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Established Contributor
Posts: 635
Registered: ‎07-29-2010
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Re: Ideal time to make the monthly payment?

My scores don't budge until 35% so I just speak from my personal experiences.

 

Like I said before though, don't stress about utilization unless you are applying for something. If you make a really large purchase and get your utilization up to 35-40% don't worry. The score effect, if any, will be reversed the minute you make a payment and your card(s) update next. 

 

Its not that serious.

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Valued Contributor
Posts: 2,323
Registered: ‎09-16-2011
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Re: Ideal time to make the monthly payment?

For people with new credit the safest/wisest method is to pay more than your expected minimum payment as soon as each new month statement begins. You may have to push the payment to the company. This way there is no way possible to be late on a payment because you forgot. 

 

 

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Frequent Contributor
Posts: 342
Registered: ‎04-21-2012
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Re: Ideal time to make the monthly payment?


OptimalFICO wrote:

Note, the recommendation of many to keep balances below 10% of CLs isn't an imaginary nor magic number... It is based upon FICO's scoring algorithim. According to FICO scoring expert and insider, Al Bingham, authori of The Road to 850, "Any reported balance above 10% of the credit limit is considered a high debt ratio to FICO. As this ratio increases, more pressure is applied to FICO scores... Any revolving account balance less than 10% of its high credit limit is the point where FICO will not penalize FICO scores. Anything above this ratio will drop FICO scores." The impact can be slight to substantial, so be especially attentive to accounts with smaller CLs (e.g., with a $300 CL, work to keep your reported balance below $30, either by charging less or making a payment in advance of your card's reporting date).


Your statement actually supports my assertion rather than counters it.  "As this ratio increases" = is the same thing that I am saying that your score is variable with the utilization. 9% is incrementally better than 10% which is incrementally better than 11%.  9% is not MAGIC in of it self.  You are not going to see anything but a incremental difference in score between 9% and 10%, etc. 

 

Do you honestly believe the author is implying that a 2% utilization is no better than a 9% and that there is a SPECIFIC cutoff at 10%?  Meaning no penalty below 10% but and increasing penalty above 10%?  To support that kind of statement I want to see hard validation!  As far as I know, the algorithms used are not published so proving that statement is only going to be done by real world examples.

 

I say phooey - there is no magic cut off but merely an incremental gain. In general a lower utilization is simply better than higher based on an incremental differences.  If someone wants to physically "chase" these numbers to prove the minutia of a point, they are welcome to it.  I would read that post with interest. Smiley Indifferent

 

Valued Member
Posts: 203
Registered: ‎07-05-2009
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Re: Ideal time to make the monthly payment?


Roarmeister wrote:

OptimalFICO wrote:

Note, the recommendation of many to keep balances below 10% of CLs isn't an imaginary nor magic number... It is based upon FICO's scoring algorithim. According to FICO scoring expert and insider, Al Bingham, authori of The Road to 850, "Any reported balance above 10% of the credit limit is considered a high debt ratio to FICO. As this ratio increases, more pressure is applied to FICO scores... Any revolving account balance less than 10% of its high credit limit is the point where FICO will not penalize FICO scores. Anything above this ratio will drop FICO scores." The impact can be slight to substantial, so be especially attentive to accounts with smaller CLs (e.g., with a $300 CL, work to keep your reported balance below $30, either by charging less or making a payment in advance of your card's reporting date).


Your statement actually supports my assertion rather than counters it.  "As this ratio increases" = is the same thing that I am saying that your score is variable with the utilization. 9% is incrementally better than 10% which is incrementally better than 11%.  9% is not MAGIC in of it self.  You are not going to see anything but a incremental difference in score between 9% and 10%, etc. 

 


I misunderstood, I thought you were asserting that there is no difference between say 9% and 35%. As with most everything with FICO, it's all incremental and also depends on the rest of one's portfolio and usage. So what doesn't impact one person's score significantly may have a more dramatic impact on another's.

 

Frequent Contributor
Posts: 342
Registered: ‎04-21-2012
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Re: Ideal time to make the monthly payment?


OptimalFICO wrote:

I misunderstood, I thought you were asserting that there is no difference between say 9% and 35%. As with most everything with FICO, it's all incremental and also depends on the rest of one's portfolio and usage. So what doesn't impact one person's score significantly may have a more dramatic impact on another's.

 


Agreed.  Another poster is also correct in saying that unless you are applying for additional credit and doing a credit pull that there is little point in monitoring the ups and downs of your credit card in fine detail.  Since their is no credit score history in the credit score, a person could go months or even years without worrying about whether their score varies or is at a peak.  But to establish good spending habits and discipline I would advise a person to aim for 10% or less utilization.

New Contributor
Posts: 51
Registered: ‎08-14-2012
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Re: Ideal time to make the monthly payment?


Roarmeister wrote:
Do you honestly believe the author is implying that a 2% utilization is no better than a 9% and that there is a SPECIFIC cutoff at 10%?  Meaning no penalty below 10% but and increasing penalty above 10%?  

I know you weren't replying to me, but *I* honestly believe that is what the author is implying, assuming those are direct quotes from the book.  Why specifically mention 10% if it's a continual scale all the way down to zero?  More specifically, he says:  "Any revolving account balance less than 10% of its high credit limit is the point where FICO will not penalize FICO scores."  That seems pretty clear to me.  I'm not saying it's correct, I have no idea.  But that definitely seems to be exactly what the author is implying.  And honestly, it makes perfect sense to me.  Why would you drop someone's score down for just using their credit card?  How many people with good credit pay for everything with cash or check these days?  If you use your credit, you are going to have a balance, unless you specifically log in or call just before the cut-off date to find out how many new charges have hit, then make an instant payment to cover them.  It makes sense to me to have a cut-off where below that limit it's just considered normal use of credit as a convenience, as opposed to an indication that someone is in NEED of their credit line.

Frequent Contributor
Posts: 258
Registered: ‎06-10-2012
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Re: Ideal time to make the monthly payment?

This is a good question, and the answers on here have been informative as usual. I just thought I'd add my 2 cents.

Before coming on this forum, I always paid my cards in full every month around the 1st of the month. My statements always cut around mid month, and I would pay the statement balance on the 1st. That has always worked fine. However, when I decided I wanted to get myself an Amex last month, I knew I would need to get every last point I could on my FICO score. So, in addition to my regularly-scheduled payment on the 1st, I made an additional payment on each card right before the statement cut, so on my reports for last month, I showed a 1% balance on one card and 0% on the rest. This strategy bumped my FICO score almost 30 points, and I was approved for an Amex.

So, in short, most months it doesn't really matter when you pay, as long as you pay on time. If you need a FICO boost in any given month, make sure you're paid in full before your statement cuts.

Starting Score: 617 (EQ 6/10/12)
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New Contributor
Posts: 51
Registered: ‎08-14-2012
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Re: Ideal time to make the monthly payment?

[ Edited ]

LionLaw wrote:
in addition to my regularly-scheduled payment on the 1st, I made an additional payment on each card right before the statement cut, so on my reports for last month, I showed a 1% balance on one card and 0% on the rest. This strategy bumped my FICO score almost 30 points
But what was your typical utilization before that?  I did the same as you, but my low CL combined with high monthly spending had me around 75% utilization despite PIF every month.  Like you, I paid extra the month I wanted to app for new cards, but I only did enough to get me down to 8%.  That still got my FICO from 753 to 807.  But I have no idea if it would have been any different if I had paid it down to 1%.

 

Valued Member
Posts: 203
Registered: ‎07-05-2009
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Re: Ideal time to make the monthly payment?

I agree, great discussion. Another point is that sometimes life happens and one might need to appy for credit without sufficient time to plan to manipulate FICO scores first, especially considering the reporting lag. So for scores that might be less than stellar or borderline, I feel like it pays to give enough attention and management to it that you know you can get credit when you need it. Again, it all depends on individual circumstances. My scores, spending habits and CLs are such that I don't need to worry about it. My fiance's on the other hand are such that we need to actively manage his usage.

Established Contributor
Posts: 731
Registered: ‎02-15-2012
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Re: Ideal time to make the monthly payment?

Honestly, as long as you always pay on time, it really doesn't matter that much.  I've never worried about paying before the statement cutting or manipulating utilization and I've never had a credit card application be denied.  I know my utilization must have been high on some of my early applications, like Capitol One and on my Amex Gold card application, and I was still instantly approved.  Since then, most of my spending has been on my Amex, which isn't factored into utilization.  Still, I had a balance on that and my 2 other cards when I applied for the Sapphire Preferred 2 weeks ago and it was no problem.  I'm not applying for any new credit cards any time soon, but I don't think I'll ever bother worrying about accounts with balances or utilization for a credit card application, for a car loan/mortgage sure, but not a credit card.  If you are paying in full, your utilization probably won't really be that high anyway.  If it is, you need to just work on raising limits and/or get a charge card.

FICOs (2/24/12): EX 752, EQ 740
Chase Sapphire Preferred, Freedom; American Express PR Gold, Blue Cash Everyday

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