Board 8 > here's something someone told me about credit

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we got to talking about paying off monthly credit card statements, having good credit score, etc.

i mention about wanting to make sure i don't overspend because i want to have enough to pay off my monthly statement in full.

he says that he thought that it's better for his credit if he only pays the minimum on his statement because the bank "likes" it when you're in debt with them and therefore you will have a better credit score.

Keep paying in full on time and avoid unneccesary interest. Your credit score will steadily improve as time goes by. There's no "get good credit score fast" scheme out there.
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And even if it got your score better quicker, is it worth paying all the extra interest?
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I've heard that too but I think it's still a better idea to just pay it all off
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kateee posted...

he says that he thought that it's better for his credit if he only pays the minimum on his statement because the bank "likes" it when you're in debt with them and therefore you will have a better credit score.

He's a moron. End of story.

Nah, it's pretty much just dependant on how reliable you are at paying it off. Whether you pay it off in full each month or just the minimum payment, as long as you don't miss payments or are unable to pay the minimum, your credit score will improve. Interest is one thing, but the bank does eventually want the money back that they've lent you.
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Other thing is too that credit rating looks at the % of your credit limit you are using. The more you are using, the worse your credit is. So it's more beneficial to pay off your credit if you want a higher score

It's sad that people consider being in debt such a normal thing.
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Of course they want you to pay off the minimum, they make more money than if you pay in full. Your friend is a tool who is bleeding money.
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Just get Credit Karma.

I signed to for it almost two years ago now, and my credit score is up 100 points.
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oh. i guess this wasn't as funny as i thought. >_>

kateee posted...

the bank "likes" it when you're in debt with them

true
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I understood one of the smaller factors banks look into for credit is how long you've had your longest-running payment. When that is paid off, your next-longest payment is naturally not as long as the one you just finished so that gets factored as a little bit less proven that you pay your bills in full...even though that only happened because you paid a bill off completely.

Dunno how true that is, but I heard it was minor even if it was true.
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It's literally true that you get better credit if you have debt that you consistently pay

But having no debt and paying things off quickly is still good for credit, and it's also not totally fucking stupid
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kateee posted...

the bank "likes" it when you're in debt

No shit.

My dad told me the same thing when I first got my credit card but even then I knew that paying it off in full every month was the better move. I've got excellent credit now and I've never had credit card debt.
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I knew what this would be before entering the topic and no, that's dumb as hell.
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this seems to be a more commonly held thought than i thought. it's definitely not as funny then.

Your score will increase if you don't get yourself into a bad situation. To counter your friend's point, 'the banks' would raise the score of someone who always pays the minimum to encourage them to borrow more because they have a better rate. The person who carries a balance is less likely to need such enticement.
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My debt is my house and i live in it. That is all the debt i have ever had and will hopefully ever have
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I will probably go into debt for a house one day.

Until then I'm shooting to not incur any other type of debt.

RPGlord95 posted...

My debt is my house and i live in it. That is all the debt i have ever had and will hopefully ever have

what about the UOTY debt?
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