I have been told that it is wise for a first time user (college student) to leave a small balance on your credit card to build credit. For instance, I have a $1000.00 limit on a credit card; haven't come close to maxing it out; at most maybe $500.00 at one time. I have paid $450.00 (leaving a $50.00 balance) most months because I heard it was a good idea for someone just starting out to do so; in order to build my credit score. Any opinions? Thanks....

ScottGem

Its not a bad idea to pay off balances over time. to build a credit record. If charge $500, pay it in 3 installments. Leaving a balance isn't what does it, but showing that you pay on time over time will help.

Fr_Chuck

yes while I so hate credit cards and normally advice people don't use them. Go to a local bank and borrow 300 dollars and pay them back over so many months ( put the money in a savings account and use to pay back, it builds up creidt also.

Credit cards are so easy to get you into trouble.

But you would need to charge a few hundred dollars and pay off over a year or so to be best for credit.

But please, please be careful with it

CaptainForest

I disagree with this.

Yes, taking out loans is a wonderful thing, but you do not need it.

You are wasting YOUR money by paying interest.

So many people get into credit card trouble. The best way to deal with it is to ALWAYS PAY OFF THA BALANCE IN FULL.

The fact that you pay the balance off every month, WILL help your credit.

So, stop leaving $50 on your credit card and pay your balance off completely every month.

ScottGem

The problem here is that sometimes its impossible to pay in full. One need to have a credit history to purchase a home, a car and some other big ticket items. Using credit is not a bad thing is its managed right. To pay a few dollars of interest to build that credit rating is generally worth it.

dxviii

I am no expert but if I recall correctly some creditors look to see if you have a running balance.

posheak

Bad advice. Want good advice? Here it is:
Pay off your credit card in full every month. Never carry a balance. Thus you will never be paying interest; you will maintain a supurb credit record; you will sleep soundly at night. Be the only one in your generation not to run up a huge irresponsible debt!!!

Never leave a balance. Even leaving a penny balance will cause interest to be charged on the total amount. I have paid my balance off entirely my entire life and have a credit score over 800.

ScottGem

Do you have a mortgage? Have you ever had car loans? Have you ever had other loans? How long have you had credit cards? All those things factor into your credit score. Paying your card balances in full each month is probably NOT the reason for your high credit score.

I agree with you that its wrong to run up "huge irresponsible debt". But there is nothing wrong with using credit responsibly. Nor is the anything wrong with paying a little interest to help build a credit score that will help you get a lower interest mortgage or car loan. Spending a little now to build your rating may pay off dividends when it comes time to get those major loans.

posheak

It is not a good idea. Just having a credit card in good standing is good for your credit history. You are paying exorbitant interest on the balance unnecessarily. This is an urban myth - don't fall for it. If some one checks your credit it will list the credit card and the limit. It will show arrears if you missed the date or payment.

ScottGem

Please show some proof that this is an "urban myth".

I worked in the field of credit/collections for several years. Companies that extend credit do so to get a return on the money they lend. They make NO money from people who pay in full each month. Therefore, they look for people with a history of making payments on time. That's why having such a record improves one's credit score and makes such a person a more attractive client.