Am I Hurting My Credit Score?

A few years back, I decided not to pay cash for anything. My reasoning was: my credit is good, and i can get free stuff by racking up points on my CC accounts. So here is how I live:
-I use my MC to buy EVERYTHING (gas, food, clothing)
-I keep a small amount of cash on hand for emergencies only
-every month end, i pay off my CC balance in full (I have never paid any interest)
-if the CC I use announces a yearly fee, i drop them and get another one (with no fees)
I figure I am ahead of the game-I don’t risk getting robbed (because i carry no cash), and I rarely have to write a check.
Is this good cash management, or am I secretly hated by the CC company?

Except for canceling cards with annual fees (we just call and ask for it to be waived, and are usually successful), that’s exactly how we spend. Points! Points! Points!

And no, the CC companies don’t hate you, they love you.

If you’re concerned about your credit score, just get copies of your reports from each of the credit reporting agencies. They’re required by law to send you a free one every year. So once every 4 months ask one of them for your free copy, then four months later, ask the next one, and so on. That way you’ll get 3 free credit reports every year and can spot any wonkiness that might show up.

This is the official site:


Cancelling cards can cause your credit score to be lower than if you didn’t do that, and paying off the balance every month can also have a slight negative impact.

It’s very good. Your CC company is giving you a short-term, interest-free loan every time you use it. Plus you get the points.

I do the same, The credit card companies hate me, too, but they want to keep me because they are hoping I will forget to pay off the balance (or they can convince me not to with “special offers” and suchlike foolishness).

Hasn’t happened yet. Hee hee hee.


The credit card companies get a small percentage of everything you buy. They love you whether you pay off your balance or not.

While this is a wise thing to do, it doesn’t give you your FICO score. Just a list of creditors and your current payment status with them. So it’s great for making sure some old bill you forgot about isn’t biting you in the ass, or someone isn’t taking out credit in your name, but it won’t tell you if the CC companies are dropping your score because you pay off in full every month.

Really? Isn’t he one of the worst types of customers, in their eyes? Don’t they want him to be carrying a balance and paying interest?

They call people who pay the full balance each month “deadbeats.” :smiley:

[quote=“Gfactor, post:3, topic:481131”]


Cancelling cards can cause your credit score to be lower than if you didn’t do that, and **paying off the balance every month can also have a slight negative impact.[/**QUOTE]

My credit card score is excellent and we never carry a balance. I don’t think this is true.

I pay my balance in full every month. Recently the bastards have changed the default setting from the balance due to the minimum. Example: The screen will tell me I owe $435.15, and I will click the button that says “Pay Bill Now.” And the system takes me to a screen that prefills, in very small type, with the minimum payment of $15. Nowhere on that screen does the $435.15 appear. They are counting on me just clicking on the $15 and paying interest on the unpaid balance.

They got me that way once, and the next month when I saw the balance I called and complained. They removed the fee and I have never fallen for it again. I cut and paste the full amount I owe, and pay that. If you pay online, pay close attention to what the amount is. They very much want you to pay the minimum.

I’m sure they’d like the interest, yes, but if you’re paying your bills and they’re getting their merchant fees, trust me, they’re happy with you just fine.

For that matter, why should you care what the bank thinks of you? I live within my means, which means I don’t charge more than I can afford to pay off, and I pay it in full when the bill comes. If they don’t like it, they can go stuff themselves.

Not necessarily, despite anecdotes to the contrary and that absurd story about “deadbeats”.

The actual answer, sadly, is “it depends”. It depends on the business model of the credit card company and the state of the external environment.

It is easier to say what credit card companies don’t want. They do not want you to go into default while carrying a large balance. This will wipe out whatever spread revenue they have been able to make from you for years or even decades. When default rates are high and default provisions are very expensive, you’re damned right they want you to pay off that balance every month.

Credit card issuers rely on access to cheap cash via global capital markets. They borrow the money they lend to you. When these markets are squeezed or become very expensive, the amount of spread revenue (interest less cost of funds) they make contracts. Since this usually coincides with times of great economic uncertainty, they care very much about paying your bills in full and on time. When currency is cheap and default rates are low, then all things being equal, an issuer might prefer to lend than to be repaid. But once again, it also depends on the particular credit card business model, of which there are essentially three.

Come on! Don’t leave us hanging! What are the three business models?

That’s what they call them:


Wow, I had no idea my pedantic little narrative was so dramatic.

Most credit card issuers do a bit of all three, though some are far more tilted towards one than the other. These models aren’t technical terms, per se.

A/R Based – These issuers grow lending balances. Their biggest source of revenue is net spread, or charged interest less cost of funds.

Fee Based – These issuers charge you lots of fees. For everything. If you max out your $3k credit card, instead of raising your limit, they will just give you another card to abuse. So if you have a rough month, you will now miss two payments instead of one and owe double the fees. These cards will often look extremely competitive: no membership fee, incredibly low interest rate, etc.

Spend Based – These issuers make the bulk of their money from merchant fees. They charge more than other issuers, but in exchange they drive higher spending people into merchants who want to use their card because it gives them robust rewards. Lending is somewhat important to these issuers, but less important than the merchant fees.

Even A/R based businesses can deal with cardholders who only pay their bills on time. They will try to cross-sell them more “elite” products, some with fees and some without. Merchant fees for Signature, etc, are higher than for standard products. So if you aren’t going to borrow money at interest from an issuer of a V/MC card, your merchant will pay a higher discount rate. American Express is the exception to this rule: it has the same price for all of its products.

…in two completely unsubstantiated references. Perhaps someone somewhere in the enormous credit card industry might have used the word deadbeat. But this is by no means any sort of industry standard. It also makes no sense.

One question for ralph124c, assuming that he returns to this thread, which I doubt he will. Why do you care whether the credit card company hates you?

And another thing. I recently read a recommendation for a credit card offered by Charles Schwab. It has no annual fee, and offers 2% cash back on all purchases. The only stipulation is that the cash has to go into a Schwab One brokerage account. Currently I have a United Airlines Mileage Plus credit card, on which I earn United frequent flier miles, but for which I pay a $60 annual fee. I’m thinking of canceling the United card and getting the Schwab card instead, and putting enough money in a Schwab One account to avoid any fees for it. I think I charged $12-15,000 or so last year, so I should be able to earn a few hundred dollars from this.

That’s true. But if you’re still not willing to spend $5-$6 to get your score after your report’s been generated, you can use the data you get from it and go here: MSN

Just do some basic calculating (count how many cards are showing as open, add the amounts in recent balances, add available credit, etc.), plug the numbers in, and it will generate a range that your score is most likely within. I just tested it and it says my credit score probably falls somewhere between 710 and 780, which, based on the last time I got my actual credit score, which was 765, seems like a pretty good estimator to use.

I’m sorry, I must have missed your substantiated references. Would you mind repeating them?