Asked by payne.charles864  |  Submitted May 30, 2016

If I use my credit card and pay the balance in full each month, how will this impact my credit score?

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  Answers  |  2

May 31, 2016

Hi payne.charles864,

Paying your balance in full each month is the best way to manage your credit. Now, here is the other side of the equation:

Credit scores add up the limits and the balances on your revolving accounts in order to calculate your overall balance-to-limit ratio, or utilization rate. The higher your utilization rate, the greater the negative impact on your scores. To recap, paying the balance in full is good. Having cards with no activity and/or a balance near the credit limit (even if paying in full each month) may lower your credit score.

Feel free to contact us directly to discuss your situation in greater detail. No obligation.

It's not what you make; it's what you keep that determines your lifestyle.

Sharon | 10.12.16 @ 17:50

I found a way to avoid a high utilization rate. No matter how much or how little I charge, I always pay off the balance on each credit card in full a week before the statement closing date. That way, when the statement closes, the balance is zero and that's what is reported to the three credit scoring bureaus. When I paid off my balance after I received my statement, the balance was still reported to the credit bureaus and my credit scores were somewhere around 760. When I started paying off my balance before my statement closed, the balance reported was always zero and my credit scores went up into the 800s.

Dave Bradley
Investment Manager (Financial Advisor) in North Charleston, SC | 10.12.16 @ 19:52

A $0 balance is great. Congrats. It's not what you make; It's what you keep that determines your lifestyle

$commenter.renderDisplayableName() | 12.05.20 @ 11:05


May 31, 2016

Considering that 35% of your FICO score is driven by payment history, paying on-time in full always has a positive impact to your FICO score. The only negative impact is how much of your limit that you charge on a monthly basis as 30% of your FICO score is based on the reported amounts owed, regardless of whether you pay it off every month. You should keep charged balances no greater than 30% of your limit to maximize the positive impact to your FICO score.

$commenter.renderDisplayableName() | 12.05.20 @ 11:05