Credit gurus....payment question

[chronical]

Not using credit at all gives them no measure of one's worthiness to pay money back in a timely and consistent manner, which is what your credit score is. In that same vein, when you pay cash for everything your credit score will suffer, regardless of how much you make.

Spot on

[chronical]

technically if you are chasing max score, typically having between a 1%-10% credit card utilization is better than 0%.

For optimal scoring allow $2 to post on one card. You are correct that 0% is worse than 1 to 10%. Most people don't know that the balance in your statement is what is reported. So to really take control of the utilization that is reported and ultimately used for scoring purposes, then you must pay before your statement cuts. A person could pay his balance in full every month, the day he opens up the statement but still be penalized since this amount has already been reported and won't be updated until the following statement is cut

[chronical]

Too much available revolving credit can actually take away from your score.. Like if you have 100k available on credit cards.

This is wrong and should be dismissed

[chronical]

The benefit of "spreading" out the payments to help your credit score would likely be offset and then some by the increased interest expense.

Just pay it and be done with it.

If a large balance has been carried for a long time, some lenders will do what's called balance chasing. This means as soon as the payment is posted , the credit limit is reduced to barely over the new balance. Negating any ground gained in overall utilization. Chase has been known to do this. If the balance was short lived he should be ok, but if the balance was carried for a while, I would send in multiple smaller payments

[chronical]

Any difference in score increase would be minimal, if at all. I doubt there would be a difference.


btw, I'm no guru, but I have done a lot of research on credit repair in order to improve my own. Your increase has to do more with the percentage of credit currently used. My guess is you would see a 40 (hypothetical) increase with a single payment or (2) 20 point increases with two payments or possibly a 25 point jump and a 15 point jump.

Your guesses mean nothing. It depends on his overall credit file, the total limits he has, the limit of the card that has the balance and what % that balance is in relation to that one card AND to his overall all limit. Utilization is huge for scoring purposes

[fordracing19]

When your in the 800's it doesn't really matter.

[Big A]

I guess I just need to look at it as if the credit card company is offering you a better score if you continue to use their card, no matter the balance as long as it's paid on time.

This is exactly how it is, the scoring system encourages carrying a balance because lenders are in it to make money. They don't really care that you are able to pay everything off, they want to know if you are willing to make timely payments that preferably include interest, and even if not, there is a much higher likelihood that someone making payments will get into a situation where they do need to carry a balance, thus incur interest.

[slow99]

Boost up your "I LOVE DEBT SCORES" debtors!

The rich rules over the poor, And the borrower becomes the lender's slave.

http://bible.knowing-jesus.com/topics/Debtors#sthash.0LBBvbsI.dpuf

[Roscoe]

Being that the card issuer doesn't make money at all unless you carry a balance, it may be in their best interest, but it makes more sense to me that your credit score would be better by basically saying, "I borrowed $2000 and now it's completely 100% paid off, can I have more now?"

Depends - did you buy one large item and are spending the next xx months paying it off? Yeah, they'll make money off of you.

Do you pay it off at the end of every month and use it frequently? They are making their money off of the merchants in transaction fees.

[CWO]

Not using credit at all gives them no measure of one's worthiness to pay money back in a timely and consistent manner, which is what your credit score is. In that same vein, when you pay cash for everything your credit score will suffer, regardless of how much you make.

Well that makes complete sense if you open a credit line and never use it. I imagine that's not the case for most people. I'd say most people open a credit line, pay on it for x amount of months/years and eventually pay it off. It's silly to me that they consider it "better" to carry a $150 balance on a credit card with a $2000 limit than to pay it off completely. Being that the card issuer doesn't make money at all unless you carry a balance, it may be in their best interest, but it makes more sense to me that your credit score would be better by basically saying, "I borrowed $2000 and now it's completely 100% paid off, can I have more now?"


I guess I just need to look at it as if the credit card company is offering you a better score if you continue to use their card, no matter the balance as long as it's paid on time.

[Roscoe]

[Big A]

This is true as well. It makes no sense to me, but having a small balance vs 0 balance is better for your score. Go figure.

Not using credit at all gives them no measure of one's worthiness to pay money back in a timely and consistent manner, which is what your credit score is. In that same vein, when you pay cash for everything your credit score will suffer, regardless of how much you make.

[momo]

This is true as well. It makes no sense to me, but having a small balance vs 0 balance is better for your score. Go figure.

i think it makes you more attractive to lenders since you actually use credit thus potentially pay interest. otherwise they make nothing off you (aside from potential annual fees) while you get points/miles.

[CWO]

technically if you are chasing max score, typically having between a 1%-10% credit card utilization is better than 0%.

This is true as well. It makes no sense to me, but having a small balance vs 0 balance is better for your score. Go figure.

[CWO]

Too much available revolving credit can actually take away from your score.. Like if you have 100k available on credit cards.

It's all relative. DTI and stuff.