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Low Balance vs. No Balance


Low Balance vs. No Balance

Why is it better to carry a small (1% - 2%) balance on your credit cards than to have them paid off completely?
Message 1 of 3
New Member


I have read that they want to see you pay on time consistently over a long period of time to see that you can handle it rather than spurratic purchases followed by paying the total amount off.  They also make more money over time and want you to continue to use your card all the time.
That is my take on it.  Maybe someone else can chime in here.
Message 2 of 3
Moderator Emeritus

That is 1-2% total balance acorss all lines of credit, ev...

That is 1-2% total balance acorss all lines of credit, even if its on one card (provided it doesn't max out that one card).  I think the reason being is that with 0 percent utilization the code for figuring FICO utilization is throw for a loop.  Kinda like my last cholesterol test.  Cholesterol levels were well below the range the comp was set for.  Got a negative (just like the credit score) for cholesterol levels, when I pointed it out to my doctor, he said that I would live to be 110 its just that the machine was calibrated to figure norms, mine was well under.  (Darn!!!  Thought I was going to be given free range to eat pork chops three times a day)
Message 3 of 3