All Forum Posts by: Eric Lind

Hey Eric! Credit scores can be an interesting phenomenon and I'm convinced that no one fully knows how they work. However, the person you spoke with has a good point. The credit bureaus report your score once per month, not every day. So if you pay off the balance every month on the first but the credit bureau reports on the second, then it might look like you're not using your credit and therefore doesn't have much of an effect on your score. It's important to keep your utilization under 30% of the credit line and it might be a good idea to show a small balance periodically. Obviously you want to avoid paying interest when you can, but you could see some improvements to your score by showing a small balance.

Ok thank you, so a small balance will help to show I am active and bring a score to life even though I may pay some interest?

Yes, that's exactly right.

Should I continue to pay interest on it forever and always hold that 9% balance or just keep my balance there for a few months until I have a score and then pay to zero?

Forever is a long time. You want to show the credit bureaus that you're using your line(s) of credit but you also want to limit the amount of interest you're paying. I'm not saying you should always carry a balance, but it doesn't hurt to show a small balance periodically. Try it for a couple months and see how your Credit Karma score changes.

Ok thank you

0 Votes

Quote from @Colby Dorris:

Quote from @Eric Lind:

Quote from @Colby Dorris:

Ok thank you, so a small balance will help to show I am active and bring a score to life even though I may pay some interest?

Yes, that's exactly right.

Should I continue to pay interest on it forever and always hold that 9% balance or just keep my balance there for a few months until I have a score and then pay to zero?

0 Votes

Quote from @Colby Dorris:

Ok thank you, so a small balance will help to show I am active and bring a score to life even though I may pay some interest?

0 Votes

Quote from @John Burke:

It's important to look at which scoring model was used by Credit Karma. More than likely it was Fico 8. When you apply for a mortgage, each bureau (Equifax, Experian & TransUnion) uses a different model.

FICO® Score 2, or Experian/Fair Isaac Risk Model v2

FICO® Score 5, or Equifax Beacon 5

FICO® Score 4, or TransUnion FICO Risk Score 04

A no score response from the credit bureaus means you do not have enough open & active accounts to generate a score. This why the lender told you to get a Capital One Secured card.

For optimal scoring, you want to carry a balance on just credit card at 9% of the limit. For example: If your credit limit is $500, you want to carry a balance of $45.00.

With this $45 balance would you never pay it off? And would that lead to paying interest?

0 Votes

I recently filled out a pre-approval application for a mortgage, however, the lender did a hard pull and told me they came back with no score. Credit karma gave me a score of 711, I know it is an estimate but I found it weird one had a score yet the lender got none. The lender told me they got no score because I was paying my credit card balance to zero. They told me to get a Capital One secured card and never pay it to zero. I could not find any affiliation between the lender and Capital One. Is leaving a $10 balance at all times a real strategy to gain a credit score or a possible reason the lender did not get any score when they did the hard inquiry? Everything I have read and learned says to pay off credit cards on time and to a zero balance since that is the point of credit and how you show you are financially responsible. I would appreciate any advice you can give me!

1 Vote

I recently filled out pre-approval application for a mortgage, however, the lender did a hard pull and told me they came back with no score. Credit karma gave me a score of 711, I know it is an estimate but I found it weird one had a score yet the lender got none. The lender told me they got no score because I was paying my credit card balance to zero. They told me to get a Capital One secured card and never pay it to zero. I could not find any affiliation between the lender and Capital One. Is leaving a $10 balance at all times a real thing or a possible reason the lender did not pull any score? I feel like I am being lied to or manipulated for being young. Everything I know and have read and learned says to pay off credit cards on time and to zero since that is the point of credit and how you show you are financially responsible. Any advice is very appreciated!

0 Votes

All Forum Posts by: Eric Lind

Eric Lind has started 2 posts and replied 6 times.

Post: Mortgage Lender tells me to not pay full credit card balance?

Post: Mortgage Lender tells me to not pay full credit card balance?

Post: Mortgage Lender tells me to not pay full credit card balance?

Post: Mortgage Lender tells me to not pay full credit card balance?

Post: Mortgage Lender tells me to not pay full credit card balance?

Post: Mortgage Lender tells me to not pay full credit card balance?