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Contributor
phonic
Posts: 136
Registered: ‎12-30-2013

Question about PIF and Utilization

I had a quick question I couldn't find the answer to in various threads I've read.

 

I understand the general rule of thumb is to keep your average utilization on credit cards low (<20%) and ideally pay in full every month. We always pay all our CCs in full and have $0 of real 'revolving' debt. However, quite often we use the same credit card for a primary, and average ~$3-4k/month on it. Up until recently, it had a $10k limit (which we just bumped to $16k). From a simple point of view, this would have looked like a 30-40% utilization on that card. With the holidays, we actually had $6-8k, which is 60-80%. However, most of our other cards had either $0 or a few hundred on them (also PIF). So with ~$100k in available CLs across all our cards, our total usage is 5% on average with a peak of ~10%.

 

Anyway, here is my question. In looking more closely at my EQ CR, I see that the accounts show, each month, the balances, the minimum due AND the amount paid from the previous month's bill. Every month it shows I paid the exact amount owed from the previous month. So, if that is taken into consideration, it does show on the report that I PIF and have basically $0 in revolving debt. 

 

Everything I've read indicates that there is no difference to charging $X on your CC and paying only the minimum versus charging and paying off $X every month.

 

So, does that 'amount paid' figure get taken into consideration at all during the review or scoring process? If it does, than shouldn't that mean that you could spend close to your limit and not be affected negativelt? If it doesn't, shouldn't it be? I would assume that having the ability to pay $10k in a single month would be a very good indication of a person's financial status.


Limits: PRG=NPSL, CSP=$16k, BCP=$30k, DIT=$15k, USAA=$6k, CDW=$12.5k, IHG=$9k, BBY=$2k, BOA=$13k
Mega Contributor
coldnmn
Posts: 11,011
Registered: ‎08-08-2011

Re: Question about PIF and Utilization

A person would take it into consideration.  Unfortunately computers don't mostly or never do. Some cc companies their underwriters can't overturn a computers decision. That is why you should have only one card reporting under 9% utilization. YMMV

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Valued Contributor
daybreakgonesXe
Posts: 1,702
Registered: ‎11-17-2012

Re: Question about PIF and Utilization

You are right, the "amount paid" is not reflected in your score, but could be considered in a review. Obviously paying the minimum each month on a very high balance could look bad.

You can spend $1 a month or $10k a month, and as long as you pay it before your statement cut, it will NOT affect your score. However if you let it report (let it post for next statement), then it will affect your report.

Hope that helps clarify!
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Contributor
phonic
Posts: 136
Registered: ‎12-30-2013

Re: Question about PIF and Utilization

Thanks for the replies. You basically confirmed what I thought - that even though that metric is listed, outside of a manual review it isn't used by most if not all automated systems. 

 

With my new BCP card coming, that should take a large chunk of the charges but still stay <10%. And that will free up alot of the spending we normally do on our CSP card, which should put that around 10%. 

 

I still think that it would make sense for companies to take that into consideration on your report/score.


Limits: PRG=NPSL, CSP=$16k, BCP=$30k, DIT=$15k, USAA=$6k, CDW=$12.5k, IHG=$9k, BBY=$2k, BOA=$13k
Mega Contributor
coldnmn
Posts: 11,011
Registered: ‎08-08-2011

Re: Question about PIF and Utilization


phonic wrote:

Thanks for the replies. You basically confirmed what I thought - that even though that metric is listed, outside of a manual review it isn't used by most if not all automated systems. 

 

With my new BCP card coming, that should take a large chunk of the charges but still stay <10%. And that will free up alot of the spending we normally do on our CSP card, which should put that around 10%. 

 

I still think that it would make sense for companies to take that into consideration on your report/score.


You can spend as much as you want just have all but one paid <9% before statement close.

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