# Tips on building credit **URL:** \ **Category:** Factual Questions\ **Created:** [August 17, 2005, 1:33pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425 "2005-08-17T13:33:57Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Future\_Londonite](https://avatars.discourse-cdn.com/v4/letter/f/9dc877/32.png) [@Future\_Londonite](https://boards.straightdope.com/u/Future_Londonite)\ **Post date:** [August 17, 2005, 1:33pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/1 "2005-08-17T13:33:57Z")
Hey all - I need some help/tips on building credit. Quick background: live in the US but not US citizen (am on my second H1B visa). Never have been able to get a credit card either do to status (Legal Alien) or no credit history. Well the improbable has occurred and I got approved for a credit card with a $3K balance - yay for me…So now my question is how to properly build up my credit? run up a high balance and pay minimum payment each month? Pay full balance each month? Keep balance at $1.5K and pay minimum and then some each month? Thanks ---
**Author:** ![Padeye](https://avatars.discourse-cdn.com/v4/letter/p/a9a28c/32.png) [@Padeye](https://boards.straightdope.com/u/Padeye)\ **Post date:** [August 17, 2005, 1:52pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/2 "2005-08-17T13:52:40Z")
> [@EuroMDguy](#): > > run up a high balance and pay minimum payment each month? Not unless you want to fund the profit of the bank. ---
**Author:** ![Hampshire](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hampshire/32/4887_2.png) [@Hampshire](https://boards.straightdope.com/u/Hampshire)\ **Post date:** [August 17, 2005, 2:06pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/3 "2005-08-17T14:06:27Z")
I wouldn’t carry a large balance on the card. I would however use it regularly and pay the balance in full **on time** every month. This will demonstrate your dependability on paying the bill when due. Skipping payments or paying late is a bad mark in their record books. I would also consider taking out a loan for your next vehicle, paying **every month, on time** for the duration of the loan. Credit companies are willing to give lots of credit to people who can demonstrate that they are consistant payment makers when it comes to billing time. While they’d prefer you make minimum payments so they can suck inetrest money out of you instead of paying in full it doesn’t really matter in regards to building good credit. ---
**Author:** ![missbunny](https://avatars.discourse-cdn.com/v4/letter/m/76d3ee/32.png) [@missbunny](https://boards.straightdope.com/u/missbunny)\ **Post date:** [August 17, 2005, 2:06pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/4 "2005-08-17T14:06:35Z")
> [@EuroMDguy](#): > > So now my question is how to properly build up my credit? run up a high balance and pay minimum payment each month? Pay full balance each month? Keep balance at $1.5K and pay minimum and then some each month Why would you want to run up a high balance and only pay the minimum (or a little more)? If you think that is any kind of suitable strategy, you might want to look into the mathematics of credit cards a little bit more before you start spending. Since you haven’t had one before, you might not be aware of exactly how they work and how the interest charges add up. As for building your credit, I have read that the best way is to make some charges each month and pay them off entirely upon receipt of the bill. You don’t want to charge up to the limit all the time even if you’re going to pay the whole thing off immediately, because then when you do want additional credit cards or loans, your credit report will show that you were always maxing out your credit card. I believe that’s not a good thing in the credit world, even if you do pay it off all the time. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [August 17, 2005, 2:10pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/5 "2005-08-17T14:10:30Z")
> [@EuroMDguy](#): > > Hey all - I need some help/tips on building credit. > > Quick background: live in the US but not US citizen (am on my second H1B visa). Never have been able to get a credit card either do to status (Legal Alien) or no credit history. > > Well the improbable has occurred and I got approved for a credit card with a $3K balance - yay for me…So now my question is how to properly build up my credit? run up a high balance and pay minimum payment each month? Pay full balance each month? Keep balance at $1.5K and pay minimum and then some each month? > > Thanks The last option is probably the best of the three. Though still imperfect. Here are some links. [http://www.go-uag.com/services/31\_facts.html](http://www.go-uag.com/services/31_facts.html) [http://moneycentral.msn.com/content/Banking/Yourcreditrating/P38052.asp](http://moneycentral.msn.com/content/Banking/Yourcreditrating/P38052.asp) [http://www.myfico.com/Offers/myFICO\_UYCS%20booklet.pdf?lpid=UNPR1&promocode=UnionPlus](http://www.myfico.com/Offers/myFICO_UYCS%20booklet.pdf?lpid=UNPR1&promocode=UnionPlus) (pdf) The best scores come from having exactly three bank charge accounts with balances in the 0-30% range. ---
**Author:** ![missbunny](https://avatars.discourse-cdn.com/v4/letter/m/76d3ee/32.png) [@missbunny](https://boards.straightdope.com/u/missbunny)\ **Post date:** [August 17, 2005, 2:12pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/6 "2005-08-17T14:12:05Z")
> [@Hampshire](#): > > I wouldn’t carry a large balance on the card. > I would however use it regularly and pay the balance in full **on time** every month. This will demonstrate your dependability on paying the bill when due. > Skipping payments or paying late is a bad mark in their record books. That’s good advice. If you can’t pay off the whole balance on the next bill, MAKE SURE to make some kind of payment - any kind - BEFORE the due date. Credit card companies and loan issuers want to see _regular, on-time_ payments. Lots of people think that if they miss a payment but then pay double or pay the whole balance the next time, it “evens out” somehow and all is good. It is not. Plus, those late charges will absolutely kill you. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [August 17, 2005, 2:31pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/7 "2005-08-17T14:31:07Z")
Credit card companies tread a fine line here. They don’t want you to pay the full balance. If you do, they lose income. They have a name for people who pay in full each month: Deadbeats. OTOH, they want to be sure that they can milk a consumer and not get stuck with a huge uncollectible balance. That’s where the FICO model comes it. The FICO score is highly (inversely) correlated with bankruptcy filing: The lower the score the higher the probability that a borrower will file for bankruptcy. Because the FICO model is based on statistical probability and not the good credit practices our parents taught us, or should have, it sometimes yields some strange results. As far as what they want to see? They love the [Universal Default](http://www.bankrate.com/brm/news/credit-management/20040120a1.asp) and you can bet they love late fees and penalty interest rates. ---
**Author:** ![dlack](https://avatars.discourse-cdn.com/v4/letter/d/b5ac83/32.png) [@dlack](https://boards.straightdope.com/u/dlack)\ **Post date:** [August 17, 2005, 2:31pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/8 "2005-08-17T14:31:16Z")
> [@Gfactor](#): > > The last option is probably the best of the three. Though still imperfect. Here are some links. > > [http://www.go-uag.com/services/31\_facts.html](http://www.go-uag.com/services/31_facts.html) > [MSN](http://moneycentral.msn.com/content/Banking/Yourcreditrating/P38052.asp) > [http://www.myfico.com/Offers/myFICO\_UYCS%20booklet.pdf?lpid=UNPR1&promocode=UnionPlus](http://www.myfico.com/Offers/myFICO_UYCS%20booklet.pdf?lpid=UNPR1&promocode=UnionPlus) (pdf) > > The best scores come from having exactly three bank charge accounts with balances in the 0-30% range. Your links indicate that the second option is the best option (Pay full balance each month?). From the MSN link: > [@](#): > > What many people don’t know is that credit scores don’t distinguish between those who carry a balance on their cards and those who don’t. So charging less can also improve your score – even if you pay off your credit cards each month. The best option seems to be to charge a small amount every month (to keep your ratio of debt to credit low) and to pay it off every month (to establish a history of on-time payments). Keeping a constant balance only serves to give the credit card company your money in the form of interest. ---
**Author:** ![dlack](https://avatars.discourse-cdn.com/v4/letter/d/b5ac83/32.png) [@dlack](https://boards.straightdope.com/u/dlack)\ **Post date:** [August 17, 2005, 2:37pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/9 "2005-08-17T14:37:28Z")
> [@Gfactor](#): > > Credit card companies tread a fine line here. They don’t want you to pay the full balance. If you do, they lose income. They have a name for people who pay in full each month: Deadbeats. > > OTOH, they want to be sure that they can milk a consumer and not get stuck with a huge uncollectible balance. That’s where the FICO model comes it. The FICO score is highly (inversely) correlated with bankruptcy filing: The lower the score the higher the probability that a borrower will file for bankruptcy. Because the FICO model is based on statistical probability and not the good credit practices our parents taught us, or should have, it sometimes yields some strange results. > > As far as what they want to see? They love the [Universal Default](http://www.bankrate.com/brm/news/credit-management/20040120a1.asp) and you can bet they love late fees and penalty interest rates. I think some people are confused about the distinction between credit reporting agencies and credit card companies. As far as I know, credit reporting agencies supply the credit score, which credit card companies can do with as they wish. If there is some partnership between these separate companies, I’d like to hear about it. While I’m sure credit card companies enjoy receiving your interest, giving them extra money doesn’t help your credit score. ---
**Author:** ![Mr.Slant](https://avatars.discourse-cdn.com/v4/letter/m/c57346/32.png) [@Mr.Slant](https://boards.straightdope.com/u/Mr.Slant)\ **Post date:** [August 17, 2005, 2:59pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/10 "2005-08-17T14:59:39Z")
Read what **Gfactor** posted. Good stuff. Also, cruise on over to [http://consumers.creditnet.com/straighttalk/board/](http://consumers.creditnet.com/straighttalk/board/) if you want a message board where these topics get discussed. A lot. Also try: [http://www.artofcredit.com/board/](http://www.artofcredit.com/board/) My personal advice is to take it easy with that card you just got. To keep it active, buy gas, groceries and toiletries with it. If you confine your spending to those categories, which few Americans really go overboard on, ([except for some folks discussed in this thread](http://boards.straightdope.com/sdmb/showthread.php?t=328519&highlight=truffles) ), you shouldn’t wind up in trouble and your card issuer will see enough activity to grow to like you and report positive activity on your account. If you investigate this matter, you will note that 20% balances on 3 cards may be close to ideal for your credit score. I would suggest to you that my advice will build your credit, and unless you’re actually in the process of trying to qualify for a particular loan product, is a better idea than running a $600 balance every month in an attempt to dope your credit score. Just act like a grown-up with your credit, and your score will grow without too much effort on your part. Remember, be careful with all this credit stuff, or you’ll wind up posting here: [http://chat-cards.com/wwwboard/bankruptcy/messages.html](http://chat-cards.com/wwwboard/bankruptcy/messages.html) ---
**Author:** ![Future\_Londonite](https://avatars.discourse-cdn.com/v4/letter/f/9dc877/32.png) [@Future\_Londonite](https://boards.straightdope.com/u/Future_Londonite)\ **Post date:** [August 17, 2005, 2:59pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/11 "2005-08-17T14:59:42Z")
Thank you guys for your input… I’m leaning towards using my card for my monthly food/music purchases ($300/400) and then off the balance in full each time the bill arrives. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [August 17, 2005, 3:02pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/12 "2005-08-17T15:02:08Z")
> [@dlack](#): > > Your links indicate that the second option is the best option (Pay full balance each month?). From the MSN link: > > The best option seems to be to charge a small amount every month (to keep your ratio of debt to credit low) and to pay it off every month (to establish a history of on-time payments). > > Keeping a constant balance only serves to give the credit card company your money in the form of interest. Good point. But take a look at page 10 of the Understanding Your FICO Score pamphlet. It directly contradicts Ms. Weston. > [@](#): > > Your score takes into account: > ■ The amount owed on all accounts. Note that even if you pay off your credit cards in full every month, your credit report may show a balance on those cards. The total balance on your last statement is generally the amount that will show in your credit report. > ■ The amount owed on all accounts, and on different types of accounts. In addition to the overall amount you owe, the score considers the amount you owe on specific types of accounts. Weston, though usually credible, sometimes publishes erroneous stuff. For instance, a while back I was investigating an industry rumor that paying off old debts can sometimes drop one’s score. I e-mailed her about it. She wrote back and told me that it wasn’t true. Then she wrote this article: [When paying bills can hurt your credit](http://moneycentral.msn.com/content/SavingandDebt/P59862.asp). I know, I’m arguing with my own source. Sorry. > [@](#): > > I think some people are confused about the distinction between credit reporting agencies and credit card companies. As far as I know, credit reporting agencies supply the credit score, which credit card companies can do with as they wish. If there is some partnership between these separate companies, I’d like to hear about it. While I’m sure credit card companies enjoy receiving your interest, giving them extra money doesn’t help your credit score. As I pointed out before, the FICO model is a statistical one. It’s got nothing to do with what anybody wants or enjoys. I know of no direct partnership between FICO and any creditor. I’m not proposing any kind of grand conspiracy. My point was simply that talking about what creditors want is a little confusing (mortgage companies don’t really give a crap about late fees and would rather have a stream of on-time payments; credit card companies would probably like to see a lower FICO so that they can impose more fees, and they’d probably rather see you pay late once in a while, but late payments will lower your FICO for sure–so don’t). And talking about what the FICO model wants is anthropomorphic because it is a mathematical formula. ---
**Author:** ![Balthisar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/balthisar/32/2825_2.png) [@Balthisar](https://boards.straightdope.com/u/Balthisar)\ **Post date:** [August 17, 2005, 3:41pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/13 "2005-08-17T15:41:03Z")
> [@Gfactor](#): > > Credit card companies tread a fine line here. They don’t want you to pay the full balance. If you do, they lose income. They have a name for people who pay in full each month: Deadbeats. I don’t know about that. I pay off my Citi card every, single month, and they always treat me as a golden, AAA+ customer. For example when I call, I never have to wait in a queue once I enter my account number. They’re always willing to work with me. One representative told me that I was an excellent customer and they wanted to make me happy. But… if you consider that I use this card (associated with an airline miles program) for every, single conceivable purchase that I can in a month, they really do make a good quantity of money on commissions from me, more money than they’d make on just interest for someone with a $1000 balance carrying over. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [August 17, 2005, 3:55pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/14 "2005-08-17T15:55:08Z")
> [@Balthisar](#): > > I don’t know about that. I pay off my Citi card every, single month, and they always treat me as a golden, AAA+ customer. For example when I call, I never have to wait in a queue once I enter my account number. They’re always willing to work with me. One representative told me that I was an excellent customer and they wanted to make me happy. But… if you consider that I use this card (associated with an airline miles program) for every, single conceivable purchase that I can in a month, they really do make a good quantity of money on commissions from me, more money than they’d make on just interest for someone with a $1000 balance carrying over. They really don’t make much profit from the discounts. At least according to this book: [http://www.amazon.com/exec/obidos/tg/detail/-/0805798102/qid=1124293992/sr=8-4/ref=sr\_8\_xs\_ap\_i3\_xgl14/002-1497012-6125639?v=glance&s=books&n=507846](http://www.amazon.com/exec/obidos/tg/detail/-/0805798102/qid=1124293992/sr=8-4/ref=sr_8_xs_ap_i3_xgl14/002-1497012-6125639?v=glance&s=books&n=507846) That’s why it took so long for many fast food places to begin accepting credit cards. The fast food industry operates on a low margin. Paying the discount for charges wouldn’t make financial sense for them. So they asked for a better deal. Credit card vendors, meanwhile, were similarly disinterested in making a smaller percentage–to do so would not make financial sense for them. And then they came up with a solution. [http://money.cnn.com/2005/06/14/commentary/everyday/sahadi/](http://money.cnn.com/2005/06/14/commentary/everyday/sahadi/) [http://credit.about.com/cs/anticredit/a/061597.htm](http://credit.about.com/cs/anticredit/a/061597.htm) ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [August 17, 2005, 3:57pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/15 "2005-08-17T15:57:52Z")
BTW anybody who has not checked out the [Frontline](http://www.pbs.org/wgbh/pages/frontline/shows/credit/) story about the history of the credit card industry really should. You can watch the episode at the website. ---
**Author:** ![Kevbo](https://avatars.discourse-cdn.com/v4/letter/k/e47774/32.png) [@Kevbo](https://boards.straightdope.com/u/Kevbo)\ **Post date:** [August 17, 2005, 4:16pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/16 "2005-08-17T16:16:30Z")
Paying your balance in full every moth doesn’t please the CC companys, but it does not hurt your credit rating any that I can tell. In my case it seems to help it a lot. The CC company sees that I am capable of making very large monthly payments, and raises the limit. I also suspect they’d like me to get in so deep I CAN’T pay it off every month. Since I don’t USE it, the higher limit improves my FICO score, because I then have a much lower debt/available credit ratio. ---
**Author:** ![Driver8](https://avatars.discourse-cdn.com/v4/letter/d/b5a626/32.png) [@Driver8](https://boards.straightdope.com/u/Driver8)\ **Post date:** [August 17, 2005, 5:02pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/17 "2005-08-17T17:02:06Z")
> [@EuroMDguy](#): > > Quick background: live in the US but not US citizen (am on my second H1B visa). Never have been able to get a credit card either do to status (Legal Alien) or no credit history. As an aside, why did your legal status prevent you from building up a credit history? I am in the US on an H1-B (for under a year now and I had never lived in the US before) and I obtained a credit union credit card (with a limit of $500) and a new car loan (although with a 10.7% rate) right from the beginning. I’ve been here for about 10 months now and my credit score is around the 670 mark (not great, but climbing). I have always put my purchases on the card and payed it back in full every month. ---
**Author:** ![dlack](https://avatars.discourse-cdn.com/v4/letter/d/b5ac83/32.png) [@dlack](https://boards.straightdope.com/u/dlack)\ **Post date:** [August 17, 2005, 5:48pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/18 "2005-08-17T17:48:56Z")
> [@Gfactor](#): > > Good point. But take a look at page 10 of the Understanding Your FICO Score pamphlet. It directly contradicts Ms. Weston. > > > [@http://www.myfico.com/Offers/myFICO\_UYCS%20booklet.pdf](#): > > > > Your score takes into account: > > ■ The amount owed on all accounts. Note that even if you pay off your credit cards in full every month, your credit report may show a balance on those cards. The total balance on your last statement is generally the amount that will show in your credit report. > > ■ The amount owed on all accounts, and on different types of accounts. In addition to the overall amount you owe, the score considers the amount you owe on specific types of accounts. This in no way contradicts the quote I posted before, which was: > [@http://moneycentral.msn.com/content/Banking/Yourcreditrating/P38052.asp](#): > > What many people don’t know is that credit scores don’t distinguish between those who carry a balance on their cards and those who don’t. So charging less can also improve your score – even if you pay off your credit cards each month. Both quotes are saying that whether or not you’ve paid off your balance since the last statement, your credit report will probably show you as having the balance you had at your last statement. So if you had a $300 balance and paid it off, it will look exactly the same as someone who had a $300 balance and merely paid their minimum payment. So there’s little or no benefit to someone carrying a balance if they don’t have to. Even if you’ll be more favorable to credit card companies by carrying a balance instead of paying it off, this benefit is probably not worth the interest you’ll be paying. Every reputable source I’ve read says that the major factor in your credit score is whether you make consistent on-time payments. The companies who will be looking at your credit score (mortgage vendors, auto loan vendors, cell phone companies, insurance companies) are much more concerned about you paying what you owe on time than anything else. You seem to be basing your credit score theory on the idea that you’re going to use your credit to get more credit cards. There are other, more important reasons to have good credit. I’m not trying to bicker with you, but I really don’t think encouraging people to maintain a balance just to increase your credit score is a good idea. By the way, I’m not an accountant, but I’m sure that’s pretty obvious. ---
**Author:** ![groman](https://avatars.discourse-cdn.com/v4/letter/g/73ab20/32.png) [@groman](https://boards.straightdope.com/u/groman)\ **Post date:** [August 17, 2005, 6:13pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/19 "2005-08-17T18:13:49Z")
> [@dlack](#): > > I’m not trying to bicker with you, but I really don’t think encouraging people to maintain a balance just to increase your credit score is a good idea. By the way, I’m not an accountant, but I’m sure that’s pretty obvious. However, a customer who always pays off the entire balance every month is the worst absolute person to the bank. Since they are actively using bank’s services without giving them a cent other than processing fees from merchants. This is obvious, and if you want to have a good credit history you should be a good customer, and a good customer generates profit for the bank without carrying much risk. That means paying as much interest as you feel you can afford. Think of it as a “good credit fee”. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [August 17, 2005, 6:21pm UTC](https://boards.straightdope.com/t/tips-on-building-credit/317425/20 "2005-08-17T18:21:42Z")
> [@dlack](#): > > This in no way contradicts the quote I posted before. > [@](#): > > credit scores don’t distinguish between those who carry a balance on their cards and those who don’t. > [@](#): > > Your score takes into account: > ■ The amount owed on all accounts. Looks pretty contradictory to me. We need to distinguish between credit reports and credit scores. The \*report \*may or may not show balance as of the last statement. But Weston claimed that the \*score \* doesn’t distinguish. If that’s true it’s an artifact of the reporting system. There is no guarantee that it will be that way. And if she is making a claim any stronger than that, she’s just wrong. > [@](#): > > So there’s little or no benefit to someone carrying a balance if they don’t have to. Agreed. > [@](#): > > Even if you’ll be more favorable to credit card companies by carrying a balance instead of paying it off, this benefit is probably not worth the interest you’ll be paying. Probably also true. > [@](#): > > Every reputable source I’ve read says that the major factor in your credit score is whether you make consistent on-time payments. Fair Isaac, the creator of the score says it accounts for 35% of the variance in a credit score. So I guess it depends on your definition of major. It is the most important single factor, but it accounts for less than half of the variance in scores. > [@](#): > > The companies who will be looking at your credit score (mortgage vendors, auto loan vendors, cell phone companies, insurance companies) are much more concerned about you paying what you owe on time than anything else. Well now, if that were the case, they wouldn’t need to look at the _score_. Late payments show up on the _report_. They account for only 35% of the variance in scores. Actually, it’s a little more complicated because creditors can buy scores that are tailored to their needs. There is little information available about how these scores differ from the FICO model. \*Scores \*aren’t free, even to creditors. So the fact that the creditors are paying for them suggests that they are interested in a lot more than payment history. > [@](#): > > You seem to be basing your credit score theory on the idea that you’re going to use your credit to get more credit cards. There are other, more important reasons to have good credit. 1. It’s not my theory. 2. If you want the best score, you’ll need to have three cards. 3. I agree that good credit is not embodied solely in the FICO score, and that there are better uses for the score than simply getting more credit. In fact, it quickly becomes counterproductive. Too many open accounts, balances too high=lower score. And once you get there, it’s harder to fix. 4. The credit industry itself encourages people to get the highest possible FICO score, so it helps to learn as much as possible about how it really works. The model is proprietary, so we only get crumbs from Fair Isaac, and then only when Congress starts talking about regulating them. > [@](#): > > I’m not trying to bicker with you, but I really don’t think encouraging people to maintain a balance just to increase your credit score is a good idea. By the way, I’m not an accountant, but I’m sure that’s pretty obvious. Bicker away, it breaks up my day. It seems to me that there is a cost-benefit analysis that each of us must do about whether it is more costly to have a marginally lower score and pay no interest or have a marginally higher score and pay some interest. The problem is that we can’t reliably predict the effect on our score of any given change in our credit profile because the scoring model is a big secret. [Next page](https://boards.straightdope.com/t/tips-on-building-credit/317425.md?page=2)