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I've heard two conflicting things: One is that you should pay your entire credit every month, and the other that you should maintain roughly %30, %50 (it varies by who you ask) of your available credit still indebted, but pay off the minimum amount every month.

Is one of those answers universally true? Does it depend on the credit card?

And two more tangentially related questions: I've heard that if you're late in paying bills that are unrelated to the credit card (for example electricity or cable) then it doesn't affect the credit history. Is that right?

And -- do you have to ask for more available credit or does it happen automatically? I currently have $500 (and have had for over a year); is there a special thing they're looking for take to me from $500 to $1000?

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    Generally speaking, you should ask one question per post. That is unless the questions are closely related. In this case, the add-on questions would make great questions of their own. See also this question about past-due bills and credit score.
    – George Marian
    Commented Oct 12, 2010 at 21:48
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    Here's a related question: money.stackexchange.com/questions/2585/…
    – Michael Pryor
    Commented Oct 12, 2010 at 22:38
  • You should clarify what your goal is: increasing your credit score or doing the financially wise thing. They have different answers.
    – jcollum
    Commented Jun 5, 2011 at 23:29
  • When I had a credit card that charged interest from day 1, I always paid it off in full, as soon as my pay was deposited. Now I have a 60-day-interest-free card, so I usually allow a small balance (it's basically an interest-free loan, so why not?), preferring to put the money to better use (e.g. reducing interest paid on the home loan).
    – Jeffrey Kemp
    Commented Apr 24, 2014 at 7:11

3 Answers 3

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You should pay things off every month. You don't want to be paying 10%-25% interest if you don't have to. If you regularly use you card, the credit agencies can't tell the difference. The way it works is that every month, they send the credit agencies your current balance and if you paid the last bill on time. There is nothing that indicates if this is a standing balance, or if you charged all of it since the last payment.

Any business that you legitimately owe a debt to can report that to the credit agencies. Not all of them do. This includes utilities, cell phone companies, landlords, etc. If any of them report overdue items it will show up on your credit report, and your credit card company can use that to raise you interest rate.

Some cards will automatically raise you credit limit. They are basically looking to make money fro you. If you often charge near the limit, and pay the minimum balance each month, they may raise your limit to get you to charge more, and pay more interest. You can also call them and ask. They have some internal rules to decide if, based on your history with them and your credit history, if you are a good risk.

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I think you got the message mixed up a little:

Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. What's typically reported to the credit bureaus, and thus calculated into your scores, are the balances reported on your last statements. (That doesn't mean paying off your balances each month isn't financially smart -- it is -- just that the credit scores don't care.) You typically can increase your scores by limiting your charges to 30% or less of a card's limit.

-- from 7 Ways to Fix Your Credit Score

In other words, ALWAYS pay off your balance if you can. But don't fill up your card to the max of your credit limit each month. i.e. if your credit limit is $5000, only spend $2000 each month.

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  • So supposedly I can stay at around %30 all the time, not paying off immediately, and while I will lose money on interest, my credit score will not suffer?
    – M. Duff
    Commented Oct 12, 2010 at 22:28
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    @duff No, that's not what I mean. You should spend no more than 30% of your card's maximum each month AND ALSO pay off your card each month. That is the best for your savings AND your credit score. If you can't pay off your card each month, then yes, the balance you carry should be less than 30% of your max charging abilities.
    – Michael Pryor
    Commented Oct 12, 2010 at 22:36
  • The main factors for computing a credit score are debt to credit line ratio, payment history and length of credit accounts. Want a good score? Over time, acquire a credit card from each of the major networks (Visa, MC, Amex, Discover). Use one or more of the cards, and pay the bill on time. Keep doing that.
    – duffbeer703
    Commented Oct 13, 2010 at 2:34
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    @M. Duff - To put it simply: Try not to let your card balances go over 30% if possible, even if that means making more than one payment per month.
    – JohnFx ♦
    Commented Oct 13, 2010 at 4:36
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Always pay on time, and stop listening to whoever is telling you not to -- they are clueless.

Credit cards are revolving accounts with a grace period. The balance owed is due on the statement date, and you have a grace period of 20-40 days to pay.

Paying bills on time is the single most important thing that you can do to have a good credit score. Always pay on time.

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    This should read: "Always pay the FULL BALANCE on time, and stop listening to whomever is telling you not to -- they are clueless."
    – Sam Erde
    Commented Oct 13, 2010 at 19:26
  • -1. As written this doesn't answer the original question.
    – DuckMaestro
    Commented Sep 2, 2011 at 5:24

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