No. of Recommendations: 1
That is - never use credit at all...or charge a little every month or every few months, and pay in full when the bill arrives? It seems to me to have good credit you have to USE credit, such is the story about a person who has no credit cards at all having trouble getting approved for a car loan (or with high rates). Any credible references to which is better - not using credit at all or charging & paying in full each month - would be greatly appreciated!


The thing to remember as you ask all these questions is: Why do you need a good FICO score?

If you are buying a house, you need a good score to get a good interest rate on your loan. If you borrow money to buy a car, again, you need a good score to get the best rate.

However, the FICO is only used to borrow money. If you have no plans to borrow money, that is, charge a little every month or every few months, and pay in full when the bill arrives, then does the FICO matter? I think it doesn't matter much. My advice is to not worry.

If you are paying your cc off each month, you are establishing the credit you need to have a good FICO score. Another thing that helps your FICO, is simply don't have any late pays on things like utilities. Good money management is an important to a good FICO.

Also, imagine you want to buy a home. You save money, do your research, and walk into a bank and ask for money. A downpayment of 10-20% plus your salary will go a long way in helping you get the best interest rate available.

Print the post  


UGC Disclosure Notice Regarding Credit Card Posts
Community board discussions about credit cards are not provided or commissioned by banks who may have advertising relationships with The Motley Fool. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.