Your Credit Cards: Should You Carry a Balance?

Credit cards and their use play an important part in your overall credit scores, but confusion reigns over how to handle them to make the best impact on your credit report.

Because credit history makes up about 15% of your credit score, you should definitely not close any unused accounts. The longer you’ve held that account, the more it improves your score. And, in order to prevent the credit card issuer from closing them for non-use, you should use each card occasionally.

In addition, it turns out that a little use improves your credit scores more than no use at all. Having a tiny charge on your credit card and paying it off promptly adds to another, even more significant, segment of your credit score: Your payment history.

One practice you should avoid is going beyond about 30% of your available credit in any one month – even if you pay the balance in full each time your statement arrives.

This is how many people who use their credit cards for business have damaged their scores. Because the credit card issuer reports both your credit limit and your balance at the end of the statement period, using the card to the max makes it appear as if you are extended to the limit of your credit. There’s no section in your credit report showing that you pay the balance each month.

If you do use your card for business, consider getting another card to spread the charges out, or asking your credit card issuer for a larger credit line. If you’re reimbursed each month by your employer, instead of using your personal credit for company business, ask your employer to furnish you with a card that is owned by the company.

In today’s credit climate, it’s important to do all in your power to keep your credit scores high, so get your free credit report and see what’s being reported about you. Make sure there are no mistakes – and if there are mistakes, take prompt action to correct them. Then look over your credit limits and balances and see what you can do to re-arrange your debt for the best effect on your credit scores.

Unless you also have a home mortgage and a car loan, also consider taking out a small consumer loan. 10% of your credit score is based on the number of different kinds of credit you use. Being able to handle multiple bills with a “paid as agreed” notation on each adds to your financial reputation as a good money manager.

Author: Mike Clover

2 Responses to “Your Credit Cards: Should You Carry a Balance?”

  1. ViewCredit says:

    Thanks for the great info. Having long term relationships are very important to determine credit worthiness.

  2. theme addict says:

    Great info, thanks.

Disclaimer: This information has been compiled and provided by as an informational service to the public. While our goal is to provide information that will help consumers to manage their credit and debt, this information should not be considered legal advice. Such advice must be specific to the various circumstances of each person's situation, and the general information provided on these pages should not be used as a substitute for the advice of competent legal counsel.