Quote:
Originally Posted by Jimellow
Is it true that if you don't carry a balance, you aren't building any credit rating?
For instance, if I charge $150 every month, and pay it off entirely every month, does that mean I won't build any credit rating as a result.
I was told that if I don't carry a balance (even if it's a small one), I won't build a credit rating, and was advised to "pay down" so that my balance is lower, but still not $0, so that I carry a little into the next month.
Is this sound advice, or no?
Thanks!
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That is poor advice, my friend.
The credit reporting agencies will see whether or not you have made a payment that month, so as long as you use your card - even if it is only to purchase a pack of gum, and pay it off in full when you recieve your bill, you are building as much credit as carrying a balance - likely even better having an extraordinarily low balance vs. a higher one.
The only issue you may run into is if you make a purchase and then immediately pay it off. An example of this would be if you purchased something and then went home and transferred the payment online to pay off the balance.
If you just wait till you recieve your bill, it will almost definately report that you had a balance and that you made your payment - and you still avoid paying interest.