High Credit Card Balance For 1 Month To Build Credit Score?

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got850?
 
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High Credit Card Balance For 1 Month To Build Credit Score?

Postby got850? » Thu Jul 14, 2011 8:11 pm

Would it be smart to use your card one month close to the limit to show a high balance and then from then on carry a 1-10% balance to help build credit? The argument is that it will show this person has used the card a lot and is able to manage debt. If the high balance is 100 dollars on a 5000 dollar card, and the current balance is 75 dollars, then it looks like you are at 75% of you highest utilization ever...how do you think a mortgage lender would read that? I guess if for one month you put all your expenses on your card it should raise the high balance and then you can use the card for 1-10% to build credit.


Money card
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Postby Money card » Fri Jul 15, 2011 10:41 pm

A Mortgage lender would rather you pay your bill in full. so if you purchase something for 100 dollars or your bill is 100 dollars, it's best to pay your bill in full. You get better credit paying your bill in full than carrying a balance even if it's 1% -10%.

LTomBerry
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Postby LTomBerry » Wed Jul 20, 2011 3:32 am

A mortgage lender, or any other lender, will be more interested in your balance to limit ratio (utilization ratio) than your balance to highest balance ratio. If your balance is $75 on a $5000 limit then your ratio is 1.5% which is way low. Anything below 10% is good.

You and Moneycard have stumbled on a common myth that paying in full vs. carrying a balance has anything to do with your score. It does not. When a lender looks at your report all they see is the total balance on your monthly statement and your credit limit. There is no differentiation between what was carried over vs new charges. All that matters is the end of cycle balance. You do NOT have to carry a balance to earn credit. All that would do is incur interest, which is a waste of your money.

Money card
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Postby Money card » Wed Jul 20, 2011 6:33 pm

i bought a condominium in 2002, I always paid my bill in full which at that time was a Chase platinum and a Discover card. Had I carried a balance and paid interest, the mortgage company could have denied me a loan.

paying 75.00 on a 5,000 card balance with interest of 1-10%, the mortgage lender wouldn't approve his loan if this person does this all the time.

LTomBerry
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Postby LTomBerry » Thu Jul 21, 2011 1:00 am

Money card wrote:i bought a condominium in 2002, I always paid my bill in full which at that time was a Chase platinum and a Discover card.
Had I paid intrest the Mortage company could have denied me a loan.

paying 75.00 on a 5,000 card limit with intrest of 1-10% the Mortage lender wouldn't approve his loan if this person does this all the time.


How would the mortgage company know if you paid interest on your credit card unless you told them? (Unless it is the same bank) Your credit report shows your credit limit, your statement balance, and your highest balance. Experian also shows a history of balances. Nowhere does it show your interest rate or whether your balance is from new purchases or carried over.

HipHopSays
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Postby HipHopSays » Tue Jul 26, 2011 6:35 pm

OP are you using a charge card....cause I have seen friends who have green/gold amex charge X amount in travelers checks to get a high usage reporting on their report. typically, they return the checks to pay off the charge and they get a slight (a few points) bump immediately. Outside of with a charge card which doesn't have a credit limit and operates off of the highest dollar charged I couldn't see how your scenario would work.



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