Is it good to maintain a balance on your credit card?

[dullard]

Thanks for the help everyone. Guess what I heard was wrong then. I'll go ahead and just pay my credit card off in full then. I hardly use it currently, but I figured it'd be good to start using it, paying it off, and earning points on my card.

Everyone was correct about there being no benefit of carrying a balance. Have you ever seen a credit report? If not, you can get a free one (truely free with no catches and no clubs to cancel) from www.annualcreditreport.com

That credit report is the ONLY thing that the credit score is based on. Look at a credit report - it doesn't say if you are carrying a balance or not. If it doesn't say that you are carrying a balance, how could your credit score possibly be improved by carrying a balance.

That balance myth has been going around for years, and people who propagate it clearly can't do the 30 seconds worth of thinking that I pointed out above.

 

[rcpratt]

There is no way this was a serious question. Come on.

 

[Strk]

Technically, as far as the credit reporting agencies are concerned, there is always a balance as long as you're using the card.

 

[mugs]

Technically, as far as the credit reporting agencies are concerned, there is always a balance as long as you're using the card.

That's not what he's asking about though. He's asking if it would benefit him to intentionally pay less than the full balance each month, and the answer is no.

I think the point you're making is that it won't hurt him any more than using a card and paying it off each month? Because regardless of how you use it, the balance that determines your credit score will be the balance that is reported at the time the score is calculated. I believe you are correct, it will have the same effect.

But he shouldn't do it intentionally, because it will cost him money.

 

[tk149]

Technically, as far as the credit reporting agencies are concerned, there is always a balance as long as you're using the card.

I think that FICO takes a snapshot score of your credit.

I recently refinanced my mortgage.

I pulled my own FICO scores from myfico.com. One of the factors dragging my score down was something like "high balance on credit card". I pay off my credit cards every month, and usually only have a few hundred dollars on my $5000 limit card. On this day though, I had $1200 on the credit card. Still seems kind of low to be dragging down my FICO score, but whatever.

A few weeks later, I contacted several banks/mortgage brokers. I made sure that two days before, I paid off the credit card in full. Each of the brokers said that my credit score was higher than when I pulled my own FICO scores.

 

[highland145]

One of the factors dragging my score down was something like "high balance on credit card". .

Had the same with a $30 balance showing the report. Called my equifax rep. She told me that it's impossible to get a perfect score and fico will put comments, accurate or not, to "explain" why you don't have an 850.

 

[kranky]

I think that FICO takes a snapshot score of your credit.

I recently refinanced my mortgage.

I pulled my own FICO scores from myfico.com. One of the factors dragging my score down was something like "high balance on credit card". I pay off my credit cards every month, and usually only have a few hundred dollars on my $5000 limit card. On this day though, I had $1200 on the credit card. Still seems kind of low to be dragging down my FICO score, but whatever.

A few weeks later, I contacted several banks/mortgage brokers. I made sure that two days before, I paid off the credit card in full. Each of the brokers said that my credit score was higher than when I pulled my own FICO scores.

It's unlikely that your scores were affected by payments made two days before. FICO does not dynamically go out to every creditor and pull a current balance whenever a score is generated - they use the balance provided by the creditor until the creditor reports a new one, and it would be a coincidence that your creditor did that during that two day period.

What I think is more likely is that the banks and brokers obtained a mortgage-enhanced FICO. When you request your own FICO, you get the "vanilla" FICO. There are various flavors of FICO depending on the purpose of the score - mortgage, car loan, etc. That would explain the difference in the scores they got and the score you got.

 

[speg]

Thanks for the help everyone. Guess what I heard was wrong then. I'll go ahead and just pay my credit card off in full then. I hardly use it currently, but I figured it'd be good to start using it, paying it off, and earning points on my card.

It's a common conspiracy theory of sorts that carrying a small balance will put you in good favour with your issuer. You scratch my back, I'll scratch yours kind of thing. But there is no proof of that and I don't think they'll ever admit it.

 

[Stojakapimp]

There is no way this was a serious question. Come on.

There's no way you're seriously such a troll. I mean, come on.

 

[evident]

Yeah its great.


If you like getting fucked in the ass.

this pretty much sums it up.

its never good to carry a balance on your credit card.

 

[evident]

Cash is king! That is my lesson. You can buy a house without a FICO score. Join a credit union if you need to get a loan for a car. The idea that you need to use credit cards or get a loan just for your FICO score is crazy and gets a lot of people in trouble.

what the fuck?

getting a mortgage w/o credit history is next to impossible.

why not use a credit card responsibly, pay off the balance each month and enjoy rewards either cashback, or hotel/airline miles while building credit? Using cash for everything sucks. CC offers an extra buffer that keeps your bank account organized so that a debit occurs once a month, and it offers additional consumer protections. I would have been burned if i purchased airline tickets with a debit card insted of my amex.

credit cards aren't scary if you have a modicum of self control.
if you dont have that, learn self control asap or you're gonna be fucked for the rest of your life

 

[speg]

what the fuck?

getting a mortgage w/o credit history is next to impossible.

He didn't say anything about a mortgage...

 

[evident]

He didn't say anything about a mortgage...

how else do you buy a house? have $400K laying around?

 

[rcpratt]

There's no way you're seriously such a troll. I mean, come on.

Agreed.

 

[CRXican]

cash is king people are usually nutjobs

 

[spidey07]

cash is king people are usually nutjobs

Or deadbeats that can't get credit.

 

[CRXican]

or old people

 

[rudder]

Cash is king IF a person can NOT handle CCs/loans correctly.

No, I NEVER said let run out and get a bunch of CCs and loans "just for your FICO score" as you stated. Read the list of my op in this thread again. See #1? Very very important, that's why it is #1 on the list. If you can't do that, you have no business to get CCs or loans whatsoever.

Did you know that beside home purchase and car loan, credit scores are being used for employment, insurance rating/charging purposes, properties rentals, cell phone service, utility services, etc....shall I go on? How "cash is king" will work then? Oh, do you know how much fun to rent a car/get a hotel room/pay for gas at the pump/etc. with your debit card?

CC's also vey helpful to dispute with merchants, or buyer protection, extra warranty, miles for travel, points to converse to cash, and in my case, cold hard cash back (extra money in my pocket in which cash will not be able to provide).

Don't take my words for it. Here are a few links to support my case:

http://articles.moneycentral.msn.co...ing/your-5-minute-guide-to-credit-scores.aspx

http://articles.moneycentral.msn.co...ing/meet-the-credit-score-perfectionists.aspx

Now your turn to defense your stance of "cash is king". Let us see some links/sources.

http://www.daveramsey.com/

There you go. I am not going to argue with a dick.

There are a lot of people struggling now with credit card balances at 30% interest. I did not imply you said anything. There is just a belief that people need to get debt to get a FICO score and you need this as a prerequisite to buy a home. I couldn't give a flying fuck what my fico score is. I have got a cell phone that costs the same as everyone else, I have an extremely low rate on my mortgage, and I am sitting in a nice air conditioned home with running water. I spent the weekend before last at a softball tournament and paid for the hotel with my debit card... funny thing is it works like a credit card as well. Proper money management techniques and I don't worry about credit holds causing a check to bounce.

Just look at the people struggling in this economy. Lessons learned.

People want to get sucked into the credit card/debt trap, let them. Some people listen.. others like you don't. I will sleep well tonight either way.

 

[JS80]

are u stalking me? pfft, what satisfaction can I get from owing money to a CC company? I owe about 20k on cards hahaha.
FML

No wonder you hate Jews so much. The Jewish bankers must be making coin off you in interest. Jealousy is poison.

 

[cKGunslinger]

how else do you buy a house? have $400K laying around?

I know a few people that bought their houses with cash (~$200k.)

If more people did so, house prices would come back down to reasonable levels. It a crappy cycle..

 

[Bill Brasky]

4. No unnessary credit inquiries (10%)

Is this really true? How does inquiring about your score cause that score to drop?

 

[Svnla]

Is this really true? How does inquiring about your score cause that score to drop?

Only if you have excessive/unnecessary inquiries to open more credit cards. For example, you went out and opened 5 different credit cards within 3 months = bad. People that just open store credit cards just because they would get 5% off from the stores are perfect examples.

 

[Svnla]

http://www.daveramsey.com/

I don't see anything about cash is king. Give us the direct link if you would.

I am not going to argue with a dick.

Hummm, what did I do for you to call me name?

There are a lot of people struggling now with credit card balances at 30% interest.

If they know how to handle CC's correctly, they would not be struggling, i.e. pay all balances before due date, they would not care how much the CC's interest are.

There is just a belief that people need to get debt to get a FICO score and you need this as a prerequisite to buy a home.

You don't just "get into debt" for FICO score. You get CC's and loans if and when you need it and know how to handle it correctly.

I couldn't give a flying fuck what my fico score is.

That is fine and dandy with you. But don't come in and say "cash is king" and bash CC's and loans when you know it you did not know how to handle it correctly because you said it in your very first post in this thread " That is my lesson".

in a nice air conditioned home with running water.

I like to know how much is that nice house of yours? Around here, a nice decent house is about 200K to 300K at least. I don't know about you but I don't (or most of Americans) have that much cash on hand.

Just look at the people struggling in this economy. Lessons learned.

People that are struggling and in deep doodoo because their lack of common sense and money smart, i.e. borrow too much debts, pay the minimum on CC's, buy too much house, etc., not because of the big bad CC's. Exceptions to job losses/medical expenses.

People want to get sucked into the credit card/debt trap, let them. Some people listen.. others like you don't

Sucked into the trap? Did I say in the very beginning about "responsibility"? about "handle CC's correctly"? about the 5 rules of how to get great credit score? CC's companies didn't put a gun in my head and make me sign the application.

I have been and always handle all my loans, debts, CC's, and everything else correctly and use them as tools to benefit me and my wallet/checking account. If you want to keep on using cash, that is fine for you, but don't brag about "cash is king".

Here are a few things that my evil CC's do for me, on top of the cold hard cash back (and they don't cost me a penny) that your cash is king will not able to do :

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[StageLeft]

Fvck me, if Obama simply got a bill passed to force a one day training session to each American on the basics of the economy and personal finance he'd be a resounding success and I'd never speak ill of him again.

 

[IHateMyJob2004]

How to have good credit:

I had no credit cards my entire life. I went to college, got a good job, saved money. No credit card. When I bought my first home, the loan officer said that I am the kind of person that mortgage companies dream of.

Don't want to buy a home ever, get 10 credit cards. Seriosuly, this will kill you.