Zero Balance Or Not?
I was talking to a buddy of mine about credit scores and how they're affected by having a credit card. He recommended that I used my card regulary to buy gas and then at the end of the month instead of paying it down to zero leave maybe 10-15 bucks on it. I theory is that if its constantly being used and active, but at a very low debt then it will drive up your score. My wife and I have no reason to use our credit card at all so its been at a zero balance for about a year now. Should I take his advice and start using it in small amounts?
How does credit card usage affect your credit rating?
Using your credit and paying it off is what appears to drive your credit up. I don't know about leaving a few dollars on there each month but I certainly would start buying gas, food, etc on it as long as you pay it off each month.
greetings
i've been told to use your cards at least once a year, and pay off balance that month, this keeps account active which adds lenth to the account which ups credit score
hope this helps
:-D
The FICO score graph of utilization versus credit score can be seen over at www.creditboards.com's forums, however I can summarize it briefly here. For those with high scores, utilization begins to drag the score down immediately (but not by much). For those with low scores, 5-10% utilization creates a "kink" in the curve, and their scores are actually higher than for such folks who have zero utilization.
http://www.creditboards.com/phpBB2/viewtopic.php?t=3207
In general, under 10% utilization (but not zero) is best.