credit card and pay in full question

Anonymous · ‎07-07-2009

I just got a credit card and wanted to know if I should pay in full or leave a balance since I only have one credit card. I keep reading that you need to leave at least one with a balance and pay the rest in full but what happens when you only have one.

FocusOnFICO · ‎07-07-2009

Doc-----if you have only one account--and nothing else currently reporting, it would be wise to let that card report a balance.

The goal would be to have 1% - 4% of the credit limit reporting. If you have more charges that that, send a payment before the statement cut off date (5 days or so) to bring the reported (statement cut date or end of month) to the preferred %.

Good luck with your new card!

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Lel · ‎07-07-2009

It's not that you want to carry a balance, it's that you want a balance to report to the credit reporting agencies.

If you use your credit card and wait for the statement to close, you will receive a bill from the credit card company. The amount on that bill will be reported to the CRAs. You can pay it in full by the due date and avoid unnecessary finance charges. Your statement balance will still appear on your credit reports.

AndySoCal · ‎07-07-2009

I agree with the previous post. I am doing the same thing. The problem with the carrying a balance for me at least I am always nervous if I carry a balance with out paying it full it will get out of control. Besides I am too cheap to pay the interest rate they want to charge. I have my Satellite TV bill paid by charging it to my credit card. Then I pay the balance in full every month. The main thing is you want activity on the card so that credit card company can start reporting a payment history. You do not need activity each month

Message Edited by AndySoCal on 07-07-2009 10:08 PM

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RobertEG · ‎07-08-2009

I agree with all prior posts.

Paying in full is not bad, and maintaining some monthly activity in order to prevent cancellation of the account for inactivity is advised.

Then enters into the forum the issue of whether PIF is better or worse than 1%-8%.

For the most part, that is speculation that is totally irrelevant until you are ready to actually app for new credit.

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No one can offer you definitive advice on how FICO scores indivual accounts. That is part of the proprietary FICO scoring algorithm, and is not known to any of us.

What is known is that FICO scores overall % util at about the same level as utilization of indiviual cards. In assessing the use of indiv cards, they look at the % util on each card, and also at the % of open cards carrying balances at any level.

It is a guessing game. But it only matters when you app for new credit, for none of these considerations have any FICO memory, and are erased with the dawn of each new credit reportng month.