4 ms·

My credit score goes down unless I carry some revolving balance.

by Lammy 5y ago

Spooky23 5y ago
No, that’s not how it works.
- tata71 5y ago
  Using a very, very low, or no percentage of your available credit for ages makes you just as bad of an investment for these companies as customers who run off on the bill. In both cases, higher risk of default, less chance of profiting from interest, lower creditworthiness score!
  - singlow 5y ago
    I have never once carried a credit card balance or paid a cent in interest. My credit score is over 800 which is pretty much maxed out. The only things on my credit history are a few credit cards that I got to establish credit history, and my mortgage, which is why I needed a credit history. So I got 3 credit cards and used them each during each month so that I would established on-time payments on all three and boom, I had perfect credit after a couple years and qualified for a mortgage. I didn't use any credit before I decided to buy a house in my 30s so I had a completely empty credit history prior to that, apart from a library that reported a lost book. So it just took a little while to get my average account age up and my number of on-time payments above some threshold. Now if you don't use the card at all, it is less effective at establishing credit because you don't get the on-time payment history or balance. The credit bureaus just get reports of on-time or late payments, balances, and delinquencies/defaults, etc. You will be given the best rating at a small non-zero percentage of your total available credit being used each month, but it doesn't have to be carried. All you have to do is make sure you don't pay it off too early. Just wait until the due date, and pay off the statement balance, not the full balance. If you pay it off mid-month, before the end of the statement, or paid the full balance instead of what is due, you may get a zero balance reported which is a slight temporary hit to your score, but not that significant. I found that it was best to have a few cards with a total available credit at least 5 times my monthly spending. That way the reported balance ends up being <20% of my total available credit which is near the sweet spot. If I am going to do a refi on my house i might try to micromanage it to somewhere close to 5% for a few months ahead of time and get a few points added to my score, but once you get your score up around 800 it doesn't really matter if it is up or down 10pts or so. I found that as my average account age increased, the swings from slight differences in balance were smaller.
  - Spooky23 5y ago
    Maybe, but it’s good for your credit score.
- raegis 5y ago
  It's a little complicated. My credit score has been consistently higher than my wife's score, and but she has never carried a credit card balance in her life. You get high credit score marks for making banks money, but not borrowing so much that they get nervous.
  - deleted 5y ago
    [deleted]
  - Spooky23 5y ago
    Not really, it’s all about payment history. Use your card for gas, etc is more than enough to demonstrate a pattern of on time payments. People who don’t use credit often get penalized from a scoring perspective because they don’t have a large credit line and have a higher utilization. The bank wants you to make payments, period. More credit lines means you have more resilience.
    - leviathant 5y ago
      It's more than payment history. I avoided credit until I bought a car, and I made a point to pay my car loan off early. Seemed like a way to demonstrate that I was responsible with my money. The month I paid off that loan, my credit score dropped precipitously. In 2006, my wife and I bought a home, and had to get two separate loans to make it work, because our credit scores weren't great at age 26, since I generally avoided credit. As soon as we opened those two loans, our credit scores jumped to the highest they've ever been. That and other patterns I've watched over two decades are why I believe credit scores are entirely about how well you pay the banks' game.
      - Spooky23 5y ago
        You made my point — they care about payment history, not paid off. You’d be better served taking a $500 personal loan from a credit union and paying the payments every month.
deleted 5y ago
[deleted]
throaway46546 5y ago
For maximum FICO score you ideally want every card except one to report a $0 balance and one card to report a $1 balance (some issuers will forgive a balance of $1 so you might have to use $2). You do this by paying down the cards before the statement generates. Once the statement for the $1/$2 card generates you can then pay it off.There is no need to revolve a balance. In fact if you pull your credit reports it does not even show if you are revolving a balance. If you would like to see what data is in a credit report you can obtain a copy for free. https://www.ftc.gov/faq/consumer-protection/get-my-free-credit-report https://www.ftc.gov/faq/consumer-protection/get-my-free-cred... If you are interested in how FICO scoring works there is a lot of information available on various forums. The best resource I have found is on https://creditboards.com/ https://creditboards.com/. The FICO algorithm is proprietary and they do not disclose it, but through experimentation people have managed to reverse engineer quite a bit of it.

My credit score goes down unless I carry some revolving balance.

by Lammy 5y ago

My credit score goes down unless I carry some revolving balance.

Spooky23 5y ago

No, that’s not how it works.

tata71 5y ago
Using a very, very low, or no percentage of your available credit for ages makes you just as bad of an investment for these companies as customers who run off on the bill. In both cases, higher risk of default, less chance of profiting from interest, lower creditworthiness score!
- singlow 5y ago
  I have never once carried a credit card balance or paid a cent in interest. My credit score is over 800 which is pretty much maxed out. The only things on my credit history are a few credit cards that I got to establish credit history, and my mortgage, which is why I needed a credit history. So I got 3 credit cards and used them each during each month so that I would established on-time payments on all three and boom, I had perfect credit after a couple years and qualified for a mortgage. I didn't use any credit before I decided to buy a house in my 30s so I had a completely empty credit history prior to that, apart from a library that reported a lost book. So it just took a little while to get my average account age up and my number of on-time payments above some threshold. Now if you don't use the card at all, it is less effective at establishing credit because you don't get the on-time payment history or balance. The credit bureaus just get reports of on-time or late payments, balances, and delinquencies/defaults, etc. You will be given the best rating at a small non-zero percentage of your total available credit being used each month, but it doesn't have to be carried. All you have to do is make sure you don't pay it off too early. Just wait until the due date, and pay off the statement balance, not the full balance. If you pay it off mid-month, before the end of the statement, or paid the full balance instead of what is due, you may get a zero balance reported which is a slight temporary hit to your score, but not that significant. I found that it was best to have a few cards with a total available credit at least 5 times my monthly spending. That way the reported balance ends up being <20% of my total available credit which is near the sweet spot. If I am going to do a refi on my house i might try to micromanage it to somewhere close to 5% for a few months ahead of time and get a few points added to my score, but once you get your score up around 800 it doesn't really matter if it is up or down 10pts or so. I found that as my average account age increased, the swings from slight differences in balance were smaller.
- Spooky23 5y ago
  Maybe, but it’s good for your credit score.
raegis 5y ago
It's a little complicated. My credit score has been consistently higher than my wife's score, and but she has never carried a credit card balance in her life. You get high credit score marks for making banks money, but not borrowing so much that they get nervous.
- deleted 5y ago
  [deleted]
- Spooky23 5y ago
  Not really, it’s all about payment history. Use your card for gas, etc is more than enough to demonstrate a pattern of on time payments. People who don’t use credit often get penalized from a scoring perspective because they don’t have a large credit line and have a higher utilization. The bank wants you to make payments, period. More credit lines means you have more resilience.
  - leviathant 5y ago
    It's more than payment history. I avoided credit until I bought a car, and I made a point to pay my car loan off early. Seemed like a way to demonstrate that I was responsible with my money. The month I paid off that loan, my credit score dropped precipitously. In 2006, my wife and I bought a home, and had to get two separate loans to make it work, because our credit scores weren't great at age 26, since I generally avoided credit. As soon as we opened those two loans, our credit scores jumped to the highest they've ever been. That and other patterns I've watched over two decades are why I believe credit scores are entirely about how well you pay the banks' game.
    - Spooky23 5y ago
      You made my point — they care about payment history, not paid off. You’d be better served taking a $500 personal loan from a credit union and paying the payments every month.

deleted 5y ago

[deleted]

throaway46546 5y ago

For maximum FICO score you ideally want every card except one to report a $0 balance and one card to report a $1 balance (some issuers will forgive a balance of $1 so you might have to use $2). You do this by paying down the cards before the statement generates. Once the statement for the $1/$2 card generates you can then pay it off.There is no need to revolve a balance. In fact if you pull your credit reports it does not even show if you are revolving a balance. If you would like to see what data is in a credit report you can obtain a copy for free. https://www.ftc.gov/faq/consumer-protection/get-my-free-credit-report https://www.ftc.gov/faq/consumer-protection/get-my-free-cred... If you are interested in how FICO scoring works there is a lot of information available on various forums. The best resource I have found is on https://creditboards.com/ https://creditboards.com/. The FICO algorithm is proprietary and they do not disclose it, but through experimentation people have managed to reverse engineer quite a bit of it.