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My uncle in Fresno said paying off my $1,200 card in full would tank my score, so I did it anyway and gained 31 points
He swore up and down that keeping a small balance was the secret to good credit, and I believed him for almost two years. I was paying interest every month on stuff I already bought, which looking back was just free money for the bank. Three months ago I got fed up and paid the whole $1,200 off in one shot, then checked my score two weeks later expecting the worst. It went from 668 to 699, which is the highest it has ever been. Did anyone else get told the opposite of what actually helps your score?
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karencampbell1mo ago
The part about "free money for the bank" is what gets me, because people never seem to count the interest they paid as part of the cost of that little balance they were told to keep. Run the math on your $1,200 sometime and it gets ugly fast. If you were carrying say $400 of it at 24 percent, that is about 8 bucks a month in interest, so over two years you handed them close to $200 just to rent your own credit score. And here is the thing nobody brings up: paying interest does not even report as a good thing on your file. The score models see a balance and a payment history, they do not see that you paid extra for the privilege. So your uncle was not just wrong, he was wrong in a way that costs actual cash. Good on you for testing it yourself instead of taking his word for it.
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