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Guest

Hi! I am in the process of repairing my credit reports, doing it myself. I have heard conflicting information, and wanted to get more info.

I have heard that it is best to pay a card balance off in full each month.
However, I have also heard it's best to pay all but a small amount, say $10.

Which statement is actually true, and why? Which one will have the most positive outcome on my score?

Thanks!

Posted: Sun Jun 01, 2008 11:38 am Subject:

I personally think that keeping a small balance on the card and paying on it each month would help. I wouldn't have more than say a $100.00 balance on it and pay it early every month.

Guest · Posted: Sun Jun 01, 2008 11:42 am Subject:

Why is keeping a small balance better than paying it in full?

Posted: Sun Jun 01, 2008 12:15 pm Subject:

I honestly don't know the logistics of hiking a credit score, but I would think that paying it off monthly would have a bigger advantage, I'm honestly not sure about that, though. Hopefully someone else will be around to share some insight. Smile

Posted: Sun Jun 01, 2008 12:17 pm Subject:

Keeping utilization low shows you are using your credit & paying on time.Don't keep a balance on a credit card just for score purposes though.See how much the balance cost you per interest rate.

Guest · Posted: Sun Jun 01, 2008 2:42 pm Subject:

Posted: Sun Jun 01, 2008 3:04 pm Subject:

Yes it would depending on how statement date relates to date credit bureaus are updated. After using your accounts in relation with a credit monitoring service,you can estimate these dates.

Posted: Fri Jun 13, 2008 7:57 am Subject: Payment History

The largest portion of your credit score calculation is payment history. If you have no payment history (because you are not using your card), then it is more difficult to reflect positive, on-time repayment as part of your score. Most credit experts suggest that consumers use their cards for necessary purchases (like groceries, but only purchasing what you can pay for from your bank account) and then pay off that balance at the end of the month. This way, you should avoid or minimize interest fees while at the same time demonstrate that you can pay your bills on time (payment history).

Another factor of your credit score is balance-to-limit ratio. This is a ratio comparing your credit limit to your balance on your card(s). So, if you keep your balances to $0 (or very low), you will have a much better ratio (which reflects better on your score). I don't believe there is a need to carry a balance and doing so will only cost you unecessary interest fees (what a waste of money). However, using your cards and paying them off will demonstrate a positive track record of payments (payment history), and that should help to rebuild your credit (over time... it's not overnight).

Posted: Fri Jun 13, 2008 3:01 pm Subject:

when you are paying down several debts, is it better to pay one down/off at a time, or to spread it out over the cards?

Like say I have an extra $200 to pay towards 3 cards, 1 card had $7500 balance, 1 card had $1,000 balance, 1 card had $500 balance. What would help my credit score more?

Thank you!

Posted: Fri Jun 13, 2008 4:01 pm Subject:

I would pay the mins on the two higher balances, and knock out that small balance in the course of 2-3 months. Then take that $200 + whatever you'd been paying on the $500 balance, and kill off the $1,000 balance. Continue as needed, from smallest to largest.

If this sounds suspiciously like Dave Ramsey's 'debt snowball', it's because it is. Regardless of where you hear about it, the technique works.

Posted: Sat Jun 14, 2008 3:36 am Subject:

Posted: Mon Jun 16, 2008 9:11 am Subject:

even if the higher balance/limit card has a much larger interest charge than the 2 smaller balance/limit cards? 30% versus 17%?

Posted: Mon Jun 16, 2008 10:46 am Subject:

If you are paying 30% interest,I would darn sure be looking for a way to either pay it in full,transfer it somewhere,or borrowing money to pay it.

Posted: Mon Jun 16, 2008 1:27 pm Subject:

that's the card that I paid in full after I had run it up to the max (I was stupid and didn't THINK about what I was spending). I took out a cash-out loan on my property, and as soon as I paid the card off they reduced it from $30k down to 3k, I had to beg and plead for them to raise it to $7,500. And then they turned around and raised the interest from 11% to 30%. I have sure been shocked into reality over that whole thing!

Posted: Tue Jun 17, 2008 1:35 pm Subject: highest rate or largest balance

There is a lot of debate about whether people should pay off the largest or smallest balance first or the one with the highest APR first. Perhaps it should be restated as pay off the one with the largest finance charges first. So, if a larger-balance account has a low APR, but a smaller-balance account has a ultra-high APR, the lower-balance account may actually be costing you more. The sooner you can pay this one off, the sooner you will have more money to pay towards the other accounts (and the more money you will save because you knocked out the highest-cost account first).

Posted: Tue Jun 24, 2008 3:00 pm Subject:

There hasnt been a mention of negotiating lower interest rates with any of the credit card companies in this thread. Starting with the highest interest card try to lower the rate. Do the same with any sort of monthly or annual fees... try to get them waived. Also ask about other "products" that might be available that will save you money - meaning a different credit card that might give you fewer frequent flier miles to redeem etc.

Best of luck.

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