Best timing to pay off cards?

[Jazzzy]

I'm new to this forum. Reading about credit cards made me wonder...

I thought my husband and I were doing the right thing by paying our cards off every month. We waited until we had the statements, and then paid off the entire balances. We use the cards because we get travel credits, which amount to a couple of thousand dollars each year for us.

By paying in this way, however, we probably show pretty high utilization, even though we don't carry open balances. Should we be paying them off before the statements are generated?

It's tough to try to do this all correctly in order to enhance our FICO scores. Thanks for any advice you can give me on the best timing of paying off monthly balances.

Lynette

[haulingthescoreup]

IF you want to enhance your scores, then yes, paying off all but one card before their reporting dates will reduce your reported util.

A lot of us do this as a matter of habit these days, but it's really only necessary if you want to increase your scores, for instance, if you're getting ready to apply for new credit.

Also, with the banks as jittery as they are, I like knowing that when they review my credit reports, they're seeing a trail of $0's. They can tell that I use my cards, so that's not a concern.

[Jazzzy]

Thanks for your response...but I have one question...

You recommend paying off all but one card before the statement date. What is the reason for leaving one until the statement generates?

Thanks,

Lynette

[haulingthescoreup]

Oddly enough, for most of us, our scores drop if all revolving credit reports $0. My guess is that this makes it look like you're too scared to use your credit or something. At any rate, it's built into the scoring formulas.

I tried it once and lost 2-6 points (varied by credit bureau) on my FICO's. Others report losing as much as 10 points. TransUnion penalizes less for this than the other two. Scores recover as soon as a card does report, but it's just a heads-up for anyone wanting maximum scores, as in for a mortgage qualification.

There are some exceptions to the statement date, which is when almost all accounts update: HSBC/Orchard bank cards (not their store cards) and USBank update on the last business day of the month, reporting the balance as of that date. American Express reports the balance on your statement, but they don't report it until 4 weeks later, creating a built-in lag. So if you have any of those, and you want to play the timing payments for util game, you'll need to allow for those exceptions. (And I'm sure there are others --these are the ones I'm aware of. All the other major banks and credit unions use the statement date.)