improving credit... pay off credit cards, or keep low balances???

[DrLove'sKuDang]

i'll be paying off all my cards within the next day or two, but for any of you that might major or specialize in a credit/financial field, whats better for improving your score? i know, its good to keep the cards open, since itll create a good credit history... but what about the balances i should keep on them?

i dont plan on using them much at all. is there a "good" low balance i should keep on them so activity isnt stagnant, or is it always better to pay them down to zero and let them sit there, for the most part, unused.

[93EXaesthetic]

i'll be paying off all my cards within the next day or two, but for any of you that might major or specialize in a credit/financial field, whats better for improving your score? i know, its good to keep the cards open, since itll create a good credit history... but what about the balances i should keep on them?

i dont plan on using them much at all. is there a "good" low balance i should keep on them so activity isnt stagnant, or is it always better to pay them down to zero and let them sit there, for the most part, unused.

hmmm depends how long you have had them for.. i have 3 credit cards... i am actively using them... but its good to just keep them with no money owed on them... is that called balance?..

if you are good on your payments and on time.. and you show you have them payed off.. and are just using them as ''available credit..'' it will be good for your score

another thing is how long you have had them.. if you apply for credit cards.. but never use them.. and use them as available credit or emergency money it is not good if they have no history.. it seems you have history so you should be good... also if you want to be on the safe side.. leave 1 dollar on each one

[bagoon316]

also heard credit cards with high balances and not much money on them is bad too. ie: $5,000 credit limit with only $100 on it per say. they see it as money you can spend that you dont have. i only have two cc's both with pretty low balances and always keep some money on them but also keep them really low. i dunno, just want to show that they get used i guess.

[203Cree]

Generally you want to keep about 1/3 of the available balance on there unless you intend to close the account. That will build a rating the fastest. Pay on time and pay more than the minimum. Generally closing them completely will actually lower your score, as will paying off an auto loan before maturity. Funny thing, credit ratings.

[gloryaccordy]

Keep ur balances under the 50% limit

[Blk EX Coupe]

Keep ur balances under the 50% limit

I almost max out one of my credit cards every month because the limit is the lowest, but I pay the balance in full every month. Does the keeping the balance under the 50% limit apply? I guess I should start using my other cards more often anyways.

[cp[mike]]

theres nothing wrong with keeping most of your balance on any 1 particular card most of the time, because what is most commonly looked at is: your debt VS capacity.

lets say you constantly max out a $1000 card - but have $10,000 worth of other available credit lines with 0 balances, that puts you at 9% which is fantastic. this is why many people say PAY OFF your cards, but DONT CLOSE THEM. show you can handle them! use them as necessary but keep the balance DOWN. this combination looks best on a credit report / history.

many people say that you shoudl try to keep this under 30%, or under 50%, and as you get higher than that, it starts to appear a little riskier. but thats mainly for people looking at your credit, when youre applying for things in the future.

actual activity on any of those cards is what contributes to raising your score... leaving ALL of your cards down at 0 shows nothing, they want to see the balance fluctuate with ON TIME consistent payments but never really get to the point of debt maxing out available credit. so absoultely, pay them off! but dont be hesistant to use them again, as long as you know youll be paying it off again!

[Rusty]

There is some good and bad info in here. This is all what I've learned since I've been working at a mortgage company and from buying a house.

Bagoon is correct in the fact that having a high limit and a low balance is bad b/c its what they call open debt/credit. The best thing to do is to use the card at least a little bit each month and then pay it off at the end of the month. Some people will use it for a certain expense like groceries or gas. Something that they know they have the cash set aside to pay it off when its due. Most cards don't have any finance charges if you pay off the entire balance at the end of the month.

paying off auto/personal loans normally don't hurt your credit. I paid off my car a couple of months before we bought the house and there was no record of it on my credit report. Also thats what my loan officer advised me to do. I paid it off about 6 months early.

not having too much open debt and paying your bills on time or less than <45 days late is the best way to keep your credit scores high. The more often you pay on your cards the more information they have to base your score on there fore leaving an empty balance on your card doesn't really help you.

EDIT: I have had my 1 credit card with a $2000 limit maxed out every month for the last 3 years and every month I make a $1-200 payment each month and my scores are still above 720 so these are only tips... not guarantees that you will have great scores

[203Cree]

There is some good and bad info in here. This is all what I've learned since I've been working at a mortgage company and from buying a house.

Bagoon is correct in the fact that having a high limit and a low balance is bad b/c its what they call open debt/credit. The best thing to do is to use the card at least a little bit each month and then pay it off at the end of the month. Some people will use it for a certain expense like groceries or gas. Something that they know they have the cash set aside to pay it off when its due. Most cards don't have any finance charges if you pay off the entire balance at the end of the month.

paying off auto/personal loans normally don't hurt your credit. I paid off my car a couple of months before we bought the house and there was no record of it on my credit report. Also thats what my loan officer advised me to do. I paid it off about 6 months early.

not having too much open debt and paying your bills on time or less than <45 days late is the best way to keep your credit scores high. The more often you pay on your cards the more information they have to base your score on there fore leaving an empty balance on your card doesn't really help you.

EDIT: I have had my 1 credit card with a $2000 limit maxed out every month for the last 3 years and every month I make a $1-200 payment each month and my scores are still above 720 so these are only tips... not guarantees that you will have great scores

I know for a fact when I paid off my truck last spring my score dumped 50 points. I'm not saying it will do it every time, but it can.

[Rusty]

which is why i said normally. you must have had some sort of pre-payment penalty. At a time those were really popular but they are becoming less and less popular.

[Blk EX Coupe]

theres nothing wrong with keeping most of your balance on any 1 particular card most of the time, because what is most commonly looked at is: your debt VS capacity.

So if one of my card has an available credit of $1000, and I spend about 900 a month on it I'll be fine because I pay it off every month or I'll be fine because I have an available credit of 10 grand+ over like 3 cards?

Bagoon is correct in the fact that having a high limit and a low balance is bad b/c its what they call open debt/credit. The best thing to do is to use the card at least a little bit each month and then pay it off at the end of the month. Some people will use it for a certain expense like groceries or gas. Something that they know they have the cash set aside to pay it off when its due. Most cards don't have any finance charges if you pay off the entire balance at the end of the month.

So lets say if I have a card with a $8000 available balance and I charge about $400 worth of gas a month on it and pay it off every month. 400 is relatively low compared to the available credit. Should I split my expenses off other cards and spend more on this one or just leave it as is because I'm still actively using it?

[JARHEAD293]

i just don't have any. learned my lesson when i was in the military and young. everyone offered u credit cards,lol. was stressed the f out when i got out with all these bills. now i just go with the flow, no need for them. score is good

[Chrisisiced]

For improving your score its a good idea to use the card for normal everyday expenses like gas, food, and groceries but do be sure to pay it all at the end of the billing cycle.

[apuforyou]

I financed my sonata for 5 years but I just sold it on saturday after less then 2 years, think it will hurt the credit?

I sold it so I could save money towards a down payment on something else

[brawl]

selling a car early or anything of that sort will not hurt your credit. defaulting on payments, late payments, having to get a 3rd party involved to negotiate payments, those all hurt your scores.


Car payments, long term loans, mortgages all help because its consistency over long amounts of time. credit cards help as long as your debt to income ratio is not at an absurd amount. typically i've always heard from a bunch of my friends in the banking industry that its less than 30% of your debt to income ratio. Maxing a credit card out won't hurt you, but I wouldn't advise it unless you can pay off 75% of the balance relatively immediately. Banks make money off payments over time, not immediate payoffs. Finance charges, interest, etc... is all accrued over paying a balance off and being profitable in their pockets...after all, who is giving the good recommendation to the 3 credit bureaus? if you're not making them any money on your purchases, they won't report you as being as reliable as you could be. I know alot of credit cards that offer you 0% interest on balance transfers and purchases and all that won't actually report positively for you on your credit score until after the 1st promotional year expires, because at that point they're now making money off of you being a customer of theirs. Also don't keep open credit accounts if you're not using them for months at a time. its viewed as "stale" credit and will actually impact your score. Everything i have done just like this and last time i check my score was in the 730+ range.




Cliffs: Long term debt helps more, dont spend over 30% of available credit, try not to keep open accounts that aren't being used at all.

P.S. - also raises and pay increases does actually help your score since your debt to income ratio swings more in your favor.