Mitch wrote:So, are you saying, keeping a $0 Balance (non use of the card) would be bad?
If you only have that account and keep 0 balance, then it is bad. Other creditors regard that as you don't use the credit and may lead to adverse action. To have a 0 balance, you may not use the card, or may use the card and pay entire balance before statement.
If you actually don't use that card for a long time then the issuer can close it due to non-activity. This differs from using the card and pay all balance before statement generates.
In the future if you have other accounts and keep this account (or others, as long as not all) 0 balance, then it is fine (and usually good in terms of scoring). Just make sure there is activity if you don't want the lender to close the account.
Mitch wrote:However, using more than 30% of a credit limit (even if you pay it off in full) is also bad?
If it is reported to credit bureau, other lenders may view it as bad.
Generally banks only report the balance as of the statement date, so there is no problem to use more than 30% (while staying within your credit limit) during a billing period and bring the balance down (make payments) before statement.
If you don't want to get any other loans or credit cards, there usually is no big problem even if you have more than 30% reported. The score may not be good, but you can manage your debt responsibly and it's fine.
Mitch wrote:If I pay off any balance, in the middle of a billing cycle, would it be shown that I purchased something, and paid it off, on my credit report? Would it also show that I went over the 30% utilization?
Only the balance on statement date (or the day it gets reported, if not statement) is reflected on credit report. For Discover and most other lenders it is the statement date.
Example: Suppose your new billing period begins on 11/30/2014 at $10 balance. Your statement closes at 12/29/2014. You make the below purchases and payments.
- Code: Select all
12/1 Purchase $500
12/2 Purchase $600
12/20 Payment $1000
No other activities in this period. Then, your balance reported will be $110. From the credit report, it is impossible to find out you have had $1110 balance or have made what amount of purchases.