Help! Confused about credit card util

[Anonymous]

I'm trying to figure out how to go about showing a low util on my credit cards. Let's say I charge $35 on Card X on March 15. Statement date is March 23, payment date is April 21. Do I let the $35 hit the statement then pay before the due date? If I let the $35 hit the statement won't I then be assessed finance charges? If I pay the $35 before the statement date what will report to the CRAs? Have I confused anyone else yet?

[Uborrow-Upay]

Hi, Rhodes7609!

If you want to show a $0 balance on your credit reports, pay the balance online, in full, on or before March 23.

If your make your PIF payment after March 23, but before the due date of April 21, your credit report will show you owe $35, even though you paid to $0.  

You will not get finance charges if you PIF by the due date, unless you owed a balance from the prior statement which was carried over.  In that event, you will have an interest payment due for the following month, even if you don't use the card after March 23.  See the terms of your account concerning "grace periods".

Hope this helps!



 

 

[Anonymous]

Hi back, Uborrow-Upay.

Yes, this is very helpful. I'm in the process of paying down my overall debt and have most cards at $0. I'm now trying to set up a schedule for using them to show low util and keep the accounts active so the banks won't be tempted to close. Thanks for the reply - I really appreciate it!

[Uborrow-Upay]

Anytime! 

And it's kinda nice having those cards at $0, isn't it?  Good job.

[Anonymous]

More than kinda! Now that I'm better educated about debt, credit, and FICO I'm bound and determined to do everything I can to make myself as creditworthy as possible. Not that I'm planning to go on an app spree, but when I need credit in the future I want to be able to take advantage of the best rates possible. I also hope to never sweat about debt again. Too much stress!!

[woozy]

If you keep your utilization under 9%, do you still need to pay before the statement date?

[Wolf3]

My understanding is that 0 to 9 % utilization gives you the same FICO score.   So, no need to pay before the statement date.

IMO, this practice of paying before the statement is only useful when you are planning to apply for new credit or CLI.

[haulingthescoreup]

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woozy wrote:
If you keep your utilization under 9%, do you still need to pay before the statement date?

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Only if you're getting dinged for "too many accounts with balances." If this is so, you might want to have all but one or two CC's (depending on the number of installment and mortgage accounts you have) report $0.

Again, this is strictly a FICO scoring tweak, often used by those of us who've done all the history clean-up we can and are now bored, waiting around, and torturing our scores. As long as your overall util is OK, you probably don't have to worry about lender reaction.

For those who use multiple cards a lot, and don't pay until their statements post, you will look as if you have excessive util, because the reports don't show that you're immediately paying your balances before they are due. For those in this situation, it would probably be a good idea to pay at least some early, because your lenders are softing your reports, and they might think that you have a whole lot of debt and take AA.