Originally posted by Living-In-Clip
When I went to get my loan for my newest car, I had one thing on my credit. That was my previous car, which I owned for six months and paid off. When I went to get the loan, I was told if you pay everything off early it doesn\'t actually count towards your credit, as much as if you make smaller payments.
-shrugs-
I think you guys have this slightly wrong. The credit reporting companies analyze your credit history in a very predictable way.
When you try to apply for a "big" loan like a car or a house, the most important variable is your history in how well you paid back other "big" loans in the past. Therefore, it\'s much easier to finance a car if you\'ve already financed and paid off another car before, and all payments were made on schedule. Likewise with a house purchase.
The other "smaller" credit items on your credit report (such as credit cards) are insignificant compared to the big loans, unless they are bad, in which case they will hurt your credit rating. The ideal way to use credit cards as far as your credit rating is concerned, is to pay them off in full every month. Then your report will say that you had a Visa card for 8 years, always made all required payments, and never had a late payment. That\'s all the benefit you can get from it. It\'s not especially helpful to your overall score, but it doesn\'t hurt. If on the other hand you constantly carry a balance of $2,000, then when you try to get a car loan, they will say "You want to borrow $12,000, but this says you already owe $2,000." It will work against you. Carrying a balance cannot really help you, it can only hurt you.
Other stuff like paying utility bills does not benefit your credit rating hardly at all. What matters is your current income, how much you currently owe, and your history in paying off previous loans. Credit card debt is not as important as loan agreements.
