Is a credit card balance good for your credit rating?

[jimbo90]

Not to hijack the thread or anything but ...

Is paying the entire amount good or bad for my credit? I looked everywhere and the information is mixed. What is a revolving balance? Does that affect my credit?

I do have a hunch that 'pay entire amount' mantra is for those who are credit veterans, but does that apply to relative newbies like me?

[jeffrey]

"Pay the entire amount" is for anyone that has a credit card -- not doing so is a waste of your hard earned money.

Although nobody knows for sure, if you look at what MyFico says about credit scores on their site, paying off your balance each month should help your score and leaving a balance should hurt your credit score. One of the factors that MyFico lists as a factor in your credit score is the amount of money that you've borrowed which is calculated as a percentage of available credit. With this in mind, if you have nothing on your credit card with a $10,000 credit limit, you should have a better score than if you have $3,000 on that card. Theoretically, the higher the amount you have on the credit card, the lower your score would become.

[ernesto sidi]

If you're building your credit, go out to department stores such as sears, macy's, target, etc. and open up as many cards as you can. Make a small purchase at the time, but then pay it off as soon as you get your first bill. Shred the cards but keep the accounts open. That will increase the available credit you have, and as long as you don't owe anything it will improve your credit score.

sometimes it's wise to wait until you are making a big purchase, such as christmas shopping, so that you can also benefit from a !0% discount on your initial purchase after you open the card, and also no interest for 90 days or some similar deal. You benefit from the discount, and interest free payments. But you have to pay it off immediately or before you begin to accrue interest.

I opened up a babies r us card when we bought the cribs for our twins, plus a bunch of other stuff. The total was about 900. I got 10% off, so down to 810. Paid 760 with gift cards, put 50 on the new account, and then paid it off when the first statement arrived. did the same thing at target on a 200 purchase, got 20 off for opening an account.

ernesto

[boosami]

For someone with limited to no credit history, the biggest factor affecting your score is just that--you have no credit history. Carrying a balance or paying in full will both help build your history. Even if you do not spend with the card at all, it will report history to your credit file each month.

That said, the better thing to do for your you is to pay in full each month, if you have any spending at all. Make that a habit while you can and you'll thank yourself later in life!

[MonkeyMama]

I have heard this many times from smart individuals. I have seen suggested that you get credit simply for your credit score (get a loan; carry a balance). I have also heard you can never have a good FICO score without an auto loan, etc.

Complete BS all around. (Many people just don't know any better, but yeah, NOT true!)

If you use a credit card, and pay it off each month, it will generally be more favorable on your score than carrying a balance (as Jeffrey posted). You don't need to be "in debt" so to speak to build your credit. You just need to have available credit and pay your bills on time.