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reeltime
Posts: 6
Registered: ‎10-07-2007
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Paying balance-in-full.. help or maintain

It's always been my understanding that by making charges on a credit card, then paying off the balance-in-full at the end of the month with an on-time payment, you will only be maintaining your current credit score. I've read (don't remember where...) that to improve your FICO score, you need to carry a balance from month-to-month, preferably below 10% of your credit limit and make an on-time payment. Is this accurate? Thanks
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Timothy
Posts: 9,252
Registered: ‎03-19-2007
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Re: Paying balance-in-full.. help or maintain

[ Edited ]
For MAX points having the balance reported to the CRA's 1-9% of your CL.

This was HUGE for me to understand this. As if I just PIF to avoid a finance charge it was still reporting 10 to 30 UTL on the credit report.

I now pay it under 10% of the OVERALL balance each month.

Message Edited by Timothy on 10-08-2007 05:44 AM
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haulingthescoreup
Posts: 28,098
Registered: ‎04-01-2007
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Re: Paying balance-in-full.. help or maintain

[ Edited ]


reeltime wrote:
It's always been my understanding that by making charges on a credit card, then paying off the balance-in-full at the end of the month with an on-time payment, you will only be maintaining your current credit score. I've read (don't remember where...) that to improve your FICO score, you need to carry a balance from month-to-month, preferably below 10% of your credit limit and make an on-time payment. Is this accurate? Thanks

You don't actually have to carry the balance month-to-month. Just let each month's balance report to the credit bureaus, and then pay it in full before it's due, so you don't pay any finance charges. Call your CCC to find out when they report--after that, you can pay it off.
 
edit: and of course, the balance that you want to have report is <10% of your credit limit, so you will probably be making two payments monthly--a partial payment before the reporting date to get your balance under 10%, which you want to report, and then pay the remainder off after it reports, but before the due date.


Message Edited by haulingthescoreup on 10-08-2007 09:17 AM
* 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
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ilovepizza
Posts: 3,071
Registered: ‎05-17-2007
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Re: Paying balance-in-full.. help or maintain

[ Edited ]
10% is your max! Just not 0%. The lower % the higher your score until you drop too far below 1%. 3% will give you a higher score than 10% and so on. I PIF. I find the closing date and just charge the amount I want the day after the closing date so it reports just that charge. Easier to get exact for me. Some just carry a balance but they are paying interest on the balance. My way is interest free. But my way involves more effort because you need a charge on a specific day where as leaving a balance is easy. So it's a personal choice which way, they both work.

Message Edited by ilovepizza on 10-08-2007 10:36 AM
If we never set higher goals we would never get as far.
sol, credit 101, acr, abbreviations, calc
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Lady_Scarlet
Posts: 2,385
Registered: ‎09-10-2007
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Re: Paying balance-in-full.. help or maintain

So I blew it by paying off my cards this month (Home Depot and JCP)? 
 
JCP plan is to charge my meds each month ($30 on 500CLI) and something small to make the amount different each month AT CVS (they take JCP)
 
Home Depot - I'll use as we repair the boat (util under 10% reporting).
Now a member of the UNOFFICIAL 700 Club - Plus scores of 734-734-747
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smallfry
Posts: 4,831
Registered: ‎04-20-2007
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Re: Paying balance-in-full.. help or maintain



Lady_Scarlet wrote:
So I blew it by paying off my cards this month (Home Depot and JCP)?
JCP plan is to charge my meds each month ($30 on 500CLI) and something small to make the amount different each month AT CVS (they take JCP)
Home Depot - I'll use as we repair the boat (util under 10% reporting).



Should be no problem running the cards up again this month. Try it again. LOL.
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RobertEG
Posts: 18,434
Registered: ‎03-19-2007
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Re: Paying balance-in-full.. help or maintain

I do not dispute the truth of the FICO mantra that maintaining debt can lead to a higher FICO score.  But the illogic of extending that mantra to the FICO-argued conclusions that maintaining debt is good, and that income and ability to pay debt should be ignored, both defy my logic.  The credit scorers are wise enough to realize that there is a limit to our acceptance of this illogic, and thus only entice us to support it up to 9%. They make the credit merchants happy, so it serves their needs.  They look at income and net worth when making credit decisions, and then use the FICO to justify a higher credit risk, and thus higher interest rates. Well, I must go now, for I have to complete my reading of the Emperor’s New Clothes, watch the latest episode of Chris Angel, Mindfreak, and saunter down to the ocean to watch the lemmings do their thing….


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