Paying off a credit card too soon?

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Q: I can afford now to pay the whole balance off right now. But is it wise to go ahead and pay it off now or let it sit and pay on it for a few months and then pay it off.....looking for the best results credit score wise

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I could be 100% wrong here, but I don't believe it is the amount of time you have a balance, but the amount of time you have the card open.... So if they won't close the card if you pay it off, I don't think it matters.

Having said that, if you are getting 0% on the balance, make the minimum payment and invest the payoff you were going to use. No reason not to make money off of them.

My personal experience in a similar situation.. My credit score was sitting still at slightly above average for a couple of years. I got an AMEX rewards card that was 0% for a year, so I put everything on it and payed only the $35 monthly min. payment. My credit score increased dramatically throughout that year, and there were no other big account changes. Once the year passed and I paid the lump sum, my credit score started decreasing at about 2-3 points per month, again with no other account changes.

I don't really know how it works. All I know is that it's retarded.

What you want here is to optimize your utilization. I would just carry a balance of $20 over from month to month to build credit. That will minimize your finance charges. If your average daily balance is $20, that's less than $0.25, even at 14% - so you would probably trip a minimum finance charge of 50 cents or a dollar (whatever) - and that would be your cost of showing some utilization.

In all cases, keep your utilization below 50%, otherwise, it becomes a negative drag on your credit score. I'm just figuring out these things in my late 40s, so good luck.

The factors that influence your score are average age of credit lines (which is why you shouldn't close your oldest line - ever - without a good reason), utilization (10% to 20% is probably your sweet spot, here - meaning the balance you carry from month to month as a percentage of your card limit) for revolving credit, payment history, derogatory marks and hard credit inquiries (and these seem to hit at about 2 points a pop, for me.)

So, what a CC does is help you with payment history, credit history AND utilization - which is why credit cards are so influential in good/bad credit scores.

A mortgage default is, basically, 2 hits - the payment history and a derogatory mark. If it is one of your longer credit histories, it can hit you there, too.

A credit card, particularly one you've held for awhile, has the potential to hit every mark except hard credit history.

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looking for the best results credit score wise

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A good credit score is the RESULT ... not the GOAL.

A FICO score or any credit score for that matter are only important if you want to get into debt. What’s the opposite of wealth? Debt, of course. So if you want to be wealthy, getting into debt is not going to get you there. It’s not how much you make, it how much you keep. And while it may be true to some extent to not close your unused credit cards, providing you want to stay in debt, it really doesn’t matter that much for those that are or want to be wealthy.

MYTH: Paying my credit card charges early helps my credit score.

FACT: There’s nothing on your credit report that shows when a bill is paid, only whether it was paid on time.

If you have a 0% APR then you have no financial reason to pay it off early. It might help your credit score if your ratio of credit used to total credit available is high, but unless you're planning to apply for a loan soon that really doesn't matter.