Credit, Debt, Personal Finance 

Carrying a Balance to get a better Credit Score

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I’ve been participating in a discussion over at the Wealthy Blogger about whether or not you should carry a balance on a credit card in order to get a higher credit score. This sort of logic is akin to buying a little extra at a store so you can use a $ off coupon ($20 off $100 purchase) but the actual $ off you get is unknown and can be as little as $0. I am wholeheartedly against carrying a credit card balance, unless its 0% interest, for this purpose because the credit score increase you get is not quantifiable and as the old adage goes, a bird in the hand is better than two in the bush.

How your FICO score is determined has been discussed ad nauseum. If you do a quick Google search you’ll find that the different explanations have put varying weights on each element of the score’s equation. Based on personal experience alone, I can say that not having a single revolving account balance did not significantly negatively impact my credit score. When I applied for a mortgage, my FICO score was 729 out of a possible 850 and these were the four items that were considered “risky:”

  • Time since most recent account opening is too short
  • Length of time accounts have been established
  • Too many inquiries last 12 months
  • Number of bank or national revolving accounts with balances
  • According to, a score above 720 “is considered excellent; those who score within this range have the easiest time obtaining loans, and get the best rates.” What that means is that, in my particular case, a few extra points based on carrying a credit card balance wouldn’t have helped me out.

    If you get a credit report and score about 720, don’t give that strategy a second though. If you score under 620 (considered “subprime”), there are probably better strategies for you to explore to improve. If you find yourself in between, maybe carrying a balance is for you… but without knowing exactly how much it can improve your score, I don’t see the sense in paying off the credit card company for the possibility of a score bump.

    { 3 comments, please add your thoughts now! }

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    3 Responses to “Carrying a Balance to get a better Credit Score”

    1. Mike Hillyer says:

      Aah, but does that make it bad to use a credit card to build a credit score? I hope you did not get the impression from my post that I recommend carrying a balance, just using a card and keeping it paid.

    2. jim says:

      Oh, I never believed you advocated carrying a balance to build the score, I believe a commenter did. I think getting credit cards early and keeping a $0 balance is the way to go, ie. getting that length of account bumped up.

    3. I think it’s an absurd idea to carry a balalnce unless it’s a 0% APR card.

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