Q&A: How does credit card balance affect credit score?
January 25th, 2012 | 
Author: Question by AJ: How does credit card balance affect credit score?
How does this affect your credit score:
Using credit card and always paying off balance right away
Using credit card and paying off balance after you get the statement
Using the credit card and making the minimum payments after you get the statement
Note sources or experience please.
Thank you guys. But can someone clarify the difference between paying before and after you get the statement? A source would really help. I don’t like conflicting info esp without a source.
Thank you guys. But can someone clarify the difference between paying before and after you get the statement? A source would really help. I don’t like conflicting info esp without a source.
Best answer:
Answer by Judy
You can easily get top 800+ scores by using credit cards alone – I am proof.
You charge a little something you need each month like food or gas, and you pay in FULL when the statement comes in.
This will show usage on your credit report, and a new lender will never know if you are paying interest or not.
There is no way from looking at your report if you paid interest.
Note: By paying in full each month you not only get top scores – you never pay interest.
There is a myth out there that you need to pay interest on a credit card.
What you need to show is usage on your credit report.
You’ll make the credit card company happy since they make 1 to 5% off each purchase you make on merchant fees – so usage is very important.
Don’t ever pay your bill before the statement comes in.
Credit cards report on the closing date and you want a balance to show on the credit report.
Never use more than 30% of your available limits on your cards at any time during the month.
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Basically the way it works is the credit card will report on your payment habits and if you maintain a high balance. Making late payments and maintaining a high balance will negatively effect your score and lower it. Paying on time (prior to due date listed on the statement) will help to increase your score. The balance on the account goes towards your debt to income ratio as well as your available credit amount. I believe the general rule is you want to have no more than 30% of your available credit as a balance but I’m not 100% sure on that number, it’s either 20 or 30%.
after statement
I found a way to play the system
just
at lest 5 days before the closing date PAY it down to 15% to 20% then after the closing date when you get the bill in the mail pay the rest of it
this way the credit to debit ratio is lower (what is reported)