Comments on: Do You Need to Carry a Balance to Get a Credit Score?

By: Roger

Roger — Fri, 20 Mar 2009 02:52:03 +0000

Ah, okay, Mrs. Micah. I saw the comment in question (it ended up being mailed out to me, even if it wasn’t posted) and was going to correct the commentator’s errors myself. I’m glad that you caught him, though; he did seem to have a thorough misunderstanding of how credit cards evaluate interest on their users.

By: mrsmicah

mrsmicah — Thu, 19 Mar 2009 23:12:44 +0000

Note: I removed a comment from a commenter who was misinformed about when credit card companies start charging interest. I’ve sent the commenter an e-mail which I hope will help him understand that they only charge the interest if you don’t pay off the bill.

I just wanted to note this because I don’t normally delete comments, this one was just factually inaccurate and might have confused readers. I stand by what was said in the article based on reading, personal experience, and pretty much every other article out there on using credit cards without paying interest.

By: Roger

Roger — Wed, 11 Mar 2009 04:25:35 +0000

Thank goodness you don’t need to carry a balance to get a good credit score; I’ve managed to develop a great credit score even while always paying off my cards in full each month.

I do like the comment about not feeling bad for paying off the debt in full each month; given some of the credit card companies’ practices, I don’t feel bad at all about giving them as little money as humanly possible.

By: mrsmicah

mrsmicah — Wed, 11 Mar 2009 00:49:05 +0000

@Phil, I think employers are interested in what kind of character you have…and that’s one place where society gives you a number and says “we trust you X much.” It’s not necessarily a dependable number, but companies like things they can quantify about a person.

On the plus side, having a lower credit score may make a company want to higher you because they think you really need the job and won’t press for as high a salary, whatnot.

By: mrsmicah

mrsmicah — Wed, 11 Mar 2009 00:46:22 +0000

@sarah, absolutely right. Because it’s supposedly a random day, I believe it’s safest to keep it on there until you know it must have been reported. Unless, as in your case, you’re worried about having a large used-to-available ratio.

And that’s an important point to bring up–the ratio of credit used to credit available has an impact on your score. And the less credit you have available, the more it lowers your score. So using the card to pay just one bill may make your score higher than if you did your monthly spending on it. It may not be a huge ding, but if you’re starting from no history or a bad history it’s probably more important.

@David, that’s a great plan. Is it a consistent date or number of days into the billing cycle for you? I’d assumed that since billing cycles are always shifting it wouldn’t be something predictable. But I suppose if they’re reporting to the credit reporting agency, then they might work on sane schedules that are month-based instead of 25 days or whatever yours is.

By: David

David — Wed, 11 Mar 2009 00:24:57 +0000

Reading a Long time, First comment.
Credit balance is reported on a “random” day. You may be able to obtain that information by calling the credit company and asking them which bureaus they report to (some only report to two of the three) and on which days, then you can use the card a few days before and pay it a few days after. I was also able to increase 2 out of 5 credit limits just by asking while I was on the phone.

By: sarah

sarah — Tue, 10 Mar 2009 15:55:17 +0000

I thought it had more to do with the balance the random day the credit reporting agency checks the balance of your account in a given month, not the actual billing amount. Is there a way to verify or check that?

Now, granted, not much of a difference for the person who only uses it for one purchase a month – you’re safer to wait until the billing statement to ensure that you have a balance when the monthly report is pulled.

However, in my case, I was recently dinged (not much, but still) on my credit score for using too much of my available balance. I had paid a term’s tuition on a card to get the cash rewards, so for a few days the balance was roughly 60% of the available credit. I made a large payment, and the billing statement showed an amount roughly 15% of the total available credit.

The billing statment has not exceeded 20% of the available credit for the past year, and I have never paid a penny of interest on the account.

We use the card for most daily purchases and pay it off in full each month. This has worked great and earned us several hundred dollars cash back each year from the card rewards. I have learned to be careful though to immediately pay off large balances and pray that it doesn’t get checked the day or two the balance is there.

By: Phil

Phil — Tue, 10 Mar 2009 13:09:10 +0000

Thank you. I’ve been wondering the same thing, though not because I’m interested in car loans and mortgage eligibility. These days insurance companies use it to figure my rates, and potential employers use it to0 (though I’ve never known why).