Remember that your utilization means nothing until your score is pulled when you are actually applying for credit.  There is no historical utilization, only historical payment history.  So FICO remembers (like an elephant) whether you pay on time every month, but it doesn't care how much you paid until the time that the rubber meets the road.
 
IMHO, there is no benefit to carrying a balance and paying finance charges unless you are fine tuning your score a month or two before applying for a mortgage.
-----------------
Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.
Senior Contributor
Posts: 3,071
Registered: ‎05-17-2007
0

Re: For best results, how much balance should I carry, when should I pay??


craziemazies wrote:
747, 780, and 757. Now? After paying the balances off, they became 685, 754, and 747.


Something doesn't sound right.
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
Moderator Emeritus
Posts: 2,050
Registered: ‎04-17-2007
0

Re: For best results, how much balance should I carry, when should I pay??



ilovepizza wrote:

craziemazies wrote:
747, 780, and 757. Now? After paying the balances off, they became 685, 754, and 747.


Something doesn't sound right.

Because the balances are now zero, utilization on those tradelines is zero. Before they were paid off, s/he had probably fairly low util which now has been lost.   We don't know what other credit craziemazies has.  If there's no other credit, then zero utilization across the board could drop the scores.
-----------------
Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.
Moderator Emeritus
Posts: 2,050
Registered: ‎04-17-2007
0

Re: For best results, how much balance should I carry, when should I pay??



masdeocho wrote:


ilovepizza wrote:

craziemazies wrote:
747, 780, and 757. Now? After paying the balances off, they became 685, 754, and 747.


Something doesn't sound right.

Because the balances are now zero, utilization on those tradelines is zero. Before they were paid off, s/he had probably fairly low util which now has been lost.   We don't know what other credit craziemazies has.  If there's no other credit, then zero utilization across the board could drop the scores.


Sorry, I didn't re-read the post.  Craziemazies has new student loans.  But the history of payment on those loans is short.  It will take some on-time payments before that credit helps boost the score.  It's all  heading in the right direction.
-----------------
Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.
Senior Contributor
Posts: 3,071
Registered: ‎05-17-2007
0

Re: For best results, how much balance should I carry, when should I pay??



ilovepizza wrote:

craziemazies wrote:
747, 780, and 757. Now? After paying the balances off, they became 685, 754, and 747.


Something doesn't sound right.



If we are talking about revolving debt then.
747 to 685 = -62 points (Can't happen)
780 to 754 = -26 points (Can't happen)
757 to 747 = -10 points (Yes can happen from a pay off)

Carrying a balance of 10% can be as much as -20 points off and no balance can be as much as -10 points off for revolving balances.
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
Senior Contributor
Posts: 3,071
Registered: ‎05-17-2007
0

Re: For best results, how much balance should I carry, when should I pay??



masdeocho wrote:


masdeocho wrote:


ilovepizza wrote:

craziemazies wrote:
747, 780, and 757. Now? After paying the balances off, they became 685, 754, and 747.


Something doesn't sound right.

Because the balances are now zero, utilization on those tradelines is zero. Before they were paid off, s/he had probably fairly low util which now has been lost. We don't know what other credit craziemazies has. If there's no other credit, then zero utilization across the board could drop the scores.


Sorry, I didn't re-read the post. Craziemazies has new student loans. But the history of payment on those loans is short. It will take some on-time payments before that credit helps boost the score. It's all heading in the right direction.



Yes. I am used to discussing very specific actions. Sometimes also things hit later than people expect and it comes as a surprise. I received a new credit cards and it didn't drop my score until 3 months later. New accounts can confuse people. Smiley Happy Missed that. Thanks.
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
Moderator Emeritus
Posts: 2,050
Registered: ‎04-17-2007
0

Re: For best results, how much balance should I carry, when should I pay??

Possible events that could have lowered the score:
 
- OP made late payments
- OP paid student loans by charging $8,000 to a CC; if util on that CC is now high, score will drop
- OP moved up to next scorecard when CCs were paid so score temporarily dropped
- OP filed BK  (JK Smiley Happy )
 
-----------------
Bartender, bring another round of FICOtinis please!

9.4.2011: TU 805. EQ 815.
Established Contributor
Posts: 739
Registered: ‎06-30-2007
0

Re: For best results, how much balance should I carry, when should I pay??

Things made more sense to me when I move all cc statements dates moved to the second of the the month giving me a due date between the 21-26th of the SAME month of the statement, based on your your grace period.
 
This has two benefits:
1)but for an occasional charge that posts on the first of the month, all charges on the statement will be from the previous month.
 
2) with statement and payment taking place in the same month, it's easier to see that if I pay the statement balance by the due date, then my charges since the 2nd will make it to the next statement interest free, than the due date running over to the next month and making this months payment for last month's statement,
People say "Only apply for credit you NEED"

I say "apply for credit you have PRATICAL use of"

I don't have AMEX card because I don't want a card that suffers from PMS
New Visitor
Posts: 2
Registered: ‎05-26-2007
0

Re: For best results, how much balance should I carry, when should I pay??

When it comes to credit & scores, you're damned if you do and your damned if you don't. I never had any credit, so I had to go out and get credit cards to just built up a history. I kept my credit cards all paid off for a while which didn't help at all bringing up my score. Something about inactive credit or something. Therefore, I actually had to have a balance and pay finance charges, just so that my credit goes up. Now, I have credit balances under 3K, which made my score drop again, because of no. of revolving credit?? Oh, sweet Jesus!!--you never win with these people. It's the worse system in the world. Not to mention, equifax dropped my score 12 pts, and neither them nor myfico can tell me why. Equifax changed my date of birth making 25 yrs older than I am for I don't know what reason. Then I sent them all my documents including paystub, driver's license and gov. id and they mailed me a letter back making corrections of my address but not my date of birth---- I had to call them and point out that I sent them the pic ID so that they can finally make the **bleep** correction. These agencies are completely useless,,their only use to make your life more difficult for everyone. You actually have to get into some kind of debt, no matter how little it is, in order for you to get credit...How idiotic is that???
New Visitor
Posts: 2
Registered: ‎08-24-2007
0

Re: For best results, how much balance should I carry, when should I pay??

This is the way I do it...
I do apply for credit cards with annual fee + low interest...
Never do  I use the credit card...
I just pay the annual fee with the minimum payment...
It builds history of payments every month during a year... Remember the bank needs to make a little money... and you need a big score more than a little money...Smiley Wink

Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.

† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
‡ Credit cards for FICO Score ranges: The score ranges are guidelines based on internal myFICO analysis of actual applicant approvals, and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range. These ranges were not provided by any card issuer.

* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.