Credit Card Utilisation - I'm a Dunce

[Boldilocks]

Our credit is bad (well, DH's is, mine is just none existant as I've been in the US for 7 years so my home UK credit report just has nothing on it, good or bad): EX 453, EQ 453, TU 554.

BUT, using the advice on these forums about getting pre-approval for CC's (going down the list and just getting soft inquiries, and then only having a hard inquiry for the card that finally approved us), we were finally able to get a credit card (this is big, we always get denied), an HSBC (Orchard) one with a $300 CL.  I know to keep the utilisation between 1-9% - so I'll make sure there is never more than a $25 balance on it - but my question is when are you supposed to pay it off to show it to the best effect on your credit report?  After you get your statement?  PIF before you get your statement?

I read that the balance the CA's report is just a snapshot of your balance at one particular time - so if an emergency came up and we used more of thye card that we should, as long as we pay it off before it is reported then that is OK?  If so, is there a set time when it gets reported?

[PayingTheBills]

Keeping your utilization between 1% and 9% is for people who are trying to fine-tune their scores.

With a $300 limit, just PIF every month for now so you can ask for a credit limit increase in 6-12 months.

If you do run want to report a balance, keep it under $25.  Your statement date is what you need to know.  My statement date is the 10th, so I let a small balance show on that day, and then PIF before my balance is due.

Message Edited by PayingTheBills on 02-24-2009 03:27 PM

[Boldilocks]

Oh thank you so much - I had no idea that the 1-9% thing didn't really apply to us (yet!), but that PIF is more important at this point!  I swear, you learn so much here every day!

Oh, hang on though, if we pay in full at the wrong time of the month, will a zero balance make it look like we're not using the card??

[haulingthescoreup]

This might not matter when you have only one card. I wouldn't worry about whether a balance does or does not report, as long as you keep it low. And the highest balance that you've had on the card during the month is also reported, so the score formula will "know" that the card is in use, even with a $0 reported balance.

For now, you want to make the bank happy, and that means using the card a lot and paying it off frequently. Think of it as a slightly stupid debit card, where you have to transfer the funds to pay the charge.

You might want to get familiar with any limitations that there might be for payment. Some banks only allow four payments a month, others make you wait three days between payments and so forth.