Is Paying in Full or Carrying a Balance Better for My Credit Score?

Published on Jul 03, 2014 11:52 am

It’s no secret that some credit cards carry high interest rates if you carry a balance, but some people mistakenly believe that carrying a balance – and paying those high interest rates – is better for your credit score.

Keeping Cards Active

Making affordable purchases on a credit card on a monthly basis, and paying your balance on time and in full, can be better for your credit score than cards that just sit in your wallet or safe gathering dust. Keeping your cards active helps build positive payment history. Plus, making small purchases on the card shows that you can manage your available credit by staying well below your credit limits. This helps your credit score because your credit usage – the percentage of your available credit that you use – counts for about 30 percent of your Experian credit score.

Paying in Full

Regardless of the rumors that swirl, one of the best things you can to establish positive credit habits is to avoid carrying credit card balances. Some will say you need to carry a balance to help your score, but the truth is that could lead to unnecessary interest added to your principal balance – which can lead to a slippery slope. In reality, you should be budgeting to spend only what you can pay-off responsibly.

Payment History

Your payment history just shows whether you made at least the minimum payment required. So, you get the same mark on your report whether you pay your bill in full or make just the minimum payment. To stay on top of the information conveyed by credit card companies, check your credit report regularly.

Costs of Carrying a Balance

Carrying a balance doesn’t directly impact your credit score, and it won’t do any favors for your bank account either. If you carry a balance, your credit card will charge you interest – possibly draining you of cash. In fact, you can calculate how much you would be spending on interest if paid only the minimum balance. Instead, create a payment plan based on what you can afford, working to pay off the balance in full each month.


About the Author
Mark Kennan is a freelance writer specializing in finance-related topics. He has worked as a sports editor and published articles on a number of online outlets.


This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from, Inc., an Experian company.   © 2014, Inc.  All rights reserved.

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