If you pay the full balance on your credit card each month do you still…?
Question by dk: If you pay the full balance on your credit card each month do you still…?
If you pay the full balance on your credit card each month, does this help to build up good credit history or score?
Best answer:
Answer by message_board_ceo
You can’t pay off debt if you don’t have debt. According to FICO, the most effective way to raise your score is to pay debt. Chase, Discover, and MBNA (now BofFA) all confirmed this by advising me to charge a small amount and paying it ALMOST entirely (leaving a small $ 3-5 balance). This would show I was an extremely low credit risk, thereby boosting my FICO score.
So I tried this method using 3 sock drawer cards, each with a credit line in excess of $ 10k. I would buy a tank or two of gas, small grocery purchases, etc. under $ 100 on each per month, then pay off 95% of the balance. My score shot up from the low 700’s to 755 in a matter of 3-4 months. Mind you I had very little outstanding debt on any of my other cards. Don’t believe me? Try it, because it most definitely will improve your score.
One more thing, keeping a card with $ 0 balance, not using it for extensive periods of time used to be a good thing but is a big NO NO these days. Why? Because creditors are very freaked out by unconsumed lines of credit that are potential sitting ducks for turning into delinquent accounts. Furthermore, unused cards are having their credit lines slashed substantially, thereby reducing your available credit, which is a major factor in FICO’s score. Expect your score to take a nosedive when Chase or Amex decides to cut your unused 10k credit line in half because you didn’t even need $ 5k, so why should they give you $ 10k?
What do you think? Answer below!
It certainly does! Not only that, it can help reduce or completely get rid of interest on what you owe as well. It also will help you get in the good habit of keeping your debt low or non-existent. Most financial problems people face are from debts they let spiral out of control.
Yes. The fact that you pay off every month is shown on the credit report the banks and other loan institutions view.
Yes it doe’s, I have used 3 cards for most everything I buy every month for the last couple of years and always paid if full before the due date. and all of my scores have gone up considerably.
And you really don’t have to worry about a balance because the time lapse between the billing date and the due date will always leave a very small amount to be reported.
It will but it not doin you good best bet not do this one try to be a cash buy this make you strong and worthy not bad risk debt pay interest many time way high too much much pay until death make you great
Hate to inform you but that is a myth!! It only works if you pay off the balance BEFORE the creditor reports to the CRA’s. Creditors only report the balance as of the last statement.
If you pay it off and don’t use it for a while, then it does improve your score. But if you charge on average $ 2,000 a month and pay it off when you get the statement, you credit report shows a balance still owed. Creditors only report that you paid on time and the amount paid not that you paid in full!
If you don’t believe this, then read the following from FICO
http://myfico.custhelp.com/cgi-bin/myfico.cfg/php/enduser/std_adp.php?p_faqid=166
EDIT: Hey message, did you not read the first part of the reference, here I will quote it for you
The amount owed on all accounts. Even if you pay off your credit cards in full every month, your credit report may show a balance on those cards. The total balance on your last statement is generally the amount that will show in your credit report.
Also do some research, you will learn something.