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How does payment history affect my FICO score??

Frequent Contributor

How does payment history affect my FICO score??

Say I just got a credit card with 0% intro APR for 12 months.  Now I have two ways to use it.

 

1. Max out the card and pay only the minimum payment for the first eleven months and pay off all the rest at the end of twelfth month.

 

2.Use the card regularly and pay it off every month before the balance reporting date, so the balance of the card always remains 0 on the credit report.

 

Do these two ways make any difference of my FICO score when I check it at the 13th month?  If not, will the bank who issues the credit card frown upon the 1st way of spending? (Thus reducing the likelihood of approving me a new card or CLI).

 

Thank you in advance. Smiley Happy

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Re: How does payment history affect my FICO score??


w20031424 wrote:

Say I just got a credit card with 0% intro APR for 12 months.  Now I have two ways to use it.

 

1. Max out the card and pay only the minimum payment for the first eleven months and pay off all the rest at the end of twelfth month.

 

2.Use the card regularly and pay it off every month before the balance reporting date, so the balance of the card always remains 0 on the credit report.

 

Do these two ways make any difference of my FICO score when I check it at the 13th month?  If not, will the bank who issues the credit card frown upon the 1st way of spending? (Thus reducing the likelihood of approving me a new card or CLI).

 

Thank you in advance. Smiley Happy


1. you can do that. it will drop your scores temporarily when you maintain a high utilization, but as long as you're not applying for new cards during that period, you are fine. however, certain lenders might be spooked off and FR you, especially if you already owe high balances on other cards or if the amount you owe is considered high compared to your income. Of course, buy only what you planned to buy in the first place. don't just max out the card just because you can Smiley Tongue

 

2. you can do it this way, but since u have a 0% APR, why not use it? it's free money. If you plan to get other loans or lines of credit during these 12 months however, take approach #2.

 

These two ways will land you with the same fico score. the bank might frown upon it a little, but this is what a lot of people do when they have 0% APR. you are unlikely to get any CLI or a new card from them while you maintain a high balance. Other than that you should be fine.

 

 

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