Credit Myth #4 - I Have To Pay Off My Balance In Full To Keep Scores High

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Sadly, this mistaken belief causes some consumers to make
unnecessary payments with the little money they already have.
The truth of the matter is credit bureaus have no way of knowing
whether you pay your balance in full each month or whether you make
monthly payments.

If you have the financial resources to do so, pay off your balance
each month but only to save money in the interest! But to increase
your score you need to focus on your utilization rate or in fact, it will
decrease your score by lowering and paying off your balances in full.

I should note that I have heard of cases where smaller balances and
recent activity on a credit card have boosted a person’s score enough
to give them a better interest rate on a loan.

That said, the increase is minimal. Generally speaking, always
keeping a balance is unnecessary and lenders might prefer a
zero balance. But remember…do this only if you trying to avoid
paying the monthly interest on your account and only if you are
maintaining the same pay patterns every month.

The optimal percentage to pay your outstanding credit card bills
down to is 30% if possible.

WARNING- Some lenders have been known to lower your credit
limit or even close your account after you pay off your card.

So be very cautious when paying off your accounts on a monthly
basis to save on the monthly interest fees it may not be worth it!

Many people avoid purchasing a home due to credit repair issues.  This week I am going to display some great blogs written by my friend Robert Montoya who has personally helped many of my clients repair their credit issues so they can purchase a home.  If you need help, contact Robert, 818-298-6894.