Should I Carry a Small Credit Card Balance to Build Credit? (Leaving Balance for Credit Utilization?

Support our channel by choosing your next credit card using one of the card links at:
- BEST: www.proudmoney...
- CASH BACK: www.proudmoney...
- TRAVEL: www.proudmoney...
- BONUS: www.proudmoney...
- BALANCE TRANSFER: www.proudmoney...
- GAS: www.proudmoney...
- BUSINESS: www.proudmoney...
- FAIR CREDIT: www.proudmoney...
- BAD CREDIT: www.proudmoney...
(We'll get compensated if you're approved, and we thank you kindly.)
Other ways to support this channel:
- Get a $25 - $325 bonus when you open a SoFi Checking/Savings Account at: www.sofi.com/i...
- Use our Amazon.com link: amzn.to/2PpQWoB (As an Amazon Associate, we earn from qualifying purchases.)
.
NOTE: Credit card information in this video is not guaranteed; we have attempted to confirm all information to the best of our ability but we could simply be wrong or the information could be outdated by the time you watch this video. We are doing our best here, but check our work!
.
Our site: www.ProudMoney...
Contact: Adam Jusko [e-mail]
(for business/media inquiries only; unfortunately I do not have the time to offer thoughtful answers to the many individual credit & money questions I get by e-mail --- but I do read them and try to incorporate answers to common questions into future videos!)
#creditscores #buildcredit #creditcards

[@ProudMoney]

Support our channel by choosing your next credit card using one of the card links at: - BEST: www.proudmoney.com/best-credit-cards-on-the-market/ - CASH BACK: www.proudmoney.com/best-cash-back-credit-cards/ - TRAVEL: www.proudmoney.com/best-travel-credit-cards/ - BONUS: www.proudmoney.com/best-credit-card-bonus-offers/ - BALANCE TRANSFER: www.proudmoney.com/best-balance-transfer-credit-cards/ - GAS: www.proudmoney.com/best-gas-credit-cards/ - BUSINESS: www.proudmoney.com/best-business-credit-cards/ - FAIR CREDIT: www.proudmoney.com/credit-cards-for-fair-credit/ - BAD CREDIT: www.proudmoney.com/best-credit-cards-for-bad-credit-unsecured-secured/ (We'll get compensated if you're approved, and we thank you kindly.) Other ways to support this channel: - Get a $25 - $325 bonus when you open a SoFi Checking/Savings Account at: www.sofi.com/invite/money?gcp=68388c1c-9593-48a6-8872-7052db78d937 - Use our Amazon.com link: amzn.to/2PpQWoB (As an Amazon Associate, we earn from qualifying purchases.) . NOTE: Credit card information in this video is not guaranteed; we have attempted to confirm all information to the best of our ability but we could simply be wrong or the information could be outdated by the time you watch this video. We are doing our best here, but check our work! . Our site: www.ProudMoney.com Contact: Adam Jusko [e-mail] (for business/media inquiries only; unfortunately I do not have the time to offer thoughtful answers to the many individual credit & money questions I get by e-mail --- but I do read them and try to incorporate answers to common questions into future videos!)

[@jpknowledge8852]

Answer: No! Don't give the banks anymore money. I've had so many people tell me they do this to build their credit and I tell them stop! I have a 800+ credit score and never given the banks extra money. Save your money people. Save your money!

[@cdpglam8895]

Thank you all for your replies. I did what you all recommended and have noticed my score changed already. At first, I would pay my cards off in full to a 0 balance and not touch the cards until after the report date. Well, this time in my highest cc, I left a balance of $275 and it was 1% credit utilization. Thanks everyone. I’m new to high end cc which is why I subscribed to this channel.

[@zlistcelebrityYT]

Simple. 1. Find out your report date 2. Make sure you have a small balance on that report date. That is the date the issuer reports to the bureaus. 3. Pay your balance in full before your due date. Problem is most people don’t know report dates vs due dates and they give dumb ass advice about “leaving a balance.”

[@p51mustang24]

Problem is most CC companies won’t tell you the exact report date, since then everyone would be gaming it, and that doesn’t help them make money. So just paying it down to 10% as you go, and in full when due, is the best bet I think. Was concerned about this having a card with a tiny $500 limit, despite the fact that I have normal adult expenses. Have been debt and credit free for my whole life, so I never built up my score enough to get a more reasonable limit. Then I realized I was missing out on things like 2% cash back on every expense I had ever debited.

[@CloseDownChannel]

@@p51mustang24 do it 2 days after the due date to be on the safe side or 1 day

[@kimoni6]

@@CloseDownChannel some of them report to the bureaus before the due date. It's better to pay way before due date.

[@j0epark1]

How about just make multiple payments throughout the month and just make sure the statement balance is fully paid off

[@lili9648]

All of my cc companies say we don’t know and on top of that they say we report once per month

[@showvideo1x]

Awesome information . Simple and concise. I really like that you don’t have crazy intros with annoying music and such. You get right to the point. Your energy and the way you deliver your message makes the information easy to digest. Thank you

[@jayspov1576]

Score dropped 20 points today because I left a 0 balance after paying it off the month prior. Mad as hell. Thank you for the knowledge.

[@magellanmax]

For the most part, wen you pay off your balance entirely, a credit agency like Experian assumes you closed out the account and proceed to drop your score. For almost a year Experian calculated my score assuming I had a dormant card or at times assuming that I wasn't paying as agreed because my balance was always at zero (I have auto-pay set up to pay the entire current balance). I actually called the CC company and they told me to call Experian and tell them that my card was active since it was issued and had a stellar payment record. I opened a dispute and within four days my score was back up 15 points. Whenever your score drops after paying off a cc balance, open a dispute with any of the credit agencies that dinged your score and they always correct it after contacting the CC company.

[@andyraphael]

@@magellanmax yes Experian system stinks

[@osimeon00]

@@magellanmax This is ludicrous.

[@s.matai2c155]

Hi there... Im a new fan and am already impressed with your method of explanation...the articulation is spot on. This topic is one I've always tried to better understand as I educate myself in rebuilding my own credit. But what I'm encountering is that mostly ALL of the videos I've watched/followed (Trust me when I say that I've watched/followed TONS of them.) lacked a clear explanation of the "why" behind this madness. And I think I'm encountering that "why" within your videos. So after watching this video I need some clarification on a couple of points: 1) Pay off balance by DUE date. I get that...easy to understand! Of all the good reasons why that rule MUST be followed but I believe the most important 'why' behind is to avoid paying any interests. 2) Leave a small balance - so i get that the #1 "why" behind that reasoning is so that the lenders could see that you are good in using credit and so on and so forth. Am I on the right track here?? Is the lender we're trying to impress or is it the credit card company itself? This is where I need clarification. Because if it's the Lender that I'm trying to impress then that scenario is clearly understood. Which means, I'd only do that in the month that I'm planning on making a big purchase or taking out a loan, correct? Which means for the rest of the months I shouldn't carry a balance. And when I do, as soon as I'm done with the paperwork for that loan or purchase I should pay off that balance ASAP and BEFORE due date...which means I need to be strategic in the dates of when I'm planning on applying for that loan or buying that car., etcetera, etcetera. Am i on the right path here? Thanks

[@ruebenshaw]

If you find it difficult to stay under a certain limit or amount because they only gave you a small credit limit simply just get another credit card. Which will actually help your number of accounts and that too will raise your credit score.

[@ruebenshaw]

Guys listen this information that he is giving you saying that 30% as probly a good mark is a lie and is not true it is not going to help your utilization.

[@Jstielo]

I've been experimenting since I began my rebuilding journey. I've been letting my utilization report low (1-10%) and my score was going up.. I paid it off in full..(actually had a credit) . let it report and my score dropped 20 points.. crazy how being responsible penalizes you. I make multiple payments monthly so o never have a min balance to pay and never pay interest but I'll def keep @ least $5 on my cards from now on

[@msleaanderson4955]

Ysssss that is what happened to me and I was like why I lost 20 points!

[@jat-justamaturetech-philpj8285]

But don't you have to still pay the $5 at the end of the month??

[@kimoni6]

@@jat-justamaturetech-philpj8285 duhhh...no he doesn't. He made his monthly payment and leave that 5 dollars so his score won't drop for paying it off in full. The credit bureaus penalized you for that.

[@aung-myat]

I have been confusing between credit utilization and balance until I watched this video. You saved me. Really appreciate it.

[@formula1dizzie326]

Best explained video I’ve seen yet explaining credit and how it works! so many miss leading videos out there that leave people confused it’s a shame… this was clear cut and easy to understand, very much appreciated👍I would recommend this video to anyone seeking understanding credit! Savannah, Ga tappin in

[@fabiananeiros6425]

In terms of subject matter, this has to be one the most relevant videos you’ve done, ever. Reddit is full of people discussing whether they should have balances, even small ones, and the effects that may have on their credit. I’m going to save the link to this video to drop it on the next thread.

[@ProudMoney]

Thanks! Although I would guess the people on Reddit get even further on exact numbers for maximum optimization and would find this video not nearly specific enough to cover every possible situation 😃😃

[@E3litecompany]

Pay it down to 10% before the statement report date. Ex: 300 spend as much as you want but make sure you pay it down to 30 dollars or 10 but leave a small amount, then on the due date pay the rest off. Simple Credit utilization.

[@sam.michaelis]

Should you repeat if? Like when you pay it off and the next month when the statement comes out it should be at 30

[@E3litecompany]

@@sam.michaelis yes

[@E3litecompany]

@Kenyan Rice Jr I think it’s because it’s a secured card I may be wrong I would do some research on that

[@cross8215]

The banker at my credit union told me that credit utilization is basically a myth and you only build credit by making your payments in full. I know that's not true but don't know how to convince these people. These people seem to not understand. What do I do? They seem to not even understand why I want my end statements dates. They just said get your e-statement and figure it out.

[@johnhallback1560]

Very clear and accurate. I have gone through all of these scenarios and I think your explanation is the clearest. My mistake is I pay off my cards too early just because it is easier when I'm clearing my spreadsheets to do it all at one time but it has cost me because some of my cards look like I rarely use them.

[@romarocovington7697]

I’m experiencing the same but what I’ve learned from having multiple trade lines want matter as much it’s the purchasing power and on time payments give you the limit increase either way timely payments I pay them all off then get something small on each one 10-15 dollars to keep my utilization very low which one of the cards will definitely report

[@vikkicarr3255]

My score dropped 7 points because l didn’t understand utilization. I have an excellent history of paying my credit cards in full however for the holidays my utilization was 40%! Well I’ll never do that again. I must get my 7 points back. Great video and thanks for the info.

[@vikkicarr3255]

I got my 7 points back this month! March 2021! I’m on a role people😂

[@robertswift6101]

i didnt understand utilization either because i always just paid them off in full every month

[@grc5618]

Something else to note: Any score that is 760 or higher is the same. Someone with a score of 760 will get the same rates and credit power as somebody with a score of 850. In other words, just maintain a score above 760 and be happy. Those shooting for 800+ are looking for bragging rights....nothing more.

[@andyraphael]

Great to know I'm at 720 right now working to get to that 760 you think I can achieve that in 2 months with good utilization rate

[@mitchellmullins6650]

Is it 760 or 761?Not that it matters. But at the moment I have to shoot for 600.If I hit 600 I`ll have bragging rights in S.E. Kentucky!

[@warfare112593]

@@andyraphael definitely not in 2 months. But it is obtainable.

[@robertswift6101]

mine is 764 and i want 800 lolol

[@helenayoung4064]

Exactly

[@TheTyson35]

I seen if I carry a balance under 10-20% but pay 💰 it off in full before/ on due date, and still get points..Basically, the ideal way is keep it low but still able use it or keep activity on it through the month ..👍🏾

[@qn5947]

Don't ever be a fool and pay any interest $$$ to the bank. Just live w/in your means and pay off all credit cards balance in full every month.

[@AntonioLopez-uj7pu]

Better yet pay it 3-4 days before to have a very low utilization or a 0% ideally by that statement closing statement and closing due date.

[@kimoni6]

Pay it in full after the statement.

[@junitolopez3762]

I pay my balance in full, then after the closing date I add a small charge. And.....I mean a small charge, gasoline, maybe lunch on another, on and on. I have managed to increase my FICO by 70 points this year using the method. Most credit cards allow you change your due date. Mine are as close to each other as possible. Remember an unused cc is like a close account. You get initial benefits when paid off. Anyway that has been my experience

[@Iammarlonbrown]

Can you help me understand

[@Iammarlonbrown]

My due date is the 12th so I pay it in full before the 12th but they report it the 15th so my balance is 0$ by then how do I manage this so my score doesn’t fall

[@donh8223]

@@Iammarlonbrown The secret to building your credit with a CC is to pay your bill in full AFTER the closing date but BEFORE the due date.

[@rmg2419]

@@donh8223 How do you know this? and can you explain?

[@Muzicboy3]

This is where I was confused … after watching a million videos in confusion I get it now … thanks my mans

[@docsays]

good topic. there's alot of misinformation about this on the net. I just make multiple payments before the statement closing date (not the payment due date) so only a very low balance is reported to the credit bureaus. Usually, only 5% or less utilization, and i never pay any interest. This method has raised my credit score from low 600s to mid 700s.

[@kimoni6]

So you had a small balance and they still didn't charge any interest?

[@docsays]

@@kimoni6 - nope, as long as the statement balance from the previous month is paid. For any new charges you’ll receive a 30 day grace period before interest accrues after the new statement closes.

[@kimoni6]

Okay I thought you meant you left a balance from the previous statement balance. My closing statement date was on April 4 and my due date is May 1st . I don't know why they did it like that. I've been making multiple payments too. I've already paid most of my new balance.

[@GrizzneyGames]

This is the best breakdown I've seen on KZbin for this!

[@effebey7538]

Thirty percent utilization is not a good move. The Godfather of Credit states that the key to maintaining an 800+ is 25-29%! Following this technique my scores went from 603 (01/02/21) to 704 (05/01/21). Zero balance gets your cards cancelled according to what I have read on myfico.

[@kamilsultan1637]

Report 1 percent utilization on statement date and pay that balance off in full by the due date. If you have more than one card, use the all zeros except one approach.

[@TxReese]

People make the simplest things difficult

[@ca6vtec]

Funny that you made this video. I recently paid off a balance I had on my Discover and my Experian Fico Score went down 9 Points lol. Eventually, it will go back up but it a bit disheartening to see that.

[@cslaton921]

I did the samething

[@ca6vtec]

@@cslaton921 it sucks dude. It 's like you take a step forward and then the fico gods take 2 steps back

[@Beautyhuntress78]

I know what you mean. I paid my TargetRED card and my score dropped 16 points😆

[@ca6vtec]

@@Beautyhuntress78 damn, I just payed my red card. I am scared.

[@massive670]

The best explanation I've heard so far

[@herman66mi83]

Been watching your Channel videos extensively. Appreciate how you get down to the “meat & potatoes.” I like your clarity and brevity.

[@coleg315]

Thank you for video. I was wrong and was teaching my daughter the wrong thing, thank you for explaining it and how to build credit. 👍👍👍👍👍👍

[@Selinak22]

This video is brilliant and you broke it down in a way I understand. In my 30s I'm getting my first ever credit card as a means to increase my credit score so my knowledge is very limited. I will go by your tips and see if that makes a difference.

[@e92bruh37]

So the best way to pay off credit cards is after the closing date before the due date

[@Goldie-kw5ju]

I have a discover secured card my credit score went up to 747 I have an American Express card easy to get discover secure card for 12 months I called discover and ask them why I have not graduated the response was you never carry a balance and that's one of the reasons why I have not graduated in 12 months everything looks good but you never carry a balance

[@charlesgomez4218]

I always make several payments on my credit cards,per month!! I constantly use and make payments- so I never have to pay interest!! Keep the videos coming✓✓

[@CYCLEGAMER1]

Maybe I misunderstood what you are saying but the credit card companies do not reach out to the credit bureaus until AFTER the statement date, not every time you make a payment.

[@ProudMoney]

I am mostly saying that they report to the bureaus before your bill is due, so there is no need to underpay to keep a balance on the report and end up paying interest. my comment about paying during the month is to say that you can reduce the balance to an optimal utilization when it does get reported.

[@TheRenaissanceAmazon]

I’m confused. It seems like you’re saying two different things in this video. First you said it’s fine to pay it all off so we don’t pay interest. But then you said we should leave a little there so our utilization doesn’t appear to be 0. So which one is it?? 🤔

[@knc3245]

From how I see it. There’s technically 2 sets of charges on your credit card - the charges from last month and the charges from this month. He’s saying that you should always pay all of last months charges but while also leaving some charges from this month to roll over into next month.

[@reelreviews982]

Here is what he’s saying. Ex, your credit limit is $1,000. Your billing cycle is from the 10th of one month to the 9th of the next month. During that billing cycle (10th-9th), you spend the money you’re going to spend, while also paying it down to 10% of your balance. On the 9th (your closing date), they are going to report your 10% usage to the bureaus. Your bill will then be due the next month (let’s say the 4th). You then pay it down to $0 by the 4th of next month. So you’ve already showed you have credit, you use it, you manage it and can pay it. Make sense?

[@Bharlos]

Have a balance/charges on your card, and just pay it all off a couple of days before your due date. Your credit score is checked I think weekly, so they want to see a balance so they know you're using the card throughout the month. So as long as you do that, then pay it off before your due date, you'll build credit without paying interest. Ideally you should try to keep your balance at around 10-30% of it's total (so if you have $1000 limit around $300) through the month, and again, just pay it off before your due date so you're not charged interest.

[@JP-1969]

Exactly. Which is it ?

[@JaniceJParisMuzic]

Thank you sooo much, you are amazing and so clear on explaining things

[@nilaypatel2595]

Thanks a ton for the information. You did it so simply. A great job, sir 👍🏻

[@trippleh1521]

This one of your best videos. I always paid in full before statement date. So when the cards reported it was always 0 dollars,so thanks so much for the video.

[@ProudMoney]

Thanks for the comment!

[@horaciosigler1097]

Thanks for sharing! Very clear and concise video...

[@fogrunr5075]

Pay in full when the monthly statement is posted. Then the next month's usage accumulates, the next statement is posted, then pay it off again. Do that with each card. My all cards utilization swings between 2.5% - 3.5%. But my statement utilization is about 3.5%, which is rounded up to 4%. Credit bureau scores love 5% utilization, but I won't operate there just for another 10 points on my FICO. I use 0% offers (from current cards) when practical to keep my total interest below $5/month. The highest single card utilization I ever carry is 29% when using a 0% balance transfer offer, which I quickly pay down below 20%, then 10%, then 9%, then pay it slowly down from there.

[@kittleeagle]

I pay all mine off on the due date, I don't even keep a balance now. My due dates and statement dates align within 3 datys of eachother. Never had credit before 7 months ago and now I'm up to 20K Credit Line. I'm doing alright and I'm happy. It's definitely a work in progress. I'm thinking about taking out a personal loan through Navy Federal for 1K at 12 months with 4% interest and having it pay off monthly just to build that way also with a Loan. Got to love the system

[@GrimKiLLzGaming]

You're english is bad but atleast you have good credit.

[@T.Q.]

@@GrimKiLLzGaming Your*

[@ARMG3-e9t]

Thank you so much!!!! This was the most helpful new subscriber ❤️❤️❤️❤️

[@roelsvideosandstuffs1513]

There is technically problem with that 50$ reasoning and it is not a good comparison to credit card. In the real world if you owe someone and you pay them in full. That's when they know you can probably be trusted. The time you pay it is not exactly relevant. Of course it better if you pay someone early. But it is really depends on both party on how the Debt be settle.

[@HijaDeCristo18]

I’m super liking this !!

[@feliciastewart972]

EXCELLENT!! That helped me so much! Thanks..🙏🙏♥️

[@tonyyero7231]

you DO pay RESIDUAL INTEREST if u keep even a small balance.

[@tino503]

Great content! Thank you for what you do and your channel!

[@reginasavage102]

Excellent information.

[@kirkdunn1379]

I got dinged when I had 0 balance on 1 card....how does CRA know you used the card if statement shows paid in full?....thats the only number that gets reported is what I've been told...

[@markbeiser]

A young coworker of mine was getting frustrated that his credit score wasn't moving, despite him using his credit card a lot, and always paying it off. Turns out, he was following someone's advice to pay it every night, so he never showed any utilization on his statements, for like 3 years!🤣 Once I got him to let a little of it go past the statement closing date, his FICO score went up almost 100 points in 3 months.

[@mssha1980]

These people be telling people to do crazy stuff

[@osimeon00]

Can you explain this in detail? I'm still confused. I'm not retarded, I just don't fucking get it.

[@markbeiser]

@@osimeon00 When you are new to credit, it is especially important to have data reporting that shows you are both actively using the account, and using it responsibly, otherwise your score won't grow much, if at all. Maybe just by a handful of points every few months as your file ages, but there is only so far that will take you if you only have one account that it doesn't appear you are actually using. Credit scoring is kinda complex, and none of the bureaus are transparent about all of the details, but it is generally a bad thing to have all zeros for balances on revolving accounts. It doesn't help that some of the crappier starter credit card companies don't really report consistently, or actually bother reporting payments if your statement balance is always $0. It would be best to have at least two cards, but stay away from ones with fees just for having them. Secured cards are good to start with, but make sure they have a fairly quick path to graduating to a secured card with no fees. Once you graduate to better cards, never close those first cards if there are no fees involved with them, as they will be the anchor point for your age of credit. I screwed up and closed old cards years ago, so instead of having my oldest account being >30 years old, it is only 15 years. I'm far from an expert on all of this, just sharing from my MIT education (Mistakes I've Tried).🙃

[@osimeon00]

@@markbeiser Thank you for all the advice! Definitely helped me gain insight into all of this. 🙏

[@mssha1980]

@@osimeon00 simply put, you want to report under 10% of utilization. Some say 1-3% is even better. The date the credit companies report your balance is the statement date. So make sure your credit card balance is no more than 10% of the total credit limit on the statement closing date. As you get more credit this won’t affect you as much but you still need to keep your utilization low.

[@TarunBathija]

I never knew this - i've been obsessed recently with seeing my debt column in mint at $0 so i pay off each card after each transaction but now i wont! Thank you

[@devontehibbler40]

You should find out when your credit card company reports to the credit bureaus.. that way you got can show a low utilization then pay it off on the due date .. and so on

[@stuartjakl]

Graphics would be helpful...

[@billywatts889]

Great video very helpful 👊

[@MoDavI-sl7iy]

Adam you're funny! "But that's another topic."🤭

[@ZestyLemonBoi]

Brilliant!

[@MLMWarriors]

No. Pay on time.

[@ruebenshaw]

For him to say that you know that you're going to have to spend $500 on a $1000 credit car is misleading no one can force you to spend any amount of money on a credit card.

[@micahbinns2740]

some ppl may get in a tight situation

[@timwong8556]

On certain credit cards, I do leave a really small balance between 99 cents and $2. Depending on the credit card company, it will waive these small balances. Using this trick, I can get over $100 of free Amazon gift card reload. I know not a lot of money, but at least I can buy five free books a year. I know this is off topic from this video. Unless I have a zero percent introductory APR card, I always pay my balance in full, unless it is one of those cards that will waive a small credit balance

[@ProudMoney]

I've heard people say this before, but it's not something I've ever tried.

[@travisnapoleansmith]

This might not have been a bad idea to also talk about those intro apr periods where you get 0% for so many months. What to do when you have them with credit utilization. With those I actually do carry a balance and am willing to go over 30% on that one card during that no percent apr time. But keep all my other cards reporting 0 or near 0 or under 10% depending on how I want to do things. I refuse to pay interest unless I have to. I don’t mind paying a yearly fee if the card gives me offsetting perks that make sense with the amount of the yearly fee.

[@fogrunr5075]

I used a 0% Discover card (with a $2,500 credit limit) as a pivot point to triangulate funds out of a credit union higher interest card and back onto a new credit union Platinum 0% card ($25,000 limit). I made several successive transfers during the initial Discover 0% transfer period, moving $12,000 off of a high interest card and on to the new 0% Platinum card. Then the last transfer I left on the Discover card at 0%.. And just like that I had $12,000 that I had paid a 3% transfer fee on but I wasn't paying high interest on. After working hard and paying those two down, I did it again one year later with a new Bank of America 0% transfer card ($4000 credit limit). And after 2-1/2 years I had eliminated $24,000 of high interest debt. Both the Discover and Bank of America cards regularly offer 0% offers. Discover is more reliable with their offers. Usually there's a 3% transfer fee. Sometimes it's 5% which I won't use. But also sometimes they'll have an offer with $0 transfer fee yet at a interest rate of 4% - 5%. I use those offers to move money from higher interest loans out and back in to my lowest interest credit union card, without having to pay any transfer fee. When I have money sitting on a 0% transfer offer I do not use that card for purchases. And then after I have paid off the 0% transfer amount, I make sure to exercise the card for regular purchases while paying it off in full each month. Each year Discover and Bank of America will bump up my credit limit $500. After using that strategy I was able to acquire a NFCU Flagship Visa (easily done by converting a second platinum card I had to that), a Chase 0% Freedom Unlimited Visa, as well as a Capital One SavorOne 0% Visa. They're all no annual fee cards, with the exception of the Flagship card which is $49, but it reimburses for TSA travel fee, so that knocks it down along with the cash back I get. The portfolio of cards I have now allows me to get 3% back on virtually everything I buy. The NFCU Flagship card and the Capital One SavorOne card are both no FTF (foreign transfer fee) cards, so they work well with foreign purchases and overseas travel. And of course Discover Cards are all no foreign transaction fee cards. So whether it's gas, groceries, restaurants and carryout, drug stores, travel, or entertainment, I use the correct card to get 3% back. And for travel I get more than 3% by using that card's Travel Service. Also I run all of my monthly bills through my Flagship card, which gives me 2% back on everything.

[@be14mi]

I have a credit card from Chase that came with no interest for the first 15 months. I can carry a small balance for that time and not pay any interest. In that scenario where you don't pay the full balance but don't pay any interest how does that work to increase your credit score?

[@Kuolitee]

You still want to stay below that 10% utilization. However, don't get into the habit of revolving a balance when you have a 0% interest promotion. No real purpose in doing that. It is useful if you NEED to make a big purchase that you know you will not be able to pay in full. At the end of the month. IMO, it is better for you to just get into that mindset of paying off in full every month and act as though you never had that promotion to begin with.

[@isaiahsmith8523]

I think it's worth dilleniating the differences between "the credit card company" and the credit reporting agencies. The reporting agencies don't see your actual transactions so showing you use it doesn't matter. The lower your utilization the better.

[@ProudMoney]

But if it is always zero when the card company reports, it looks like no card usage at all on your credit report.

[@isaiahsmith8523]

@@ProudMoney True, very good point! Although, because they are open accounts it will show positively in terms of their overall credit utilization. When creditors look at their history it would show that they have access to money and always pays back in full.

[@rodneytaylor6313]

I’ve tried it both ways. Paying before the statement close and leaving a small balance when it closes (under 10%). When I left the small balance my score dropped.

[@leek4925]

Note taken

[@andyraphael]

Exactly my score dip when I went from 0 percent to 1% just to leave a balance it stated balance increase bring the reason

[@rodneytaylor6313]

@@andyraphael mine dropped 50 points on equifax when I did it. After that I don’t do it anymore. My percentage balance was 2%on a total of 80k in availability.

[@andyraphael]

@@rodneytaylor6313 that's wild

[@cdpglam8895]

Now, I am confused! You said to pay off your balance in full every month but to let a balance sit in order for it to report that you are using the card. I guess I’m confused because I thought the creditor reports once a month which is usually a few days after the due date. 1. Do I pay my balance off in full every month or 2. Do I leave a balance throughout the month and then pay it in full on or before the due date?

[@ProudMoney]

The card reports to the credit bureau before you have to pay your bill so you can pay the full balance by your due date and you're good. if anything else was confusing, pretend you didn't hear it because that is the part that matters most.

[@1234IZM]

Short answer: PAY your credit card off in FULL by the due date. Very long answer: Credit card (cc) cycles have 2 major dates: 1) the statement closing date, and 2) the due date. On the statement closing date, the cc company adds up all the purchases you've made over the past 30 days or so, and sends you a bill for the total amount you owe (thru the mail/electronically). You will have about 20-30 days before you need to pay that bill (the due date). You should always pay the total amount you owe by this date (even a few days before just to be safe) and NOT leave a balance. This way, you will not be stuck with paying unnecessary interest. Now the more complicated part. Credit bureaus look at your credit utilization ratio (UR). This is done by adding up all the debt you owe across all cards and dividing it by your total credit limit (across all your cc). For example, if you have 1 cc with $1,000 credit limit, but you owe $500 on it, your UR is 50% (500/1000 = 0.5), which is way too high. Most people rec >30% UR, but it is better to keep it below 10%. So if you owe $500 (say, because you made a large purchase, etc), it is best to pay off a large chunk of it ($400-$450) BEFORE the statement closing date, so that your UR won't be so high. Then pay the rest by the due date. The reason why it is best *not* to pay it ALL off before the statement closing date is because your UR would be zero, which could make future lenders think you're not using your credit cards at all. (UR is important because it is calculated in your credit scores.)

[@justdave365s5]

I believe the part that’s confusing people (myself included) is I think you’re speaking of when a person first gets their credit card! Any time beyond your first statement if they report a balance it’s because you didn’t pay in full!

[@antbrooks1625]

Just so you don't get confused, by "full balance" ProudMoney is referring to the Statement Balance--the bill amount that was reported. Anything that was reported should NOT carry over into the next report because that will get interest. When he said to "leave a little", he's referring to the new amount that will be reported for the new statement because it's not ideal to have every single "new" statement report a $0 bill. But NEVER carry over old amounts from old statement balances.

[@brianlewis5853]

Thanks for the info. Very good.

[@chanceharrington3338]

Thanks great video

[@Munce72]

Great work Adam! Scooby snacks for you. My allegiance is to Liberty, the Repubic and Democracy.

[@peterharper9703]

Thank You Great Job!

[@ZEEKEO]

The term “all zero penalty” - To avoid this I should have a balance on my card(s) throughout the month but pay the balance in full by the date date? My score drops and I believe it is due to the all zero penalty so I want to make sure I understand what the term means.

[@slappymcface5681]

Make sure you have a balance when the statement generates, but pay it off before the due date. You only pay interest on a balance that you carry past the DUE DATE. Two dates: Statement date: this is the date that your month closes and the credit card company tells the credit agency how much you have on the card. This is what you want to keep under 10%. Example: I have a $1000 limit. The statement closes on the 15th, I make sure that the balance is $50 on the 14th so the credit agency sees that I have a 5% utilization. Due date: this is the date that your minimum payment is due, for this example I will use $25. For most major credit cards this will be 21 days after the statement date. So when the due date comes I have a balance of $50 still, and I pay the minimum $25. I won’t pay a late fee, and an on time payment will be reported to the agency. However, I will Pay interest on the remaining $25 the following month. The ideal way to handle this example would be to have the $50 balance on the statement date, then pay off the full $50 before the due date. This way you get the 5% utilization reported, the on time payment reported, and the credit card company won’t charge you any interest, since you didn’t carry any debt to the next month. This is why you will hear people tell you to never spend more on your credit card, than actual money you have. If you are going to buy something on your $1000 credit card for $800, that’s fine. So long as you have the actual $800 to pay for it. Edit: One disclaimer, some sub prime credit cards will charge you interest from the date you buy something. Credit One comes to mind, these should be totally avoided, you can usually get a secured credit card to start out with a reputable company for like $300, treat this the same as any other credit card and eventually they will be happy to upgrade you.

[@MartinOShieldWindyCitySDR]

Outstanding explanation!

[@jayraymondmgtow4200]

@@slappymcface5681 even after reading this I’m still confused smh. This is my first time building credit and I don’t want to mess it up because my score has been going up. Right now I paid off $300 on my card. I left $5 which now says $5 current balance. My payment due date is on the 18th. The statement balance will show on the 21st. For the first 3 months I have been paying my entire credit card off and leaving a zero balance at the closing period. My friend has been advising me to try leaving a small $5 balance for this month. So am I doing it right? Should I leave the $5 past the payment due date and the statement balance? That’s like carrying over $5 into the next month. So is this what everyone means by leaving a balance every month?

[@rmg2419]

@@slappymcface5681 Thanks for taking the time to explain in detail. You have the best answer. I understand now. Thank you so much!

[@durellwright6758]

Adam your the best

[@Wendy-fp2kj]

Ok, so I just got a new card with a $300 limit and used $65.00 and I paid before the due date (haven't received a statement yet). Does this mean it won't show in my credit report?

[@LegendaryWatts]

Your bill is paid and in good standing, they will report a zero balance and payment made to the all three credit bureau’s..

[@Wendy-fp2kj]

@@LegendaryWatts thank you so much for the answer and for the quick response.

[@vanwright7821]

To my understanding... lol. Paying off your bill like u did will look good on your credit report bc u show zero used credit at the end of your cycle. But if you would have showed a balance on the card at time of reporting to the credit bureau it would of looked better as long as it's not over 30% of the limit of ur card. You still have time to pay your bill after it reports a balance and not pay interest.

[@erickcardenas1416]

@@vanwright7821 true. Most cards offer 15 months of free APR anyways. So why not leave a 3-10% usage each month to report to the credit agencies. lol

[@nomo87314]

So Auto Pay of the balance is not a good strategy. I actually had a math teacher tell me to keep a small balance on cards way back around 2003 he was ahead of his time

[@ProudMoney]

Autopay is fine. your balance will have been reported b4 the auto payment is made

[@larocco83]

I'm really confused because mine only reports after statement day so if I pay 100 percent..it comes up that I used 0. So that's why I leave 20 or 30 on their.

[@Iammarlonbrown]

Yea mine has the due date then the statement day so I have to pay mine right

[@larocco83]

When I did that and had a zero utilization my score dropped by a few points which is the opposite of what I'm trying to do. I carry 20 or 30 dollars so that I have under 10 percent utilization and that has slowly been raising my credit.

[@Iammarlonbrown]

How long have you been building

[@larocco83]

@@Iammarlonbrown about 7 months

[@macdaddyalexis]

Why do they make it so confusing

[@keltig]

Great video. Just shared it with my wife and kids

[@ProudMoney]

Thanks!

[@olandomorrison3410]

very very very clear

[@bopa8848]

Thank you.

[@jinnap1148]

Some people don't understand how the Credit card Works...

[@tosinakinyemi3948]

thank you for the video here is my question, you said better to pay after it been reported to the credit bureau but how do i know when or what day it been reported?

[@Adiscretefirm]

Usually on the closing day of the statement

[@lili9648]

Heeep I am still a little confused🥴 can’t I just ask when my credit card closing date is? I am the consumer flying blind? Cant I ask the bank when they report to the credit bureau?

[@mang1953]

hmm. I just paid off $20k over 5 cards since 2020 started. Nothing new in the way of credit lines, inquires, etc. Auto and Mortgage payments like clockwork. My score just dropped 20points! across the board. Puzzled.

[@jordan23ww]

Hey the same thing happened to me once I paid off all of my credit cards. The problem is the Fico score is a score of how you manage debt. When your cards are all reporting $0 the Fico algorithm doesn’t like that. Per a thread on the MyFico website hosted by Fico employees when you have a $0 balance on all cards the Fico algorithm views people with no balance as riskier than people with low utilization. They said having low utilization shows that you’re managing debt responsibly. When you have no balances then the algorithm can’t determine how well you actually handle debt and it penalizes you. I wish they’d change their algorithm to reward people with a $0 balance. Since they likely won’t I’ve found that a simple fix is to always let 1 account report a small balance and then after it reports to the 3 bureaus pay it off. I usually do $5 to $20. Since I’ve started doing this my scores always go up.

[@mang1953]

@@jordan23ww you would think that their algorithm would reward for a steady and progressive payment history...maybe the new fico 10 with it's snap shot history will indeed address this?

[@jordan23ww]

@@mang1953 I agree! Hopefully Fico 10 does fix this!

[@cslaton921]

Same. Mine go up and down 30 to 35 points.

[@curtisjefferson6658]

crazy question ... what if your utilization is less than 1% can than hurt ???

[@RickyCanDo]

what if i have 4 credit cards and i'm just trying minimally to build my credit but i don't use all of them ever because the only 1 that i use gets me my points i like and i don't want to juggle all of them and i don't even use much money every month in credit (under $1000/mo)? ... usually i use my 1 fav credit card and keep under 6% utilizing. my other 3 cards i keep 3% utilized per card but it stays on the cards...

[@jat-justamaturetech-philpj8285]

Q? If I my min payment is usually $30 and now I have a zero balance and spend $1 - $20, what will be my new minimum? Would it just carry over until it reaches over the minimum to pay?

[@cdpglam8895]

Also, in a few months, I plan on applying for an Amex card... should I keep all of my balances at a “0” before applying or what or should I keep the current balances on them around that time to show usage?

[@kamilsultan1637]

Use the All Zero Except One Approach

[@anthonyrose6686]

I do according to FICO it’s suggested you leave a small balance you need something to report

[@ylaabichi38]

So u saying never pay your credit card right away because they will report 0% utilisation to your credit report?

[@Iammarlonbrown]

That’s what I’m tryna figure out

[@monte_2000]

This is correct. It’s usually smart to pay it off a few days before the due date, or at least pay most of it at first and then pay the rest. Obviously if you’re limit is $1000 and you have $900 used, you should for sure pay off most of that immediately, and then say keep $100 to be recorded as “utilization” and then pay the rest.

[@busterbrown3927]

bruh i dont think this man could have explained it any better

[@feliciastewart972]

@@monte_2000 That was perfect!! Thanks for explaining that. ♥️♥️

[@yamatomusashi1412]

thnk you!

[@aarondurkee9092]

Adam, I have a situation where I’m able to pay my October balance in full. However, I will carry over a balance that will count towards next month’s statement. If for some reason I’m unable to pay my November statement balance in full, but I’m still under 30% would that still be acceptable in your opinion ?

[@docsays]

- just shoot for 5% - 10% and you should still be fine.

[@xseraphjg]

Great Video! I Use Several Credit Cards Per Month Making About 3-4 Credit Card Charges My Utilization Rate Is 0%. I Pay Off Any/All Credit Card Charges The Same Day I Use Through Bill Pay (Even Before The Credit Card Posting) How Does Credit Reporting Companies Know About My Payment History If I Have A O% Utilization Rate? And Do I Credit For My Efforts? Thank You. P/S Never Paid Credit Card Interest In 20 Years…

[@ChrisBanda]

While that's well and good and it keeps you from paying interest, you are NOT playing the game right by only showing zero percent utilization on your report, what he's saying in this video is that you need to show at least 7-8% utilization on your report, but pay it off in full by due date so you don't carry a balance & have to pay interest. You showing some utilization on your report gives new lenders an indication of responsible credit use and NOT just stagnant and unused credit. It's silly but it's the way the game is played. Your existing lenders KNOW you use the card, but potential lenders only have what your credit report shows to go by, they don't pick up the phone and call your existing lender for a credit use rundown, that would make too much sense and waste a lot of time.

[@xseraphjg]

@@ChrisBanda Thanks For The Input. My Current Strategy Has Keep My Credit Score 800+

[@No_Fap_Hey_Zeus]

@@xseraphjg this sounds to good to be true

[@jerryzito6840]

Thanks, I am trying to increase my credit FICO score. Does this apply to secured cards?

[@kevinmcwilliams714]

Oh forgot to let y’all know doing it this way and I have a 775 credit score

[@chuckmckee2741]

I have paid my mortgage on time for years. I just co-signed my sons car. Can you help me with a card

[@MoDavI-sl7iy]

Adam is my friend in my head.🤭

[@ProudMoney]

I'm kind of annoying in person 😉😉

[@roelsvideosandstuffs1513]

Question. They don't see if you use the credit card unless a bill is reflected in a billing cycle? If that's the case. Kinda weird to me they don't see your transactions and payments then.

[@ProudMoney]

Well obviously the credit card companies can see it but they don't report transactions to the credit bureaus, just the overall balance.

[@roelsvideosandstuffs1513]

Then that's kind of a bad system. To rely on. Not really wrong just bad if that's the biggest criteria.

[@lewisdejesus4429]

The bureaus only see you one day a month, when the banks report to them, but that’s not something bad, like he explained in the video, you can buy something expensive and later pay and lower the bill so it won’t be too big when they do the report. So that’s actually something good that they don’t keep an eye on you all the time.

[@fidelnacienceno9158]

The one thing that I’m not understanding from this is how can it be claimed that we have to report any utilization for them to see that we both use and manage any credit if just by having an account open for a long period of time let’s say a few years already shows them that we are using our cards otherwise they would have been closed accounts because they would’ve been in active so I don’t understand how showing them any utilization is going to be any different to know utilization but I can’t stop being active in five years if the account has been closed for an activity

[@1StayBless]

Because the credit card company only send the end of statement balance to the credit bureaus...example- if you swipe your card 20 times in one month, capital 1 will not send those transactions to the bureaus..they will only send the end of the month statement balance....so pay your due date amount in full but leave 30% usage or less in your current balance to show utilization

[@Goldie-kw5ju]

I have a new credit card with zero interest rate for 15 months should I carry a balance

[@vanwright7821]

2 reason not to carry balance on card is 1 interest and 2 it reports on ur credit utilization every month. U have 0 interest for 15 months so u don't care about #1. But if this card is ur only open credit line you want to keep it under 30% utilization if possible.

[@erickcardenas1416]

keep it at 3-10%.. Theres no benefits to your score if you don't use your credit, You only benefit with the company because theyll see that you pay in full each time. So, they'll consider that if you decide to call for a limit increase ..

[@erickcardenas1416]

but first, build your score leaving a small balance. pay it right away after closing date.. and then use it again and leave the usage under 10%... call the bank in 3 months and ask for an increase and they will. Trust.

[@allisbookishadventures8260]

So when you talk about 30% and 10% do you mean on each card or 30% or 10% of the total available credit?

[@johnhallback1560]

He has a video on this. I think it came out a few weeks ago. It is both each card and total.

[@tblub.9270]

My credit limit is literally $300 on my Discover It card and as you may have guessed it my credit is very low. I’m currently in the process of rebuilding and learning all I can so I don’t make the same mistakes that I made in my 20’s and 30’s. So a lot of this is still very confusing. I’ve been watching videos and reading up and now I may be in overload with all the credit talk but I’m digging myself out of a very large hole. My question is do I need to keep my ur down(forgot to add I have a secured Capital One card as well that is $500) under 30% by the statement date and Is the closing date the same as the date everything is reported to the bureau?

[@MartinOShieldWindyCitySDR]

Try and have a balance of EACH of your credit cards of no more than 1%. So your $500 credit card, I'd show a balance of $5, and your $300 card, I'd keep $3 on it. For each month that you show a Debt Ratio of 1% to your credit, thats what gets the most POINTs for that month to increase your score

[@hoodboxoffice]

300? OMG lol

[@tblub.9270]

@@hoodboxoffice I’m not certain what was funny about $300, but do share because I enjoy laughing.

[@NELSONG12]

I have 4 cards but only use 2 of them.

[@kamilsultan1637]

Might want to put a charge on the 2 you don’t use a couple times a year to keep it active and the account open.

[@NELSONG12]

@@kamilsultan1637 thank you!

[@ghassanbaqir6163]

Thanks for this informative video. Does the lender report it as cumulative utilization percentage for the whole month or report just what’s remaining? When you said show them you’re using the card during the month by not paying the balance down to Zero thought maybe they see the transactions for the whole month and do the math. Hope I can get a response from you, thanks

[@ProudMoney]

Most lenders are going to report the balance on the statement date and that is it, no info on individual transactions. If they report zero it looks like the card was never used. If there is a small balance on the card, it's apparent that the card was used. But you still pay off everything by the due date to not pay interest!

[@ghassanbaqir6163]

@@ProudMoney Thank you for the explanation I appreciate it