Comments on: Only Ever Voluntarily Carry a 0% Credit Card Balance

By: S. Teitel

S. Teitel — Fri, 20 Oct 2006 19:14:36 +0000

I am wondering what the effect of a positive balance could have on the FICO. If instead of just having some 0 balance credit cards, what if the balance was $10.00 over? What if $50.00 over? What if $1.00 over?

interested in your thoughts.

Steve

By: ASAP Credit Card

ASAP Credit Card — Tue, 27 Sep 2005 06:09:33 +0000

Whether or not this method can improve your credit, remains to be seen. But if your goal is to pay off your debt as quickly as possible, 0% APR credit cards are a great tool.

0% interest credit card offers can be an excellent way to pay off your debt and save money on interest. While some people make the mistake of getting “sucked in” to the credit card companies tactics and run these offers up due to NO INTEREST, if you use 0% APR credit cards wisely, you can carry your debt completely interest free until the debt is paid off. Just transfer to a new 0% APR credit card every time your “teaser” rate is about to expire.

No matter how you look at it, paying off your debt can only have a POSITIVE impact on your credit in the long run!

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By: jim

jim — Fri, 12 Aug 2005 18:16:07 +0000

I look forward to it, I like that you’re opening it all up so people can learn how things affected your score, it’ll give them an idea of how actions really affect your score instead of the “this is worth 25%, this is worth $10%) sort of things you see out there. Send me an email (or trackback to this) when you make the updates, I’d love to blog about it.

By: Cap

Cap — Fri, 12 Aug 2005 18:02:58 +0000

oh yeah, i decided to edit that post of mine to give more information, I think during my next update much later.. I’ll try to lay out exactly whats on my credit report, and the activities during those time period.

By: Cap

Cap — Fri, 12 Aug 2005 17:54:00 +0000

I didnt notice this post till now, and I just realized I missed out another reason why the score jumped so much; since you mentioned, without knowing my whole picture its hard to tell what was going on..

But basically only two major thing happened during those time period, I paid off the $7,700, and I removed myself from an authorized user card.

See I was checking my scores and report during April because I’m about to pay off the debt, and wanted to see where I stand so I know my chances of getting new cards.

My mom put me on as an authorized user on a Citi Drivers Edge MasterCard. The card has a $9,000 credit limit and she has $6,000 in balance on it. I’m assuming its some low interest rate deal. That balance to limit ratio didn’t help my score at all so I told her to remove me from the UA.

Experian promptly removed the account from my credit report, but Transunion and Equifax didn’t. I had to dispute it online.

So those were the two factors. Removing the high balance account from my history, and getting rid of a debt. If I didn’t remove the account, my score will probably just go back to normal around 709 (plus maybe a few for another 6 months of positive history).

In either case, I know you dont have all the detail of my situation, but from everything I can see.. there’s really no point holding a balance to get your score better, as mentioned, the balance is only updated once a month anyway. Your credit score reflects whenever you check it. Let’s say your report hasnt updated yet with the higher balance and you check your score, you’ll have a high score. Give it a day and the account balance updates, then your score will lower.

Sorry for the long post, but during the month of April I was using a daily credit report pulling service, so I had a good idea what was going on and how actions was affecting my score.

By: Michael

Michael — Sat, 06 Aug 2005 22:47:39 +0000

I think that, put simply, your score drops a bit while you have the 0% arbitrage in effect. How much would depend on what percentage of that card’s limit you’re using for the arbitrage, as well as what percentage of your overall credit limit you’re using. I’m not sure why this matters a whit if you’re not about to go shopping for mortgages, auto loans, or whatever sort of debt.

I’m sure that my FICO has taken a ding because of the high balance on the card that offered me the deal I’m currently using, but I don’t much care. When I zero-out the transaction in October, my score will (should!) head right back up — assuming nothing else about my situation has changed.

According to the book YOUR CREDIT SCORE by Liz Weston, the credit scoring setup doesn’t care whether you “carry” a balance or not. It checks your balance at a given moment in time — once per month, or whatever — and that’s that. It knows only that if there’s a balance on the card at that moment in time, then there’s “usage” occurring. Of course, the balance-to-limit ratios do come into play . . ..