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Mythbusting: Carrying a Balance Helps Your Credit Score

The internet is a big place full of a lot of information, but like most of us know (hopefully all of us will know someday) not all of that information is always true. Today we'll look at the myth that carrying a balance on your credit card can actually boost your credit.

The question "Does carrying a balance help your credit?" brings up almost three and a half million search results, so obviously a few people are curious about if that rumor has any truth.

In short? It doesn't. Carrying a balance on your credit card does not help you build credit history any more than paying off your balance in full every month. In fact, paying your balance in full shows that you are a responsible borrower. In other words, you're good for it.

If you lent your friend $200 and only gave you 20 bucks a month back for the year and a half, would you be happy? Wouldn't you rather have it all?

The misconception comes from people thinking that it will make them look more attractive as a credit consumer to lenders because they are actively participating in the process. While logistically that might make sense, in the long run for you and your credit score, it doesn't make a whole lot of sense.

What actually builds credit history is banks seeing that you pay your bill every month. When you pay it in full, even better. Of course a bank wants you to carry a balance, it means more money for them with interest, but that isn't in your best interest, so just stick to paying off your balance in full and you'll be better off for it in the short and long term.



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Alice Bryant's picture

Alice Bryant is the Editor of Creditnet and a personal finance expert with over a decade of experience writing about credit cards, credit scores, debt repair, and more.

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