Better to carry a small balance, or pay off in full?

[brokeinmichigan]

Hi all~
We're in the "rebuilding" process after being discharged last August. I have a had a CapOne card, and DH was approved for an Orchard Bank Visa last night.

What is the best way to increase our credit scores? To pay them off in full each month...or carry a small balance?

Thanks in advance for your vast knowledge...

[jJimmy11111]

Interesting question..........I once saw one of my cards being reported as " not in use ", or words to that effect. I always pay off in full each month. After seeing that, I now leave a very small balance. $5 to $10.

I'd be curious as to other people's opinion on this.

Thanks.


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[FLBK7]

Interesting question..........I once saw one of my cards being reported as " not in use ", or words to that effect. I always pay off in full each month. After seeing that, I now leave a very small balance. $5 to $10.

I'd be curious as to other people's opinion on this.

Thanks.


.

Shortly after my BK discharge while I was going through the credit clean-up process, I got a CRAP1 (huh!) Master Card with a $500 limit, and shortly after that a CRAP1 Visa with a $2K limit. Both were no-fee.

I used the MC and the Visa a few times, but the Visa more regularly. The MC remained inactive with a zero balance for almost 2 years. And then, wham, CRAP1 Master Card sent me a letter saying that due to "inactivity" they were going to charge me an "annual fee of $39." When I called to complain, they said that my "inactivity" cost them money, hence the fee. So I very nicely told them to close my account, since I wasn't going to pay them any "fee." It took quite a while, because they kept trying to get me not to cancel, but yet they wouldn't waive the fee. Today, I THINK (?) that account is now officially closed. In the meantime, The CRAP1 Visa's limit has been raised to $5K! Maybe it's the old adage of the right hand not knowing what the left hand is doing?

I try to charge something every month and then pay it in full, and I also try to sort of "rotate" my 7 total cards so that they all remain relatively active. I've also had major car and home expenses that I had to put on a CC. I just paid as much as I could each month, and managed to get that paid off in 5 months.

I think the key is "activity."

[brokeinmichigan]

Thanks FLBK7-

I was thinking that, too...activity. However, they (the CC companies) are making no money if the bill is paid in full every month, since there is no interest charged on a zero balance.

Anyone else?

[bkdone]

Experian's credit analyzer says that it is favorable to have 90% open to buy on all lines of credit, hence...use only up to 10% of your available credit limit looks best to potential creditors.

10% is not a lot obviously, but if you have a big expense, charge it and then pay it down as quickly as possible. It would seem correct that activity is the key, and low, low balances are best.

One tip that I read about the other day on someone else's thread... Check into your old credit cards that you have closed, but had zero balances at the time of your BK. Call them and see if they will reopen your account without running your credit. I tried it, and the account was reopened. I will charge about $5 on it when I get it, and keep that same $5 active. I'll have another tradeline showing, and no hard pull on my report. Nice!

I'm learning the game!

[keepmine]

Thanks FLBK7-

I was thinking that, too...activity. However, they (the CC companies) are making no money if the bill is paid in full every month, since there is no interest charged on a zero balance.

Anyone else?

They do make money on the merchant transaction fee everytime the card is swiped.
My personal opinion-I'm determined to never pay interest on a cc again if it can be avoided. I always pay in full.

[MidwestGuy]

I agree with above post, avoid interest pay in full.