Bad Advice About Credit Scores From A Well Meaning Blog Contributor

Our team has found more bad advice on the Internet from a well meaning blog contributor (let's call him Bob). Bob's post was in response to a question about whether it is better for your credit score to pay off your credit card in full or carry some kind of balance and pay some interest.

Bob's Argument: Fact Or Fiction?
Bob presented a pretty doggone convincing argument that you should pay most of your credit card balance each month, but leave a small balance (as little as $5). Now listen, his reasoning was that by leaving a small balance on your card, you were guaranteed to have the activity reported to the credit bureaus each month, even if you did not use the credit card for new purchases during that previous month.

Bob's logic continued along these lines; if you pay off your balance in full on the 29th of the month (for example) and the credit card company doesn't report information to the credit bureaus until the 5th of the month, well then, you wouldn't get credited for that month's activity. In other words, no balance on the books, no reporting to the credit bureaus and therefore no positive help to your credit score.

Your Credit Score, "Just The Facts, Ma'am" as Sargent Friday Says:
There is just enough hazy logic built into Bob's argument that it's sounds almost believable, and that's the really scary part to us as credit experts. The premise is that if one person thinks this, then thousands of people think this, too. This is where we come in to set the record straight for our hard working readers who are interested in building a credit history of value or rebuilding a credit history that has been tarnished by the impact of unfortunate life events in recent months or years:

1. Carrying any amount of credit card balance and paying interest has no positive affect on your credit score. If you have the money to pay off your balance in full, go ahead and do it each and every month.

2. If you are rebuilding your credit, Use your credit card at least once per month. No exceptions permitted here. Ten bucks worth of gas is fine for your monthly purchase. Then, go ahead and pay the bill in full on time. Repeat this month after month to get the most positive impact on your credit score.