Keeping a small balance on CC good for score?

[disneysteve]

For someone like me who uses my CC regularly, I never have a $0 balance even though I pay in full every month. By the time they receive and process my payment, I've already incurred new charges for the current billing cycle. So let's say my bill is for $3,000 and the billing cycle ended on 5/15. I'll get the bill about a week later on 5/22 and it will be due on June 12. Even if I pay the day after I receive it, on 5/23, 7 days have already passed and I've likely charged another $700 or $800 by then. And usually I don't pay the bill that quickly so my balance is well over $1,000 at that point.

[Like2Plan]

Another thing to consider, the credit bureaus don't report a history of account balances. The only balance your credit report will show to anybody who looks at it is your most recently reported balance. So you could show $0 balance for 11 months of the year, then in 1 month have a reported balance of $4000. If someone pulled your credit during that month, they'd see a $4000 balance, with zero indication of the 11 previous months of $0.

Honestly, if you're paying off your balance monthly, the reported balance means diddly. I never care what my statement balance is, because whatever it may be, I always schedule a payment for the day before the bill is due, and it's done. Some months it's a $13 balance, some months it's $1500. Doesn't matter to me, and doesn't matter to the credit bureaus.

I'm pretty sure they also report the highest balance on a CC--though it has been a while since I've pulled a credit report. (Then again, it may vary between credit bureaus.)

[kork13]

I'm pretty sure they also report the highest balance on a CC--though it has been a while since I've pulled a credit report. (Then again, it may vary between credit bureaus.)

True. But again, that's only a single data point. They don't report the date of that high balance, or any of the other high balances below that ($5000 in one month is reported as the high balance, but not the 5 other months where you've had $4700 balances). It doesn't really say much of anything about your habits.

[bjl584]

Not true.

As already stated, carrying a balance rom one billing period to the next is a lot different from paying off the balance in full each billing period.

I'm not sure what the rep meant by "carrying a balance." They should have said, "pay off the bill in full every period/month."

I never carry a balance and my score is approaching 800 last I checked.

[MonkeyMama]

I'm pretty sure they also report the highest balance on a CC--though it has been a while since I've pulled a credit report. (Then again, it may vary between credit bureaus.)

Yes - highest balance is shown.

Actually, I have an Experience credit report, recent, and it shows my balance history for 3 years: for every month it shows account balance, date payment received, minimum payment due, and actual payment.

This is a new thing as I have never seen this before.

[Petunia 100]

Yes - highest balance is shown.

Actually, I have an Experience credit report, recent, and it shows my balance history for 3 years: for every month it shows account balance, date payment received, minimum payment due, and actual payment.

This is a new thing as I have never seen this before.

I have seen this on my credit reports, too. It makes sense that they would want to know this. Even if you are not paying a penny in finance charges, you are still a profitable customer if you use your card regularly.

[kv968]

True. But again, that's only a single data point. They don't report the date of that high balance, or any of the other high balances below that ($5000 in one month is reported as the high balance, but not the 5 other months where you've had $4700 balances). It doesn't really say much of anything about your habits.

This is something I wish they would fix. You could possibly be penalized by hitting a very high credit utilization of that card when in fact maybe you only did it one month in however long you've had the card. Which could be years. They don't know if you do it all the time or if it was just a one time occurence.

[josetann]

This is something I wish they would fix. You could possibly be penalized by hitting a very high credit utilization of that card when in fact maybe you only did it one month in however long you've had the card. Which could be years. They don't know if you do it all the time or if it was just a one time occurence.

OR, they lower your limit to virtually nil. I.e. you had a $20,000 limit, max charged ever was $5,000. Then they decide to lower the limit to $2,000. THAT can look bad, a $2,000 limit with a high balance of $5,000.

[kv968]

OR, they lower your limit to virtually nil. I.e. you had a $20,000 limit, max charged ever was $5,000. Then they decide to lower the limit to $2,000. THAT can look bad, a $2,000 limit with a high balance of $5,000.

That may be true too, but I think it depends on the reporting credit agency.

I just looked at an old Experian report I have and it shows the original credit limit (which would take care of the lowering of the limit if it happened). I don't know if it would show a raising of that limit. It also showed a month-by-month breakdown of the CC account balances which takes care of the problem I eluded to regarding using a lot of credit in just one month.

However looking at some old Transunion and Equifax reports, they only show a credit limit and a high credit. Which brings us back to the original dilemma of what we're talking about with credit utilization ratios.

[neatdesign]

I look at using credit cards as a very short-term, interest-free loan. All I need to do is make sure I pay my statement balance by the due date and I'm good to go. I don't worry about charges that post after my statement is issued because those charges won't be due for another month.

[Bades]

For someone like me who uses my CC regularly, I never have a $0 balance even though I pay in full every month. By the time they receive and process my payment, I've already incurred new charges for the current billing cycle. So let's say my bill is for $3,000 and the billing cycle ended on 5/15. I'll get the bill about a week later on 5/22 and it will be due on June 12. Even if I pay the day after I receive it, on 5/23, 7 days have already passed and I've likely charged another $700 or $800 by then. And usually I don't pay the bill that quickly so my balance is well over $1,000 at that point.

I do the exact same.