POLL: Credit report - help settle an argument

[dquan97]

In terms of building the best credit score, which is the best way:

Me: use the credit card and pay it off in full every month

Him: use the credit card and make payments on it.

 

[datalink7]

add a "results" because I would like to know as well?

 

[sillymofo]

Use the card, make payment early every month, and make payments much more than your minimum due (x3).

 

[Mill]

Lower balance is better for the score, but how often the full balance is paid is inconsequential. Basically, having a zero balance is better for your score than carrying a balance, but how often that balance is paid doesn't matter. You could carry a balance of 12k for 9 months and pay it off and your score would be the same if you had zero balance for 9 months after paying in full. What really matter is the debt to limit ratio, how long the account has been open and other factors.

 

[Mill]

Originally posted by: cr4zymofo
Use the card, make payment early every month, and make payments much more than your minimum due (x3).

Paying early doesn't effect your score.

 

[Ryan]

I say paying off every month. That's exactly what I did for a year, and my credit score shot up to 695. That said, the credit card is the only thing I've ever used to build any kind of credit.

 

[rival]

i dont think it would matter, as long as the payments are made on time, not sure if carrying a balance hurts your credit unless its substantial in reguard to the limit

 

[Cal166]

Stupid me, misread the due date and now i have a late payment.

 

[Ketteringo]

Carrying a balance does not give you any benefit (credit score wise) over paying it completely off.

 

[Yossarian]

pay in full. a credit report is not a report of how much extra you pay credit card companies in interest, it's a record of how responsible you are.

 

[Mill]

Originally posted by: Cal166
Stupid me, misread the due date and now i have a late payment.

Sure it is on the report? Most don't bang you until 30 days late.

 

[DT4K]

Dont think it matters much in the end.
But it is best to keep your balance to no more than 50% of your limit.

 

[yllus]

From How to build good credit:

A classic related lending question is, "Is it better to carry a small balance from month to month, or pay the entire amount off every month?" While the notion of making yourself out to be a moneymaker for your lender holds some weight, that's simply not how it works. Pay off your entire balance religiously, and in a tight bind always have enough to at least pay the minimums on your cards.

Reasoning? From the point of view of a lender, you have no clue whether or not you'll ever see your money again. Watching someone seemingly barely scrape by making the minimum payments for a few months isn't confidence inspiring. Better to have one regular payee in your books than ten minimum payers.

Another classic question, "If I pay it all off every month, where is it that my lender makes money on me?" Remember that every time you have your credit card swiped, the merchant pays a percent of that purchase back to your lender. Lenders also take the valuable intellectual property they've built in their customer lists and resell that information to mailing lists and the like. So don't worry about your lender going broke on you. It isn't likely to happen anytime soon.

 

[DT4K]

Originally posted by: Mill

Originally posted by: cr4zymofo
Use the card, make payment early every month, and make payments much more than your minimum due (x3).

Paying early doesn't effect your score.

Depends.

If you routinely charge a lot each month, the timing of your payments could definitely affect your score.
It depends on when the credit card company reports to the credit bureaus.

For instance, say you charge $500 a month on your card and pay it in full on the 2nd day of every month.
If the card company reports to credit bureaus on the 3rd of each month, your credit report will always show a zero balance. But if the company reports to credit bureaus on the 1st of each month, your credit report will always show a $500 balance. Having this balance at the time the company reports to the bureau could hurt your credit score.

 

[Mill]

Originally posted by: Shanti

Originally posted by: Mill

Originally posted by: cr4zymofo
Use the card, make payment early every month, and make payments much more than your minimum due (x3).

Paying early doesn't effect your score.

Depends.

If you routinely charge a lot each month, the timing of your payments could definitely affect your score.
It depends on when the credit card company reports to the credit bureaus.

For instance, say you charge $500 a month on your card and pay it in full on the 2nd day of every month.
If the card company reports to credit bureaus on the 3rd of each month, your credit report will always show a zero balance. But if the company reports to credit bureaus on the 1st of each month, your credit report will always show a $500 balance. Having this balance at the time the company reports to the bureau could hurt your credit score.

But that is a non-issue. Reports are typically behind the reports anyway and some don't report but every few months and send past months data.

 

[sillymofo]

Originally posted by: Mill

Originally posted by: Shanti

Originally posted by: Mill

Originally posted by: cr4zymofo Use the card, make payment early every month, and make payments much more than your minimum due (x3).

Paying early doesn't effect your score.

Depends. If you routinely charge a lot each month, the timing of your payments could definitely affect your score. It depends on when the credit card company reports to the credit bureaus. For instance, say you charge $500 a month on your card and pay it in full on the 2nd day of every month. If the card company reports to credit bureaus on the 3rd of each month, your credit report will always show a zero balance. But if the company reports to credit bureaus on the 1st of each month, your credit report will always show a $500 balance. Having this balance at the time the company reports to the bureau could hurt your credit score.

But that is a non-issue. Reports are typically behind the reports anyway and some don't report but every few months and send past months data.

Actually, it has a lot to do with it, when the review times come, and they see that you have a good patern of paying back debts, they will increase your credit substantialy. Besides, better early than late.

 

[Mill]

Originally posted by: cr4zymofo

Originally posted by: Mill

Originally posted by: Shanti

Originally posted by: Mill

Originally posted by: cr4zymofo Use the card, make payment early every month, and make payments much more than your minimum due (x3).

Paying early doesn't effect your score.

Depends. If you routinely charge a lot each month, the timing of your payments could definitely affect your score. It depends on when the credit card company reports to the credit bureaus. For instance, say you charge $500 a month on your card and pay it in full on the 2nd day of every month. If the card company reports to credit bureaus on the 3rd of each month, your credit report will always show a zero balance. But if the company reports to credit bureaus on the 1st of each month, your credit report will always show a $500 balance. Having this balance at the time the company reports to the bureau could hurt your credit score.

But that is a non-issue. Reports are typically behind the reports anyway and some don't report but every few months and send past months data.

Actually, it has a lot to do with it, when the review times come, and they see that you have a good patern of paying back debts, they will increase your credit substantialy. Besides, better early than late.

No, it has little to do with it. Post a link if you disagree.

 

[Kelemvor]

Carrying a balance is NOT a good way to build Credit. It basically says that you spend more than you can pay. Why would you think that would be a good thing?

 

[randomlinh]

i don't think anyone has put any conclusive evidence that paying in full, or making monthly payments effects your score, either way you do it. The key thing is not to be late. So basically pay what you can, and stay out of credit debt

 

[StageLeft]

Your way is the best. In both cases you will both have the same credit card max limit, but you have no debt, whereas he does. You can use the automated score calculators at equifax and what not (if you have a subscription), which will tell you as much.

 

[dullard]

As someone said above, they make a bundle off of the people who charge a lot and pay in full. Make your CC company happy doing that and they'll raise your credit limit. Higher credit limits gives you a better ratio of actual debt to available credit. Better ratio = slightly better credit score.

Even if it were better to carry a balance (which it isn't) why would you want to be raped with their high interest? There are less costly ways of raising your credit score.

 

[SP33Demon]

Is there any way to get a late payment (30/60 days) taken off your credit report? I wonder if I call Capital One if they will still have a record of that on my account, more than likely, yes. Maybe I could still dispute it with TransUnion/Eq/Ex if the CC won't cooperate. :evil:

 

[dirtboy]

Either way should work. I've been a "pay in full" type person and I have perfect credit. The credit companies don't look at what your balance is, when determining the score, but your payment history and the amount of available credit.

 

[CPA]

Take this quiz. It will give you some good answers.

 

[CPA]

Originally posted by: dirtboy
Either way should work. I've been a "pay in full" type person and I have perfect credit. The credit companies don't look at what your balance is, when determining the score, but your payment history and the amount of available credit.

Amount of available credit is partly determined by your balance.