Should I carry over a small balnce on my credit cards?

[Anonymous]

I have a capital one cc with a $500 limit and and wells fargo cc with a $2000 limit. I plan on paying off whatever I use on them (less than $300) before each due date for payment. And I plan to spend at most $90 on the capital one card and the reset on the wells fargo card. Through my research though I have seen people mention that you should leave a small balance on your cards and pay them off to have activity reported. I am just starting out building my credit and paying them off in full has been working in increasing my credit score. Can anyone that has left a small balnce on a credit card tell me if it has helped improve your credit score?

[VanderSnoot]

Make sure you understand the difference between the reporting date and the statement due date. For example:

Card A:

Reporting Date - the 3rd of the month. This is when your statement "cuts," and it reports your usage over the previous month (since the prior reporting date).

Due Date - the 28th of the month. This is when your payment is due. ALWAYS PAY IN FULL AND ON TIME.

You can pay your balance at any time. Many people pay down their balance before the reporting date, to lower their reported utilization. For example, if Card A has a $1000 limit, and you used it to make $800 in purchases, you can pay all $800 before the reporting date (e.g. the 2nd). Then the reported balance will be $0. Some people like to do this, but leave a small amount to show some usage (i.e. pay $790 instead of the full $800).

ALWAYS PAY THE FULL BALANCE BY THE STATEMENT DUE DATE.

[Anonymous]

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@Anonymous wrote:

I have a capital one cc with a $500 limit and and wells fargo cc with a $2000 limit. I plan on paying off whatever I use on them (less than $300) before each due date for payment. And I plan to spend at most $90 on the capital one card and the reset on the wells fargo card. Through my research though I have seen people mention that you should leave a small balance on your cards and pay them off to have activity reported. I am just starting out building my credit and paying them off in full has been working in increasing my credit score. Can anyone that has left a small balnce on a credit card tell me if it has helped improve your credit score?

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If your scores are increasing without leaving a reported balance on any of your cards, then it is age related factors that are increasing it.  Leaving a small balance does not help "improve" your credit scores.  You are simply avoiding a penalty for showing 0% revolving utilization which on average is around 15 points.

[SouthJamaica]

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@Anonymous wrote:

I have a capital one cc with a $500 limit and and wells fargo cc with a $2000 limit. I plan on paying off whatever I use on them (less than $300) before each due date for payment. And I plan to spend at most $90 on the capital one card and the reset on the wells fargo card. Through my research though I have seen people mention that you should leave a small balance on your cards and pay them off to have activity reported. I am just starting out building my credit and paying them off in full has been working in increasing my credit score. Can anyone that has left a small balnce on a credit card tell me if it has helped improve your credit score?

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1. In the first place, you're using the word "carry" incorrectly. To carry a balance means to let a posted balance go into the next cycle.

2. There's never any reason to carry a balance unless you can't afford to pay it off.

3. Reporting a balance is something else. Every account has a reporting date, which is in most cases (but not all cases) the statement date. The reported balance gets reported to the bureaus.

4. The optimal mix for FICO scores is to let one card report a small balance while the others report zero balances.

5.  Reporting doesn't have anything to do with showing activity; your reports indicate whether the account was active or not, even if the reported balance is zero.

[JNA1]

@overmedicated
Are you saying reporting agencies ding you for having 0% utilization?

[Anonymous]

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@JNA1 wrote:
@overmedicated
Are you saying reporting agencies ding you for having 0% utilization?

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Yes.

[VanderSnoot]

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@Anonymous wrote:

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@JNA1 wrote:
@overmedicated
Are you saying reporting agencies ding you for having 0% utilization?

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Yes.

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But only by a small amount. That's the reasoning behind going AZEO before applying for a loan - to squeeze out a few more points. It's not going to get you 50 points, but it may get you 0-10 points, potentially putting a 740 score over the 750 hurdle for better rates. When I've tried it I usually get 0 points.

[Anonymous]

I am not an expert but when I started building my credit, I had Cap1 and barley ever used it and when I did I always paid off my balance in full as soon as it posted to my account and never carried any balance, and was able to build my available credit up immensely and credit score to the 800's in a short period of time. I think you should keep paying balance off in full. You will get plently of offers for more credit and automatic credit line increases which will build your your credit up fast showing a vast amount of credit available to you and very low utilization, Best of luck, be careful and manage wisely.