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HomeCredit ForumYour Credit Score

Pay credit card balance in full- Will Increase FICO faster?

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asked: Which one will increase FICO faster-Pay credit card balance in FULL OR leaving some balance behind?
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Pay credit card balance in full
33% 33% 
 3 
Pay credit card balance in several months
66% 66% 
 6 
Total Votes 9
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herbolaryo



Joined: 10 Jun 2008
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Posts: 1



222 Magic Points
Subject: Pay credit card balance in full- Will Increase FICO faster?
 
 Posted on Tue Jun 10, 2008 2:57 am  
1. Some say that it is will increase FICO score faster if you leave out a balance in your credit card payment Question
2. Some say that if you pay in full immediately, FICO score won't be affected because you did not show a real history of credit history. Question
3. Some say that you need to have a balance of 2-3 months before paying in full so that it will affect your credit score. Question

Which one are true and which one are just myths?
Kindly give links to support the truth regarding credit cards
 
carol

carol

Joined: 27 Jun 2006
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Posts: 272



7874 Magic Points
 
 Posted on Tue Jun 10, 2008 6:57 am  
Hi Herbolaryo
If you want to increase your FICO score, it is advisable not to put up big balances in your credit card as it hurts your credit score no matter whether or not you pay the bills in full each month. It however does not mean that you should not pay off your balances in time, You should always try to make regular payments, but what gets reported to the CRAs is the balance reported on your last statement. So try use your credit cards lightly and don't put huge balances in it. It is advisable to spend 30% to 35% of your credit limit. In this way you can raise your FICO score.
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scott

scott

Joined: 28 Jun 2006
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4471 Magic Points
 
 Posted on Tue Jun 10, 2008 7:14 am  
The fact that you need to have a balance before paying the debt in full to improve your score is not correct. In fact paying off the debt in full does not hurt your credit score, it usually helps in improving it. If you make payments in time, it will add to your credit score, no matter whether you have a balance left on your account or not.
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SCOTT

Social security, bank account, and credit card numbers aren't just data. In the wrong hands they can wipe out someone's life savings, wreck their credit and cause financial ruin.
 
fireyone



Joined: 26 Feb 2008
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Posts: 2022



10709 Magic Points
 
 Posted on Tue Jun 10, 2008 10:10 am  
Okay I myself am trying to figure this out too. So if you only make a major purchase on your NEW card and pay it off in two m onthly payments does it help? I also hear alot about always leaving a small balance on a card and making monthly payments to establish a payment history.
 
goodnatured



Joined: 03 Nov 2007
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Posts: 2591



4325 Magic Points
 
 Posted on Thu Jun 12, 2008 12:50 am  
you need to pay a little bit at a time to establish a credit history, paying it off all at once will not establish this history needed.

So my advice is to pay in monthly payments.
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Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!
 
Justin

Justin

Joined: 17 Jul 2006
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6571 Magic Points
 
 Posted on Thu Jun 12, 2008 7:13 am  
Yes, I agree with you goodnatured. But you should always pay back the amount in time and never be delinquent. Delinquency always negatively affects your credit report and has a bad impact on your credit history. I would prefer to pay my regular bills through these cards and repay them in time for building a good credit history.
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Justin
 
sdchargers_63

sdchargers_63

Joined: 13 Aug 2007
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Posts: 714



79 Magic Points
Subject: Which one will increase FICO faster-Pay credit card balance
 
 Posted on Sat Jun 14, 2008 2:03 pm  
In some cases, people CAN'T pay the balance off in 'one lump sum'. But, it WILL raise your score. My opionion, of course.
 
goodnatured



Joined: 03 Nov 2007
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Posts: 2591



4325 Magic Points
 
 Posted on Sun Jun 15, 2008 9:11 am  
The key to raising your score is to have a positive payment history, so pay it in several small payments and be on time with your payments.

I have been trying to reestablish a good credit rating, it takes a long time and it takes a lot of discipline, sometimes I slip up and when I do, one mistake will cost you months and months of work.
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Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!
 
C Hertan
Guest
Subject: closing credit card
 
 Posted on Tue Jun 17, 2008 10:34 pm  
I have a credit card which I have paid off sometime ageo and decided that I will not ever be using this card again and want to close the account. Will this hurt my credit?
 
goodnatured



Joined: 03 Nov 2007
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Posts: 2591



4325 Magic Points
 
 Posted on Thu Jun 19, 2008 1:08 am  
yes, because you have now lowered your available credit by closing the account, if you pay them off and leave them open it keeps your available credit higher. So closing them does affect your score.
_________________
Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!
 
Justin

Justin

Joined: 17 Jul 2006
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Posts: 232



6571 Magic Points
 
 Posted on Thu Jun 19, 2008 9:40 am  
Hi C Hertan
Credit history constitutes about 35% of your credit score, and so old credit cards count a lot in improving your score. Since you had paid off your credit card dues, maintaining the card will in fact improve your credit score. If you close it down, it will lower down your credit score.
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Justin
 
goodnatured



Joined: 03 Nov 2007
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Posts: 2591



4325 Magic Points
 
 Posted on Sat Jun 21, 2008 5:08 pm  
wow, I did not think that it constituted that much of your credit report, I knew it was a big part, but never imagined that it was that much.

I know that closing it willl lower your score because it takes away from your available credit. Closing it will definately lower your score.
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Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!
 
Justin

Justin

Joined: 17 Jul 2006
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Posts: 232



6571 Magic Points
 
 Posted on Mon Jun 23, 2008 6:19 am  
Hi Goodnatured
There are five major factors that determines your credit score. Among them, the credit history constitutes about 35% of your credit score, about 30% of your credit score depends on the amount you owe, 14% depends on the length of the credit history, 10% of your credit score depends on the types of credit you owe and 10% depends on opening any new lines of credit.
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Justin
 
anthony

anthony

Joined: 31 Jul 2006
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Posts: 381



9628 Magic Points
 
 Posted on Mon Jun 23, 2008 6:31 am  
Yes, it is true that if you want to keep your credit score in a better position, it is essential that you do not close down your old credit account as it will affect your credit history which is in fact the most important determinant of your credit score. Moreover, you should not apply for or open any new lines of credit within a short period of time. This is because as soon as you apply for a new credit, a hard inquiry is made which gets reflected in your credit report. More and more hard inquiries implies that you are credit hungry, which in turn lowers your credit score.
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Anthony..

A positive attitude is not achieved by turning a blind eye to the negative, but rather by responding to every situation in the most positive way possible.
 
goodnatured



Joined: 03 Nov 2007
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Posts: 2591



4325 Magic Points
 
 Posted on Wed Jun 25, 2008 1:53 am  
True, You bring out some really good points about closing an account and the issues of applying for new credit. Both will lower your scores, great job on this post.
_________________
Goodnatured,

Trying to become and stay debt free, thank you for all your help and support!
 
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