Do You Still Get A Credit Score If You Pay-Off Your Balances IN FULL Every Month?

There is conflicting information going around about this particular subject and most of it is un-true. 

Yes, even if you pay-off your credit card balances in full every month, this practice will still contribute to generating a credit score for you.  Some folks are under the wrong impression that they need to keep a balance on their account(s) in order to generate a score.  This is completely false.

If you make charges on a credit card that you pay-off in full every single month, then in actuality, your credit report will NEVER show a zero balance.  Why?  Because the creditor updates your account with the credit bureau’s at the same time that your statement cuts off. So, every time your statement cuts off, you have a remaining balance, which is why it will never show zero and will always contribute to your credit score.

Now you may think that because you pay-off your account(s) in full each month, that you’ll always have a high score right?  (This is assuming that all the other credit you have is paid-as-agreed.)  This isn’t always the case and let me explain why.

Even if you pay off your balance in full, your credit score can actually drop...

Let’s say you have a high credit limit of $500 on the one particular credit card that you use and pay-off every month.  This past month, you charged $400 on that card.  That means you’ve used 80% ($400 divided by $500 = 80%) of that card’s available credit limit.

This affects your balance-to-limit ratio which, for the best credit scoring results, should be kept at, or under 30%, but no more than 50% maximum.  If you go over these amounts, it’s going to drop your credit score during that period.

Not to fear…your score will go right back up again the following month as long as you keep your balance at 30% or under, so this will only affect you for a short period of time, but it’s definitely something you’ll want to keep in mind for the future!

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