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It would seem like paying stuff off full right away wouldn't be good for your credit, in reality it is good. It doesn't matter if you pay it off right away, what does matter is that you pay it ON time. Mak's credit score probably went up because of the amount of time that he has established his credit, not because he kept a balance on it. Wether you pay it off right away or not, it's still considered a revolving debt, which is a factor on your score.
The longer you have credit under your name and the better you keep your debt under control, the more your bank will lend and extend your credit. Subsequently your credit score will also go up. I've never asked my banks to extend me credit but like many cards, mine started at $4000 limit. Now both of my cards are around $18,000 limit. I've actually had to call my bank and credit union to stop extending me credit.
My score's been around 800+. I pay my credit cards off as soon as the balance is reflected on it so that I don't have to pay the interest.
I rarely pay anything with cash. If you guys ever take a class like the Dave Ramsey class or similar, they really harp on the fact that you should pay everything in cash. But I think that goes too much into the extremes. You can still use credit cards and pay them off right away before interest accrues on it. I think it's more convenient that way since I do online banking on a regular basis. I hate carrying cash, it's more convenient to transfer the money from my checking/savings to my credit card.
Instead of using debit cards or checks to pay off my bills, I use my credit cards to pay them. All of it. I really don't care about the credit card points or rewards, but at the end of the year I funnel so much bills through my cards that I get about $500 cash back to use for Christmas. That's without having to pay any interest, because like I said I pay everything off before it builds interest.
Here's an excerpt from one of my credit monitoring from Experian:
Also it gives a break down on what affects your credit score:
The longer you have credit under your name and the better you keep your debt under control, the more your bank will lend and extend your credit. Subsequently your credit score will also go up. I've never asked my banks to extend me credit but like many cards, mine started at $4000 limit. Now both of my cards are around $18,000 limit. I've actually had to call my bank and credit union to stop extending me credit.
My score's been around 800+. I pay my credit cards off as soon as the balance is reflected on it so that I don't have to pay the interest.
I rarely pay anything with cash. If you guys ever take a class like the Dave Ramsey class or similar, they really harp on the fact that you should pay everything in cash. But I think that goes too much into the extremes. You can still use credit cards and pay them off right away before interest accrues on it. I think it's more convenient that way since I do online banking on a regular basis. I hate carrying cash, it's more convenient to transfer the money from my checking/savings to my credit card.
Instead of using debit cards or checks to pay off my bills, I use my credit cards to pay them. All of it. I really don't care about the credit card points or rewards, but at the end of the year I funnel so much bills through my cards that I get about $500 cash back to use for Christmas. That's without having to pay any interest, because like I said I pay everything off before it builds interest.
Here's an excerpt from one of my credit monitoring from Experian:
The Score Factors listed below are listed in the order that they impact your credit score. Factors with green text reflect areas of your credit behavior that may improve your overall score while factors with red text often have a negative effect.
1. You have never missed a payment.
You have done a great job at making all of your payments on time. The purpose of a credit score is to help lenders predict whether or not you will miss payments in the future, so keeping your record clean is a very positive factor.
2. You do not have any maxed-out credit cards.
Credit cards are considered "maxed-out" when you have spent 90% or more of the credit limit. Lenders view you as someone who uses their credit responsibly and spends only what they can afford.
3. Your Credit Used % is less than 16%.
You have spent very little of the credit that has been extended to you. Lenders see this as a sign of responsible credit behavior and are likely to extend you additional credit as a result.
4. Your average credit card limit is more than $5,000.
Lenders recognize that with higher credit limits comes increased responsibility, and that you have managed to build strong relationships with other lenders. Your relatively high credit limits signal to lenders that you are a trustworthy candidate for new lines of credit.
5. You have two or more open credit cards.
Credit Cards allow you to both spend money and decrease debt; unlike mortgages or installment loans where you only decrease debt. Lenders like to see multiple credit cards on your credit report, because they are able to use them to better determine your ability to manage your spending.
6. You have no negative factors
Credit scores are calculated based on various factors in your credit report. Currently, your credit report does not show any significant negative or derogatory information.
*Calculated on the PLUS Score model, your Experian Credit Score indicates your relative credit risk level for educational purposes and is not the score used by lenders. Learn More.
1. You have never missed a payment.
You have done a great job at making all of your payments on time. The purpose of a credit score is to help lenders predict whether or not you will miss payments in the future, so keeping your record clean is a very positive factor.
2. You do not have any maxed-out credit cards.
Credit cards are considered "maxed-out" when you have spent 90% or more of the credit limit. Lenders view you as someone who uses their credit responsibly and spends only what they can afford.
3. Your Credit Used % is less than 16%.
You have spent very little of the credit that has been extended to you. Lenders see this as a sign of responsible credit behavior and are likely to extend you additional credit as a result.
4. Your average credit card limit is more than $5,000.
Lenders recognize that with higher credit limits comes increased responsibility, and that you have managed to build strong relationships with other lenders. Your relatively high credit limits signal to lenders that you are a trustworthy candidate for new lines of credit.
5. You have two or more open credit cards.
Credit Cards allow you to both spend money and decrease debt; unlike mortgages or installment loans where you only decrease debt. Lenders like to see multiple credit cards on your credit report, because they are able to use them to better determine your ability to manage your spending.
6. You have no negative factors
Credit scores are calculated based on various factors in your credit report. Currently, your credit report does not show any significant negative or derogatory information.
*Calculated on the PLUS Score model, your Experian Credit Score indicates your relative credit risk level for educational purposes and is not the score used by lenders. Learn More.
How is your Credit Score Calculated?
5 MAJOR FACTORS THAT INFLUENCE THE PLUS CREDIT SCORE®
31% Payment History and Bankruptcy
30% Credit Card Debt
15% Length of Credit History
14% Type and Number of Credit Cards
10% Credit Applications and Inquiries
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100% PLUS Credit Score
5 MAJOR FACTORS THAT INFLUENCE THE PLUS CREDIT SCORE®
31% Payment History and Bankruptcy
30% Credit Card Debt
15% Length of Credit History
14% Type and Number of Credit Cards
10% Credit Applications and Inquiries
----------------------------------------------
100% PLUS Credit Score
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