Comments on: Banker Says – Carry Debt to Improve Credit Score

By: Brian

Brian — Sat, 11 Feb 2012 17:12:02 +0000

“While carrying a credit card balance may make sense when you first listen to the advice, it clearly isn’t logical when you sit down and think about it. Actually, I will still recommend paying your balances off even if paying in full affects your score negatively because it’s the only responsible way to manage your finances.”

I’m confused. It’s stated above “even if it affects your score negatively…” Am I taking it out of context? Are we saying paying it off in full does worse to your score than carrying a balance???? Everything made sence until that part.

Thisnis good stuff, please comment.

By: Camp Taji

Camp Taji — Thu, 14 Jul 2011 15:06:43 +0000

I have three credit cards that are all with the same bank. Recently, they lowered my credit limit because I keep a near zero balance. I guess that does not really matter, as my home is paid off as are my cars.

By: Put this into perspective, though

Put this into perspective, though — Sun, 10 Jan 2010 07:05:45 +0000

I’m late to the party on this one, but put this into perspective. If you pay interest, the banks are more willing to issue higher credit lines.. the higher the credit line, the more money you put on the card.. the more money you put on the card, (keeping under 40% balances carried) the better creditors can assess how you would do on a mortgage type situation. Banks make a profit on the interest you pay as you carry balances, Creditors see the banks willingness to issue you more credit, and everyone wins but your pocketbook. HOWEVER.. keep this also in perspective, you do need to show you can pay off a card in full a couple times a year. Carrying balances under 40% is great, but if you can manage to pay off the whole card, then bump the balance back up to just under 40%.. will help creditors see that you have that ability. Also, fully using a cards credit limit also, helps banks and creditors see that you actually need the credit line. Follow these reccommendations and it may just make a 1-2% difference on your next home mortgage. (In other words.. thousands of dollars)

By: Wilson Pon

Wilson Pon — Fri, 31 Jul 2009 05:55:49 +0000

My credit card company always credited my monthly credit report on every 27th of each month. Honestly, I’m a little bit of shame, as I’m one of those who never have zero balance…

By: car insurance guy

car insurance guy — Wed, 29 Jul 2009 00:54:36 +0000

Thank goodness for this post, and for the growth of online personal finance blogs everywhere. When I was younger, all I heard was “use your credit card, don’t pay off balances, the larger, the better since they want to give you even more credit.”

What a load of crap.

By: Annie G

Annie G — Tue, 28 Jul 2009 18:19:46 +0000

You can always ask your CC companies what date they report your balance to the credit agencies. Once I knew the date, I shifted my payment strategy to be sure that they were reported a small, but above $0 amount.

By: Jerry Nordstrom

Jerry Nordstrom — Tue, 28 Jul 2009 13:34:02 +0000

Using the fear of a bad a Credit Score and Credit Card debt is entirely a scam to keep consumers in a never ending cycle of interest payments to bankers.

Think about it, the bankers are telling you to take out loans, short term high interest rate loans like credit cards, so that you will have a good credit score. A good credit score to do what exactly? BORROW MORE MONEY.

Corporations leveraging debt in a well thought out investment strategy may be successful. However, consumers have to stop thinking they should attempt the same by financing their lives. If you have borrowed more than $30,000 (besides your home) and you earn less than 80k/year then you will likely be paying interest to somebody else for the rest of your life. You will never reach financial freedom, or at minimum you will severely delay the day when you can start investing in yourself.

In my view the attitude needs to be, I do not need revolving debt, I do not use credit cards, I do not need a credit score as I do not need to use a loan for any purchase outside of a home loan.

If the bulk of consumers become cash customers we will stop being a nation of debtors. Without credit card debt, auto loan debt and worse, pay day loans, consumers will reach that point where they are investing in themselves through contributions to investment accounts.

Instead of borrowing our way to a false sense of security, we will be buying our way to a true sense of accomplishment.

Stop being taken by the credit score scam and reject using any form of short term high interest rate loans.

By: CreditLendingBlog

CreditLendingBlog — Mon, 27 Jul 2009 18:58:39 +0000

Let me tell you, this is a very, very helpful post. It simply doesn’t make sense to carry debt, would just dig you in deeper. I make it a point to pay my outstanding balance in full every month, whenever possible.

By: Richard

Richard — Mon, 27 Jul 2009 18:40:41 +0000

Telling someone to carry a balance just to improve your credit score sucks and just make no sense. If I were you, I would just walk out the door after hearing that.

By: Charlie@PayLessForFood

Charlie@PayLessForFood — Mon, 27 Jul 2009 16:53:13 +0000

I agree. This is not the best advice to give someone. Actually carrying a balance on your credit card in same cases can actually hurt your credit score.

Credit score agencies look at your credit utilization rate to determine a large part of your score. Essentially they look at how much of your available credit you’re using. Typically you want a utilization rate less than 30%, meaning if you have $1000 available credit on your credit cards you need to try to keep your credit card balance under $300.