Which one is it....?

Question

I work at a bank so I should know this but everyone gives different answers. When you get your credit card statement is it better (credit score wise) to pay it off in full or just pay a big chunk. Because I hear when building credit it is not good to pay it off in full because your really not "valued" if you don't accumalate interest. But some say it looks good to pay in full but others say your not building credit if you pay in full bc they want to see you paying in installments.

Answer 1

When I check someone's credit I take the amount of payments there are ( on a credit card this is one payment a month until the experation date) divided by how many payments made, minus late payments. So they are both right. If you pay it all off, at least keep the card active so that the amount of payments stays there. If you just pay off a big chunk that's okay too, but of course there will be interest accrued giving you more payments to make, and if made on time a better credit score.

Answer 2

If you work at a bank, you should talk to one of the loan underwriters.



Most, if not all, will tell you that you should pay off credit cards in full. When I look at someone's credit report, I look at their revolving debt and how much of it they are carrying. If I see credit cards with balances (even one credit card), I start to worry that this person is not living within their means. And that means my bank runs the risk of late payments or default. That information goes in my mental "don't approve" column.



I'm not sure where you're getting this idea that you aren't "valued" if you don't accumulate interest. Accumulation of interest is only good for the bank, very rarely for the consumer (even if you do get a tax credit for some paid interest on real estate mortgages).



And FYI: you don't pay installments on a credit card account. Installments are for closed-end loans like car loans, boat loans, etc. Credit cards are typically revolving debt.

Answer 3

I understand what "guru" is saying and what you have heard. However, I'm a firm believer in paying in full. I even go so far as to only purchase cars when I can pay cash. When getting my credit rating for buying my house, the lender basically said that with my credit rating they could pretty much lend me anything I asked for. I don't think it hurts you ONE bit to pay in full, and it certainly helps you NOT build up debt. So if you can......do. I'm just not a fan of interest payments. Heck, I even payed off my house by paying more on the principle each month just so I wouldn't end up paying all that interest! So speaking from experience......I really think you DO still have a valued credit rating by paying things in full. I totally recommend it.

Answer 4

I personally think it's better to show no revolving debt, especially unsecured revolving debt, than show a balance. Your credit score is affected by the ratio of your card balances to their limits so the less you owe, the better. As long as your card is open and you have used it at least once, the company will need to report it as an "R1" rating even if you own nothing. Eventually, the company may shut it down for inactivity but it's not likely since they want to keep you as a potential customer. There is no reason for you to accumulate interest just to maintain a credit rating. I guarantee you will be borrowing enough in your lifetime to not worry about the effects of 1-2 credit cards.

Answer 5

As Jack Nicholson said:



"You want the TRUTH?

You can't handle the TRUTH!"



Valued?



Where do you think banks make most of their money?



Let's see:



$35 late fee

$35 over limit (they will even approve charges overlimit)

Over-limit or late 2 times or any late payments with any other creditor, interest rates soar to 29.99%



Let's set the record straight. The ONLY SITE you should go to learn about FICO credit scores is WWW.MYFICO.COM This is the consumer site for Fair Isaac Co. (FICO) They are the ones who invented credit scoring and the only site that gives you the TRUTH about how credit scores are calculated.



If you got to their Credit Education section, you will see they will talk about Credit Utilization, i.e., how much of your credit line you are using.



Simple Equations:



Low Balance, High Credit Limit = High FICO credit scores

High Balance, Low Credit Limit = Low FICO credit scores



Guidelines:



No more than 3-5 active revolving accounts with high credit limits(shows credit responsibility) and low balances(zero is best)

Answer 6

If you should get ur own credit report from a credit-reporting agency, you will see that it reports only whether you paid on time, not whether you paid the full amount. Potential creditors don't know whether you paid the full amount. Only the creditor whom you paid knows.



The others are correct that you want to show a large number of on-time payments. Use your credit card to buy cheese at the grocery each month and pay it off in full.

Answer 7

Your credit score shows the number of payments you've made to your credit card company, so paying off a credit card in increments is best, and paying more than your minimum payment amount is advisable.

Answer 8

Pay off as much as you can as soon as you can. Yeah it looks better to the credit card company if you are paying some interest but you don't have to do that all the time.

Answer 9

Depends on the credit card company. Generally its better to pay everything if possible.



Sometimes secure credit cards are being used to build credit -- where you make a deposit to the secure credit company -- in order to use the "credit card" -- like debit cards. Companies issuing secure debit cards like it when you owe them some money and pay interest on the owed amount.

Answer 10

Personally, I believe in paying off the debt every month.



But there is a regular poster on Yahoo Answers, Credit Guru, who has impressed me a great deal with his knowledge of credit scoring. His opinion is to pay most of it off, leave a little balance.



Whatever you do....don't pay late.

Answer 11

conflicting answers here too huh !