@Anonymous wrote:
hope I understand utilization clearly.
1. Let's say I have three cards in total. Pay two cards in full at the end of the month. Pay one card down to below 10% of its total credit line.
OR
2. Use only one card, leave the other two at home. the card I'll be using should not be spent more than 10% of its total credit line, and pay it in full at the end of the month?
Which of the action is the correct way to utilize?
Reason I'm asking is, last time I kept all of my cards balance below 10% I got a 25 point reduction in Fico Score and the explanation on Fico Watch was too many cards carrying balance. thanks!!
It's not "end of the month." It's paying your cards to where you want them, 4-5 days before you think that each card's statement is due to post. That's how you control what is reported to the CRA's.
Since I am somewhat overburdened with cards, lol, I have statement dates on the 1st, the 5th, the 8th, the 12th, the 16th, the 18th, the 25th, and the last day of each month. And some of these wander around by a day or two. I could call up and ask that half be set for the 1st and half for the 15th, but I'm used to what I have.
These are NOT the due dates, these are the dates that the statements post/drop/etc. Nearly every CC reports the balance on the statement, on the date that the statement drops. (When the CRA's get around to posting it is another matter.) HSBC and Orchard bank cards report on the last business day of the month (when they bother to report), and the amount is what your balance was that day.
To optimize your util with three cards, pay two of them completely off online 5 days before you think the next statement is due, and stop using them until you get your online statement and see that $0 balance. Then you can use them again. On the third card, pay down your balance to 9% or less of its credit limit, let it report,
don't forget to then finish paying it off, and start up again.
You can use your cards all you want. In fact, it's a good idea. It makes the CCC's happy, because they're making money from the transaction fees, and it keeps the cards active = alive. But by paying early, you are in control of your revolving util, and since that is about 1/3 of your scores, you can see how much power that gives you. Also, by having only one card out of three report a balance, you won't get the "too many accounts with balances" ding.
Until you get used to it, this can be a PITA, and many people don't bother unless they're fine-tuning before an app. But to me, it's just as easy to pay before the statement date as to pay before the due date, and I like how it focuses me on not carrying balances on cards. I just keep track of who's due next and make sure that they're paid off. Every now and then, one slips by, but I have some wiggle room, so it usually only costs me five points or so.
Anyway, just wanted to make sure that you understand that the timing varies on each card, according to when its statement drops. GL!
edit to correct wrong fraction (wish I had a numeric keypad on the laptop!)
Message Edited by haulingthescoreup on
09-02-2008 05:07 PM
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007