01-08-2014 11:20 AM
I am someone that has been used to PIF using my debit cards for over 15 years. NOw that I have returned to the CC world what are the pros and cons of paying balances in full before statement cut off?
For example, is there ever a reason to let a high balance report on a credit report? Or not?
Thanks for any tips.
01-08-2014 11:36 AM
01-08-2014 11:41 AM
My concern is whether a reporting high balance can trigger other creditors for a FR or other steps of penalizing. Or can it help in someway to have a reporting balance?
For example does it help to show that one has maxed out a credit line and able to pay off right away? Or, better to keep the high balance off the CR?
01-08-2014 11:41 AM
01-08-2014 12:28 PM
Maxing an account is typically considered a negative for FICO scoring purposes.
Individual lenders may have additional criteria that they apply.
There may also be a tie-in to DTI calculations.
01-08-2014 01:33 PM
In terms of FICO PIFwill push the scores back up and maybe even add some bonus points. Maybe I need to clarify my question further.
What are the pros and cons to letting a high balance report on the CR?
Will other lenders view this as healthy or a sign of trouble?
Will it help to motivate lenders to approve a CLI in the future if they see a high reporting CL follow by a PIF the following month?
01-08-2014 01:45 PM
01-08-2014 01:57 PM - edited 01-08-2014 02:00 PM
Fico2Go - in my readings from various posters and financial writers coupled with my own deep experience, 100% paid off debt does not always yield the highest FICO Scores. The scoring likes a ittle amount owed to show.
To actually let 0 owed to the CRAs report will ding your score in most cases. FICO takes into account proper use of credit. Not using it is actually viewed as a neg.
however to your question- you were extended the credit to be used. creditors like to see use of the credit extended. Letting all your accounts report will in fact lower your score but this should not determine whether you let the balances report unless you are actively seeking credit. Now.. This doesn't mean use up 50% utility on all cards and let it report if you do not have the means to pay immediately. Letting high balances report to the point of drastically reducing your FICO could result in AA from lenders that have extended you credit. It is a red flag... But in general, let the balances report and PIF each month. This will not be a problem. Some lenders such as Barclays and Citi actually view this as preferred behavior. Hope this answers your question
edited end to correct grammar
01-08-2014 02:00 PM
You're overthinking things.
If you let a high balance report, for example, if you max out a card one month, it is going to have a negative effect on your score. That will go away once you pay it off. None of your creditors are likely to freak out and take adverse action unless you maxing out a card is coupled with other negative behavior such as maxing out all your lines and making only minimum payments for an extended period of time, or you max out your lines and then start letting lates report, having collections pop up, etc.
On the flip side, some lenders like to see you using their card before giving a CLI. But they will have record of your usage regardless of what you let report. It's possible that some lender cares what your previous high balance with other lenders is when evaluating a CLI request, but I doubt that it factors in at all. And even if it does, based on what we already know about lenders rewarding PIF customers with clean reports, any effect you could get out of letting a high balance report to influence a CLI has to be negligible.
Stick to the basics and the rest will take care of itself. Pay your bills on time, PIF when you can.