Cash/Check/Credit/Debit

[Perry Winkle]

Originally Posted by BrianR

NOTE: If you use credit cards, you should NOT pay them off each month...carry a balance, even a small one. If you don't, the credit report shows you as carrying the maximum charge and not paying on it. Show steady use, not too much, not too little, carry a small balance and keep the payments up. That way if you suddenly need, oh, a car, you look better on paper.

That's counter to everything I've ever heard anyone state ever.

[monster]

Originally Posted by BrianR

NOTE: If you use credit cards, you should NOT pay them off each month...carry a balance, even a small one. If you don't, the credit report shows you as carrying the maximum charge and not paying on it. Show steady use, not too much, not too little, carry a small balance and keep the payments up. That way if you suddenly need, oh, a car, you look better on paper.

Um, no. Urban myth built up by the card companies.

[jinx]

I think he's right though.

[monster]

that is, it's BS about carrying a balance being good.

If you pay off everymonth you do not get shown up as "carrying maximum balance -that's BS. But if you have huge credit limits, that can stop you getting credit even if your score ids good, because you have the potential to have a huge balance. Whether your cards are maxed out, have a small balance or are paid off has no bearing on this. If you want to be prepared in case you suddenly need a new line of credit, make sure your credit limits are not too far above what you actually need. credit card companies will often raise them with the minimum of notification. You can request that they be reduced. our primary CC once got up to about 20K limit if we had ever got close to half of that we'd've been in deep doodoo.

[monster]

Originally Posted by jinx

I think he's right though.

no, he isn't. he's right that paying off your full balance every month doesn't mean it'll be easy to get a loan, but keeping a small balance is no different. it's all about potential balance. if you have the potential to max out your cards to half your salary and have a mortgage, no-one is going to give you an additional 20K line of credit even if you pay off all your cards every month and your mortgage on time.

[Aliantha]

When you go to get a loan, they assume you're using the whole limit of your card, so it goes toward your total amount of prior debt.

whether you pay it off or keep a small amount carry over, it makes no difference (eta: to your credit rating) if you're never late with your payments.

[monster]

keeping a small balance shouldn't be a problem either, as long as it is small, but remember that if you never reduce it, it looks like your income is maxed out and you don't have room for any more payments, regardless of what your income/potential credit ratio is. also, you are pating interest for no good reason. you pay off your card every month -no fees, no interest.

[monster]

omg ali, is that twice in a week?

[Aliantha]

In fact, even if you never pay it off and keep it close to its limit, as long as you make your minimum monthly payment it wont affect your credit rating one little bit.

[jinx]

Finance companies want to see evidence of your ability to make payments. They want to see major purchases paid for over time (carrying a balance), not just using your credit card like a cash/debit card and paying it off every month.

That's what Jim told me anyway...

[Aliantha]

I know. Wonders will obviously never cease.

[monster]

Originally Posted by jinx

Finance companies want to see evidence of your ability to make payments. They want to see major purchases paid for over time (carrying a balance), not just using your credit card like a cash/debit card and paying it off every month.

That's what Jim told me anyway...

yebbut that's not credit cards (per se, although most of these types of things these days like to give you one just in case you want to owe them more.....). that's like getting new windows in your house, taking the credit option and paying it off. they do not see what you actually bought with your credit card.

[Aliantha]

Originally Posted by jinx

Finance companies want to see evidence of your ability to make payments. They want to see major purchases paid for over time (carrying a balance), not just using your credit card like a cash/debit card and paying it off every month.

That's what Jim told me anyway...

Of course, but as far as CC's go, as long as you don't miss your payments you still look good on paper, if your total amount of debt isn't higher than what the finance company deems to be payable/affordable.

[Stormieweather]

Everything you ever wanted to know about credit, credit scoring and ratings - MyFico.com

I pay for a membership and have credit improvement goals (which do not involve revolving credit just yet). Great site and advice....


ps...paying it all off every month is not good (for your rating), nor is closing out an accounts or two if you think you're overextended.

[monster]

one thing to note.....

many of these stories about how to get a good credit rating are told by people who have fucked up and are not yet totally fixed. It's like a religion. You have to have faith and you will get to heaven, even if it seems illogical sometimes. Unlike advice on fixing broken relationships, it's probably better to turn to the people who do have good credit scores and ask them what they do. Finance companies are not necessarily to be trusted as advisors, either. duh. You think they're really going to tell you how to fool them?

and there, while I was typing, stormie proves my point. You pay for membership to a site that gives you tips on how to improve your credit rating?