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 Dear
Dr. Don,
I recently managed to pay off all my credit cards
and pretty much all outstanding debt. My credit
scores are 712, 714 and 801. Someone told
me I should keep using my credit cards and paying
them off right away to further improve my credit
score. Is this true?
-- Bob Balance
 Dear
Bob,
Congratulations on taming the debt monster. Not
carrying a balance on your credit cards is a good
strategy to keep down your interest expense. You
won't be as big a profit center for the card provider,
but it won't hurt your credit score.
The myFICO.com Web page, "Improving
your FICO score," shows that you're doing
all the right things in managing your credit.
Continuing to use your credit cards and pay off the balance each month really won't do much to further improve your credit score. You have great credit. It's a little disconcerting that you are in two different brackets with your credit scores because of the large difference between two of the scores and the third.
Reviewing the information on the three credit reports should give you an idea about why there is this disparity. The credit scores themselves also typically list three reasons why your score isn't higher. Comparing those reasons across scores should also help you identify why there is a disparity.
Your credit score is based on the information in your credit report. For an open account the credit report shows the payment history, credit line and most recent balance on the account. Micromanaging the payment streams isn't really going to buy you much when you pay off your balances each month.
The myFICO.com Web site has a calculator, "A
Higher FICO Score Saves You Money," that
shows you how improving your credit score can
reduce your interest expense for different types
of loans but for at least one of the scores you're
already at the top of the heap.
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