Creditors and Bankruptcy/Credit card & credit

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Expert: Regan Shinski - 2/25/2010


Question
I've heard you should use your (paid off) credit cards at least twice a year to maintain a good credit score.

If you use the card and then immediately send a payment (paying in full) to your credit card before the statement arrives for the new charge, incurring a "credit" instead of waiting for the statement to pay, will it still show on the credit report as using the card/credit?

Or is it better for your credit to just wait until the new charge shows up on the statement and then pay it off? Does it make a difference?

I hope my question makes sense, thank you

Answer
Hi Peggy:

Technically, you do not need to use your credit card to maintain your credit score.  In fact, credit reports do not show or say if you are "using" the card.  The only things that are actually impacting your score on credit cards are age of the account, status (current, 30-days late, etc.), and balance compared to available credit (utilization).

Where that point comes from, and there is some validity to it, is if you DON'T use your credit card, your CREDITOR may close the account or reduce the limit.  Those two actions can have an adverse impact on your score.  The act of how often you use the credit or how much you actually run through the card does NOT factor into your score.

All of that being said, the bottom line is that I do agree you should use your card at least twice a year as you were saying.  Really even every three months to avoid the creditor from closing or reducing a credit limit on an account that is giving you a very positive credit impact.  Credit-wise, it is better to pay in full before the statement hits as it gives you the better utilization as described above.

Thanks,
Regan

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Regan Shinski

Expertise

I can answer questions on collections, repossessions, bankruptcy, credit repair, credit counseling, FICO scores, credit planning, and the cause and effect of credit related decisions. I can also answer questions on collection settlements and preparing to sue your creditors for false debts and credit reporting.

Experience

Fifteen years ago I was financially devasted due to severe health issues. I filed bankruptcy, had a foreclosure, car repossession, tax lien, and ruined credit. I immersed myself in credit law. I settled dozens of accounts and had them removed to improve my credit. I personally sued four creditors and collection agencies and won cash settlements for their false reporting on my credit reports. Since then, I have completely recovered and have nearly $100,000 in revolving credit lines and perfect credit. I have owned a credit repair company for the past five years and have an additional three years of specific work in the collections and debt management industry. I am fully versed in the Fair Debt Collection Practices Acts (FDCPA), Fair Credit Reporting Act (FCRA), and have used them successfully in collection settlements and lawsuits for myself and others. I am also familiar with and abide by the Credit Repair Organizations Act (CROA). I have deleted or helped delete literally hundreds and hundreds of derogatory items from consumers' credit reports and helped negotiate many settlements with collection agencies and creditors. I have also advised people on bankruptcy at any stage. In the current credit market, I have successfully advised numerous people on how to obtain credit and how to negotiate for better terms.

Education/Credentials
BA - University of Minnesota

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(private)

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