Is it true that carrying a balance helps your credit score?

Personal Finance

My dad keeps telling me I should leave a small balance on my credit card each month to build credit faster. But that seems dumb because Id be paying interest for no reason? The internet says pay it off in full but my dad is pretty good with money so Im confused. Whats the actual truth here?

Christopher Miller

3 Answers

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Your dad is wrong, this is a super common myth. You do NOT need to carry a balance or pay interest to build credit.

What actually matters:

Payment history (35%) - pay on time, every time

Credit utilization (30%) - keep balances low relative to limits

Length of history (15%)

Credit mix (10%)

New credit (10%)

The best strategy is to use your card for regular purchases, then pay the FULL statement balance by the due date. You pay zero interest and still build credit because the activity gets reported. Ive had an 800+ score for years and never paid a cent in credit card interest.

Show your dad this thread lol

John Smith

Your dad is wrong and this myth is so widespread it drives me crazy. Carrying a balance just gives the bank free money. Pay it off in full every month. Your score is based on payment history and utilization, not on how much interest you pay.

Ryan Robinson

The confusion might be that you DO need to USE the card for it to build credit. But using it and paying in full is not the same as carrying a balance. Use it, pay it off, repeat.