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Does Carrying a Credit Card Balance Build Credit?

 Money Girl has the scoop on making wise credit decisions

By
Laura Adams, MBA,

 

Q. Is it better to pay off your credit card balance in full each month or leave a balance in order to build credit?

A. It's far better to pay off your credit card in full each month.

While it's a fact that you have to use credit to build credit, carrying a credit card balance from month-to-month doesn't increase your credit score -- it just increases the amount of interest you have to pay! The best way to build credit is to pay bills on time, charge no more than 30% of your available limit on credit cards, have a mix of credit types (credit cards and installment loans), and accumulate a long credit history. 

Credit Cards image courtesy of Shutterstock

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