Credit score improvement strategy

[Anonymous]

We pay our credit card balances down to zero each month.  I've read that your credit score will actually be improved if you always leave a few dollars balance on the credit card account.  Any truth to this?

BT1

[haulingthescoreup]

Hi, welcome to the forums!

If you haven't already, please read Understanding Your FICO ® Score and Credit Scoring 101 (at least the first post.)

These will give you the background knowledge you need to understand what you read here on the forums.

Your best way to optimize your scores is to pay off all your cards except one BEFORE their statement dates. That way, they will report $0 balances to the credit bureaus. On the one exception, pay off all but about $10, let it show up on your statement, and then pay it off before the due date.

If you have bank cards from HSBC/ Orchard, or cards from US Bank, they update on the last business day of the month, so do the same trick with them, using that date rather than the statement date.

[jackg]

BT1,

Your question is not as simple as it seems on the surface, The answer is dependent on

WHEN you pay your statements in full. If you're trying to maximize your FICO score then you should pay in full each acccount, except 1, before the closing date that's on your statement. In most cases this closing date is the same date they report your "Balance Due" to the CRA"s.Total of all CL"s is 100% of avaible credit. When the total of balances is subtracted from your total CL's you end up with "Utilization". Let's say that next month, before the closing date, 4-5 days (but you can't use them again until after the closing date), you will maximize your points under utilization. But, remember, I said to pay all CC"s in full except one, what I meant was to pay that one account down to $25 and let that report to the CRA's. This is a positive for FICO scoring.

Good luck with your project!

This might be a good reminder about how FICO arrives at your score:

There are 500 points available that your credit behavior can add to the 350 pts. that all get at the beginning.

35% 175 pts "Payment history"

30% 150 pts. "Amounts owed"(Mortgage, revolving credit, installment credit)

15%  75 pts. "Length of credit history"

 10% 50 pts. "New credit."

10% 50 pts.  "Types of credit"