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Comment by at-fates-hands | Hacker News Reader

Well credit cards are a pretty recent development. The first general purpose card wasn't created until 1966. Sure, you can trace different forms of credit all the way back to the Crusades and the Knights Templar, but credit cards are a recent invention.

If you think it about this way, the greatest generation never used credit. They saved until they had the money to buy stuff. My grandparents never had credit cards, and it wasn't until my parents were in their 40's and quite wealthy before they started using credit cards.

If anything, you should use them only to maintain your credit rating. Keep a small balance (under $100) and use them to make small purchases. That way, you can reap the benefits to your credit score, without putting yourself in a huge hole.

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> If anything, you should use them only to maintain your credit rating. Keep a small balance (under $100) and use them to make small purchases. That way, you can reap the benefits to your credit score, without putting yourself in a huge hole.

Don't leave the balance, pay it off every month. It doesn't benefit your credit score.

From a Bank of America FAQ [0]:

Fiction: You must carry a balance on your credit cards to build a credit history.

Fact: You do need to use your credit cards to build a credit history, but that doesn't mean you must carry an unpaid balance. In fact, your best strategy is to use your credit cards and pay off the bill in full each month so you keep your overall debt-to-credit limit low.

[0] https://www.bankofamerica.com/credit-cards/education/5-facts...

It's hard to know exactly goes into the credit score calculation since the algorithm is proprietary but, anecdotally, you can carry a small balance (e.g. <10% of your credit line) without it having a negative impact on your credit score.

Yes, but you're paying interest. Again, anecdotally, I've never carried a balance. I've had two loans (student loans, paid off; auto loan, almost paid off) and never carried a balance on my CCs, my credit scores (across all three) are fine. It doesn't make sense, to me, to pay more interest than you have to on something you can afford to pay off (the auto loan is only still around because I'll lose another $100 to interest over the last year of the loan, and would rather keep my cash on hand in case I need it for medical or other emergencies).

Not necessarily. For FICO scoring purposes, you may carry a balance and still never pay a dime in interest: FICO considers your balance at the end your cycle, not the balance after your due date.

For example, if I have a balance of $800 when my statement was generated, my bank is going to report that $800 to the credit bureaus and FICO will calculate my credit score accordingly. So, for this cycle at least, it doesn't matter that I pay in full before my due date (thus avoiding any interest expense), my credit report will show an $800 balance on my account. This is why it's more likely to experience big month-to-month jumps in your credit score when you have fewer accounts/lower credit lines.

I do agree with you, I think that not carrying a balance doesn't have any negative impact on your credit score.

I think there may have been some confusion on my part. When I hear "carrying a balance" I think "not paying the bill in full each month". From what you just wrote I don't think you're talking about what I imagined. If that's the case then my apologies. I just meant that you shouldn't carry a balance over each billing cycle (which would accrue some interest) which is advice that I've seen people give before.

And even the relevance of the credit score depends on where you are and what you're planning to do with it. Where I live you can get mortgages without a credit history as they value more that you can live within your means than having a history of going over it.

Lenders do rely on a variety of factors when deciding who to lend money to but the credit score (as in FICO in the US) doesn't depend "on where you are and what you're planning to do with it".

Yes, of course, that was a typo from me. I meant to write "... the relevance of the credit score". Thanks for pointing it out.

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