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I recently paid off $30,000 in credit card debt. I have about $40,000 in available credit between Visa, Mastercard, and Store Credit Cards. All of which now have a balance of $0. To help increase my credit score should I carry a balance on one card, multiple cards or no cards? I am fairly young and dont not have any credit guidance. Thanks for any help.
Sorry duplicate post.... Anyone know how to delete?
@ALM10303 wrote:I recently paid off $30,000 in credit card debt. I have about $40,000 in available credit between Visa, Mastercard, and Store Credit Cards. All of which now have a balance of $0. To help increase my credit score should I carry a balance on one card, multiple cards or no cards? I am fairly young and dont not have any credit guidance. Thanks for any help.
Welcome to the forum
Carry a balance on 1 card between 1-9%
All other cards PIF before statement cuts this will help build scores
On a side note I like to alternate which card has the balance every month so that a different card is showing activity each month ...just me tho
@myjourney wrote:Welcome to the forum
Carry a balance on 1 card between 1-9%
All other cards PIF before statement cuts this will help build scores
Technically, I don't think this "builds" scores, in the sense that paying on time or letting accounts age will. In other words there is no cumulative benefit to manipulating the payoff dates and leaving a 1-9% to report. I consider this step a fine tuning for a targeted period where you are say applying for a refi or new cards. Fwiw, I had 8-10 cards reporting balances and my score went up 12 pts this month
ps
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There are pearls of wisdom found in each response posted thusfar.
I think the phrase "carry a balance" is confusing. In my opinion, the BEST CREDIT CARD PRACTICE (ignoring the credit score effect for the time being) is to PAY IN FULL every month. By pay in full, I mean to pay the entire balance (the amount shown on the monthly statement) by the due date (the date shown on the monthly statement). By paying in full, you avoid unnecessary interest charges and late fees.
Once you've paid in full, you can take additional steps to sculpt your credit score.
For a long term effect on credit score, simply let your accounts age and don't apply for new credit. Letting your accounts age will increase your AAoA which will lead to higher scores. Not applying for new credit will keep the number of credit inquiries low which will lead to higher scores.
To optimize the daily snapshot of your credit score, there are no hard-and-fast rules. But it is widely believed that you can maximize your snapshot by allowing only 1 of your cards to report a balance on the monthly statement and let all other cards report zero balance. For the card that reports a balance, the amount should be 1-9% of its credit limit.
Optimizing the snapshot takes some planning. For all your cards except the one, you need to 1) pay-in-full and 2) if you continue to use the card, pay whatever the running balance is before the next statement date. For the one card that will report a 1% balance, you will 1) pay-in-full and 2) continue to use the card but pay down the balance so that only 1% balance reports on the next statement. For example, if the credit limit is $1000, let a $10 balance report.
I hope that was clear.
I guess each one of us have different methods when it comes to paying credit card debt.
Personally, I do not manage my finances based on what my FICO Score would be.
I allow all my credit cards to report a balance and pay them prior to the due date.
Everyone is happy, the Credit Card Issuer that obtains a fee for me using the card and their
satisfaction that I use their card on a monthly bases and pay in full.
Micromanaging for the sake of a higher FICO Score is just plan Ludicrous.