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

Senior Contributor

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



topbananaboy wrote:
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


You're better off getting CCs with no annual fee, using them periodically, then PIF the balance each month. You can carry a 1-9% balance if you want to maximize your scores, but PIF is second best and good enough. So long as you aren't late, you're building a good history.
 
I wouldn't fret about the bank's finances. They'll do just fine. CC lending makes insane profit levels, and principally off those who are teetering on the edge of BK or who need to BK. Nose around the Credit News forum. CC defaults are on the rise, so CC lending profits should also be on the rise.
 
Message 21 of 39
New Visitor

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

"Carrying a balance" on your credit cards is old thinking. What's important is activity. Use the card, pay it off, use the card, pay it off. There's absolutely no reason for anyone to be paying interest to a credit card company just to build their credit. Payment history and amounts owed account for 65% of your overall FICO score. Pay off charges every month (if you have the cash) and you'll satisfy both of these high scoring categories. The third most important is length of history, so don't close your long standing accounts with good payment history. Many have suggested to me that I close my accounts when I was purchasing a new home. I quickly sought advise from credit specialists and closing accounts unexpectedly can actually lower your credit score for a period of six months.
Message 22 of 39
Established Member

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

Closing an unused account used to hurt your ability to receive credit, but that advice hasn't been true since FICO scores were created.  Length of credit history is a factor in determining your FICO -- the longer history, the better.  Keep the old unused accounts open. 
Message 23 of 39
Senior Contributor

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



bobkelly wrote:
Closing an unused account used to hurt your ability to receive credit, but that advice hasn't been true since FICO scores were created.  Length of credit history is a factor in determining your FICO -- the longer history, the better.  Keep the old unused accounts open. 


Umm, confusedly agreeing, sorta, but closing an account reduces one's overall CL. That can hurt, depending on one's circumstances, if the closed account represents a considerable chunk of one's overall CL.
 
Only really good reasons to close a credit card are:
1) It's costing you money in annual or monthly fees, but understand that some cards are worth the fees because of one's usage and the rewards.
2) You have to, like a prime mortgage lender demands it.
 
Message 24 of 39
Valued Member

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

You do NOT need to carry a balance improve your scores.  I charge everything I spend on my cards and pay them in full every month.  On my Discover card, I think I've only carried a balance maybe 5 times in 15 years.  My limit on that card is now $15K.   (Oh, Discover, I love you!  Yah rewards!).  When I first got the card, I starting charging all my spending every month on it, and paying it off every month.  I had only one other card, no installment loans, or other loans.  Well, student loans in deferment.  The point is, Discover upped my limits after responsible usage while not screwing up my credit score.  With an aged credit history, higher limit, and constant spending level (low utilization), my score increased.  Since my score increased and I'm a "good customer," Discover increases my limit.  It became a positive feedback cycle where every year or so, I would get a credit limit increase of 1-2K.
 
On the other hand, I've come to love the 0% no-interest financing accounts for things like furniture, Best Buy, etc.  These are almost revolving accounts.  You can effectively carry a balance, make regular payments, boost your score and most importantly, never pay interest!!!
 
Ergo, my recommendation is to charge responsibly (and frequently) and pay every balance in full every month unless it's 0% interest.  But then again, I like keeping my money.  Smiley Very Happy
 
 
 
 
 
Message 25 of 39
New Member

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

Hi Villarj - Where would I find a credit specialist that can look over my report and advise what to do?
 
I have been looking and can't find this service. I read these forums but everyone seems to have a different take and at this point I am completely confused as to the best practices. I am going for a mortgage in about 3 months time and I recently had a drop in my score. I need some advice quickly.

Thank you for any guidance as to where I can find a specialist that will sit down personally with me and explain the best options.
 
Thanks,

 
Message 26 of 39
Moderator Emerita

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


cmontero7 wrote:
Hi Villarj - Where would I find a credit specialist that can look over my report and advise what to do?
I have been looking and can't find this service. I read these forums but everyone seems to have a different take and at this point I am completely confused as to the best practices. I am going for a mortgage in about 3 months time and I recently had a drop in my score. I need some advice quickly.

Thank you for any guidance as to where I can find a specialist that will sit down personally with me and explain the best options.
Thanks,




Hi, cmontero7--If you don't mind hanging up all your laundry on this site, this is the best group of credit specialists that you will ever find, and you can't beat the price. Pay special attention to anything by the moderators and the veteran posters (check the number of posts by their names. There might be some wackos here, but all in all, you can't go wrong with their advice.

Go ahead and post what's on your reports--the good, the bad and the ugly. If nothing else, it's sorta like an AA meeting: no matter how awful you think you've messed up, you're bound to read a post by someone in worse shape!
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 27 of 39
Moderator Emerita

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


haulingthescoreup wrote: Pay special attention to anything by the moderators and the veteran posters (check the number of posts by their names. There might be some wackos here, but all in all, you can't go wrong with their advice.
Um, please mentally insert a close parenthesis after "posts by their names." Far be it from me to imply that we have any wacko high-mileage posters...
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Message 28 of 39
Super Contributor

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



haulingthescoreup wrote:
.Pay special attention to anything by the moderators and the veteran posters (check the number of posts by their names. There might be some wackos here, but all in all, you can't go wrong with their advice.




Hey!!!!!!!!!!!!!
 
I resemble that remark  Smiley Very Happy
 
(Veteran poster)
The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Message 29 of 39
Super Contributor

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



haulingthescoreup wrote:

haulingthescoreup wrote: Pay special attention to anything by the moderators and the veteran posters (check the number of posts by their names. There might be some wackos here, but all in all, you can't go wrong with their advice.
Um, please mentally insert a close parenthesis after "posts by their names." Far be it from me to imply that we have any wacko high-mileage posters...

Too Bloody Late!!!!!!!!!!!!

 

Smiley Very Happy


The slide from grace is really more like gliding
And I've found the trick is not to stop the sliding
But to find a graceful way of staying slid
Message 30 of 39