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?

Comments(3)

  • myfrogger23rd July, 2004

    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.

  • larryhatch23rd July, 2004

    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

  • flacorps24th July, 2004

    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.

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