<prompt> Human: I need to go on a rant for a little bit.I wanted to do something a little bit more constructive than write an article with this title, but today it looks like Im going to reduce myself to cleaning up rumors. Yes, rumors; you know, that friendly little bit of advice that at least one person decides to regurgitate when someone mentions credit score. It usually goes something like this: My friend told me that if you want to build credit quickly, you should leave a small balance on your credit card so you can build trust with the bank. If you pay interest, they will see that you are a trustworthy consumer, and that you can handle paying them off. Otherwise, it looks like youre not utilizing your cards and that looks bad on your report.Usually when I ask where people heard this, they say it was their friend who works as a teller, or maybe a friend who sells cars for a living, or someone who does collections at a hospital. News flash: not everyone who works in a hyperbolically related industry knows what theyre talking about.Not only is the statement above false, but even if it werent false, its still horrible advice. With most credit cards nowadays running an average of 15-20 APR, you cant afford how bad this advice is. And thats if it werent a complete and utter lie.Let me give you a small tip that might save you hundreds of dollars a year the next time someone farts out something like that: You dont need to pay a dime in interest for a good credit score. If you do, youre paying a premium for something thats exactly the same as the free version. And the free version goes something like this: Always pay your statement balance in full, every month, by the due date. This will allow you to avoid paying interest, and your credit utilization will be recorded for free.Its really just that simple, and its the only way you should be building your credit score. Paying interest doesnt improve your score faster. It only costs you money, and it makes you look pathetic when you have to explain to your new finance girlfriend why the size of your savings account is so small.All right, zonination. If youre so smart, then why is this rumor false?Ill tell me why. Its because the interest that you pay on a credit card is not reported to the credit bureaus.When you receive your statement, the statement balance is the number that is provided to the bureaus. This is the grand total that appears on your monthly statement from the bank. For credit cards, the bank also reports your available credit. If youve ever looked at your credit report which you should do every year, you will see that the only two numbers reported on your accounts are your statement balance and your available credit. The month after your statement, they record whether you paid on time. Wash, rinse, repeat.Its almost completely needless to say that the FICO algorithm uses only these three criteria when calculating your payment history and utilization. In case the gears arent turning in your head, this means that interest paid has no additional effect on your score. So its really just the same as paying your statement balance in full by the due date. Imagine that.But my friend X is an expert who works for Y, and she told me to carry a balance!Your friend is an idiot, and she is costing you a fortune. Youre free to believe what your friend says, but that only makes you both wrong. Just because X claims something doesnt mean its trueBut if you really want to throw your hard-earned cash into an eternal abyss of broken promises on behalf of your so-called experts advice, I suppose I cant stop you. Its your money, after all, and youre free to waste it on whatever you want.But Im nervous that paying in full might look bad on my report.Look at what I just said above. The only things your banks monthly report contains are your statement balance, available credit, and whether you paid on time. Interest is not recorded and theres nothing to get nervous about.When your statement balance comes in, youve been recorded. You will already look good utilizing your credit as long as your statement says something other than 0. Then your choice is whether or not to pay in full.Really, the only thing that will make you look bad are the bankers snickering at you behind their mahogany desks, all because you believe a rumor that pulls a ton of revenue from suckers who fall for this kind of crap.Thats just your opinion, though. I followed Xs advice, and it worked!Thats not why it workedThe reason it worked is because, in addition to paying interest you never needed to pay, you also built a payment history which would have happened anyway. Your credit score didnt get bonus points or extra trust because your bank made some quick cash off of you. Your credit score got a boost because you made on-time payments that got reported to the bureaus. It would have worked exactly the same if you had paid your statement in full.What if I took out a loan to improve my credit score instead?What? Whoa, wait! No. Lets back up here. Look at what I said above. You dont need to pay a dime in interest for a good credit score. Obviously, while its disappointing that there is no quick way to build a score, you dont need to take out a loan. Credit cards are a loan, and paying them off in full every month builds a good enough payment history to bolster your score without paying interest. There are tips and tricks to boosting your score that I will examine later on, but starter loans are only a last resort.What Ive been trying to say for this whole post is that paying interest when you can afford to sidestep it is stupid. The whole point of having a good credit score is to pay lower rates on loans that you need to take out. Paying interest to avoid interest is an exercise in wastefulness, and its completely unnecessary when you can build your score for free.So if theres one thing I want you to take away from this, its that you can build a good credit history without paying the premium rate. Repeat after me: I, name, will always pay my statement balance in full, every month, by the due date.  <response>: This post should be linked to in the right column - 