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I have 20 or 30K in credit card lines, and pay my balance in full each month. I'm wondering if banks track my 100% on time payments and correctly conclude I'm just using them to collect rewards, and they'll never get a penny in interest payments from me. Will that make them reluctant to issue yet another card or do they still make a profit from the vendor payments? My credit rating is 747 which dropped from the 800's when I sold my house. I'm beginning to sense my credit rating has dropped because I avoid paying interest and have no debt.

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    Credit card companies earn money each time you use your cards by charging the vendor a fee.
    – not-nick
    Aug 6, 2016 at 22:56

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The answer to your question is no.

Your credit rating is the way creditors let each other know whether you are in a good position and have a strong tendency to repay your debts, not whether you are an easy target for making money on interest and penalties associated with failing to repay debts in full. The fact that you make your payments on time will definitely not lower your credit rating.

While the banks are not making as much money on you as they would if you carried a balance, they are also not spending a lot of money on you, nor losing a lot of money on people like you failing to repay debts. The transactions charged to the retailers cover the costs of operating your card and then a little bit. That is enough to make you worth keeping as a customer. They are happy with your arrangement.

The formula for credit rating computation is proprietary, but we know what the factors are overall. Making payments on time consistently is a positive, not a negative factor. However, they do look at the number of cards and overall mix of cards and other types of debt. For example, if you have a very large amount of credit capacity in your cards and no mortgage, that could possibly be a negative. If you have opened some of those accounts recently, it could be a negative. If you have a larger number credit cards than they think is good, that could be a negative. There are other things as well that could be bringing your score down. Probably worth it to take a look.

If you want to get an idea of what factors are adding positively and negatively to your credit score, I'd encourage you to visit CreditKarma.com, Quizzle.com, or another source intended to help you understand and improve your credit rating.

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The banks will love you as you pay your debts on time; although they make interest money on people that don't pay full on time, they lose money on those who never pay. In overall, you will be their preferred customer.

Also, they make a more than enough money on you using your credit cards, you are basically a nearly risk-free money making machine for them.

Aside from those arguments, as a 'proof of concept': I do the same thing for 10+ years and have ~840 rating. You can't get much better.

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We don't pay interest, we have credit ratings of 800+. I wouldn't be surprised at a drop from selling your house as you now have no installment debt and thus your debt mix doesn't look at good as it did. (This assumes you don't have something like a car loan but from what you say I don't think you do.) I am very surprised at the size of the drop, though. Is it possible that something went wrong and you ended up with some sort of ding from the sale or related events? Have you checked your report for anything that could have caused it?

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  • Paying $40K in cash for a new car created another ding, as they do a hard credit inquiry even for cash buyers. I just made a cash offer for a house and plan never to pay interest for the rest of my lifeI have 100% on time payments, and have zeroed out all balances. All I've been doing is looking at the Credit Karma categories, but I will take your advice and look at my full credit report. My rating was the highest in the last few months prior to selling my house for $1.1M, in fact I was running on empty barely able to keep paying a $100K HELOC to hang onto the house till escrow closed.
    – DebtSux
    Aug 9, 2016 at 21:44
  • @AntiDebt They can't run credit without authorization these days, paying cash shouldn't cause a ding and even if you authorized it it wouldn't be anything like that big. A 60+ point drop needs more than a couple of credit inquiries. (We did get a ding the last time we bought a car--but that was because I didn't let on it would be cash. We let them think they might make some profit on the interest until the negotiations were over. The effect was only a few points.)
    – Loren Pechtel
    Aug 9, 2016 at 21:55

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