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Questions Regarding Credit Cards and Credit Scores/Reports

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Anonymous
Not applicable

Questions Regarding Credit Cards and Credit Scores/Reports

I have a couple questions regarding credit cards and credit scores/reports.

 

Will paying my credit card balance off at the end of each month have a negative impact on my credit score?  I have read that paying off your credit balance each month will reflect positively by the credit bureaus, but maintaining a low balance would be even better.  I have also read that regardless of whether or not the balance is paid in full, the monthly statement balance is still sent to the credit bureaus, correct?

 

Does secure card usage have the same impact on credit scores as credit cards?  I'm sure secure cards will be the first step before obtaining credit cards.  I wanted to be sure that secure cards have the same positive and negative impacts as regular credit cards.

 

Thanks for the help.

 

 

Message 1 of 7
6 REPLIES 6
rckstrscott
Valued Contributor

Re: Questions Regarding Credit Cards and Credit Scores/Reports


@Anonymous wrote:

I have a couple questions regarding credit cards and credit scores/reports.

 

Will paying my credit card balance off at the end of each month have a negative impact on my credit score?  I have read that paying off your credit balance each month will reflect positively by the credit bureaus, but maintaining a low balance would be even better.  I have also read that regardless of whether or not the balance is paid in full, the monthly statement balance is still sent to the credit bureaus, correct?

 

Does secure card usage have the same impact on credit scores as credit cards?  I'm sure secure cards will be the first step before obtaining credit cards.  I wanted to be sure that secure cards have the same positive and negative impacts as regular credit cards.

 

Thanks for the help.

 

 


As long as the secured cards report to the three majors, then yeah, they should have the exact same impact as they age.

 

In regards to paying off in full each month, it really depends on the credit cards report date, how many cards you have, how old they are ect.. Example: lets say you have a $750 dollar credit card that reports on May 17th and you used it to buy a flight for a business trip this week, and the flight was 600 dollars.. If you pay it off on May 30th, the balance will be Zero with the credit card, but they reported 600 dollars. Your utilization would be 600/750 - Which would drive your score down if this was the only credit card you had.

Starting FICO Score: October 2010: TU 498 | EQ: 502
Current FICO Scores:: May 2022: TU: 784 | EQ: 770 | EX: 790
Message 2 of 7
Anonymous
Not applicable

Re: Questions Regarding Credit Cards and Credit Scores/Reports

Yes, it is case by case as rckstrscott said.  
 
The following factors that you need to consider:

・Number of credit card(s) you have

・CL of each card and total  (use this to calculate your util)

・Closing Date

・Statement Balance  (use this to calculate your util)

・Util %  ... totally and individually

・Age of your cc(s)

 
I give you my case:

・Number of Credit card ... Total of 9 ccs

・CL of each card ... CL of $3k ~ 10K, and total of 65.7k (but report will be 61.9k due to the Freedom World MC report highest balance only)

・Closing Date ... Most of my ccs will close in mid of the month

・Statement Balance ... I carry the balance on the only 3 ccs and PIF by the due date, and PIF before its closing date on the 6 ccs.

・Util % ... Total util is around 1%, and highest is around 6.67% on my Discover More (March ~ May it because of promo cash back bonus.)  Normally highest one is around 5% on my Freedom VISA.

・Mine is average of about 4 yrs 3 mo ~ it runs between 2 yrs to 12 yrs.

 
* Don't let your cc(s) control you!  You control your cc(s)!! *  
Message 3 of 7
mauve
Valued Contributor

Re: Questions Regarding Credit Cards and Credit Scores/Reports

Your CL is not a factor in FICO scoring directly.

 

For ideal CC usage, you're going to want to have a balance of less than 9% reporting on one card and a $0 balance on all of the others.  Reporting is not the same as carrying a balance - if you pay it off right after it reports, you'll be OK.  Your utilization (% of CL used) is where CL comes in - a $100 balance on a $200 CL card is 50% utilization while a $100 balance on a $1000 limit card is 10% utilization.  50% utilization on either one is scored the same.


Starting Score: EQ 583 TU04 619 EX 592 (lender pull) 2010
Previous High Score: EQ 700 TU04 712 EX 726
Current Score: EQ 740 TU(Discover) 750 EX(AMEX) 747
Goal Score: 740+ all around


Take the myFICO Fitness Challenge
Message 4 of 7
lenz99
New Contributor

Re: Questions Regarding Credit Cards and Credit Scores/Reports

It depends on the CC's reporting pattern. Say if you want to lower the util%

 

If your CC's statement cuts on 15th of each month:

 

Some CC will report the statement balance, you need to PIF for previous statement balance and also make payment for purchase made in current statement period before 15th to lower the statement balance thus get better util%.

Some CC will report the balance of certain date, say the balance of end of the month and you may want to make payment before 30th to get better util%.

So you might need to keep an eye on your report or ask in the forum to get a better idea.

 

However, if you're not looking for new credit, then util% doesn't matter that much, just use the card and PIF before the due date.

 

And, absolutely no need to carry a balance(I assume you mean not PIF).

Message 5 of 7
Anonymous
Not applicable

Re: Questions Regarding Credit Cards and Credit Scores/Reports

Good info, thanks guys.

Message 6 of 7
Anonymous
Not applicable

Re: Questions Regarding Credit Cards and Credit Scores/Reports

Any time ~   Good Luck!

Message 7 of 7
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