Re: Can Somebody Nice Explain "Don't Carry a Balance?"[ Edited ]
10-14-2012 01:09 AM - edited 10-14-2012 01:11 AM
I don't agree with never letting a card report a balance. The fact is that your highest balance is reported. I have allowed a 4k balance to report on chase. A 4890 balance has reported on discover and a 8625 balance has reported on nfcu.
I also paid in full immediately after statement cut.
I personally think that manual reviewers and computers give me bonus points for actually using my cards.
For the most part I don't carry balances but if one months spend is rather high on a card I will let it report just to increase my "high balance"
Highest Balance is the largest balance that's been on the card at any time. If you charged $5k, pay it the next day, and then the statement cuts showing a $0 balance, that $5k high balance will still be reported as your Highest Balance. You don't need to let the statement cut for that to show. And no, you get no bonus points for that.
This, and also remember that credit reports don't have a memory, so nobody, not even fico, will know what your previous months balance was. However, you WILL lose points for having a maxed out card posted to your report (on statement cut date) even if you pay it off the day after, and will have to wait a month for it to recover.
Also the banks make their money on fees and I'm sure would rather have PIF your balances each month since to them it means less risk and less chance that you're going to default, and they're gonig to not only have to write off your debt, but spend money trying to collect. I'm sure they'll be more willing to extend you higher CLs and on the spot signature loans with lower interest if you have a hsitory with them of responsibly managing your money.
I already have this... so I'm not really sure that I'm in any danger of not getting this.... I was granted a 45k auto loan at 1.79% today, no verification of income required. I was granted a 15k LOC over the phone about a month ago..... and I have 13 year history of responsibly managing my money.... I don't plan on really applying for anything, so it doesn't really hurt anything to let a high balance report. Obviously before I apply for anything, I pay off all balances except for 1.
I think you're missing my point, it's nice you got a 45k loan @ 1.79%, but you're not the OP, and many other people on this forum who could be hurt by letting high balances report, who might not have other benefits to their credit file. Especially if these people have lower limit credit cards, or a lower total credit available, which will kill their UTI.
Letting balances (especially large balances, or on multiple cards) report with the intent to pay them off the next day is bad form. It will report as a maxed out card, and that is a factor in determining not only your FICO score, but also on a manual review, as it shows the creditor that you have an obligation that might take away from a new loan, and are more of a risk and higher util. There is no benefit to letting a hgih balance report, absolutely none at all.
NFCU VISA $17.5k / USAA AMEX $6k / USAA AMEX $4k / USAA VISA $4k / CHASE FREEDOM $3k / Capital One $500