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08-13-2013 11:25 PM
08-13-2013 11:33 PM
While it is encouraged to PIF before a statement cuts, is there a benefit to let a statement cut with a high balance reported to the CRA? Does it show future lenders that you can responsibly pay off your high balances, thus giving a positive effect on your credit? I currently have a pretty high Balance at over 50% util on my Freedom and am thinking whether I should pay some of it down before it reports. I'm not planning to apply for any more credit as I am in the garden and recently approved for a Barclays last week. Any
it helps show usage, so in a way it's a good thing.
if you are not planning to apply for any new credit, feel free to let high balances report. Just don't drag high balances while making only minimum payments for extended periods of time, and you should be fine.
08-13-2013 11:49 PM
08-13-2013 11:51 PM
High balance not used in FICO scoring except for rare cases (where no limit is shown for card. It is then used as the card "limit," but only under certain circumstances). However, who knows how high balance might be used for other internal scoring models or CL determination etc. I would think it would look good under manual review. Remember there is no standard for high balance reporting which might be why no one publically says they use it.
The important thing to remember about utilization is that FICO score is a snapshot of your credit in time. Since utilization is so easy to change, you can worry less about managing it unless you are planning a credit event in near future. So in OP's case, I would allow high balance to report unless they have credit event coming up. Yes OP's FICO will drop, but when it reports with low balance next month, his/her FICO will bounce right back.
08-13-2013 11:53 PM
08-14-2013 09:17 AM
Pure speculation on my part, but I suspect showing the occasional high balance may increase your odds of receiving targeted offers. I've seen anecdotal evidence of it personally, and it logically makes sense (CCCs want to target big spenders). I made a thread about this idea here: http://ficoforums.myfico.com/t5/Credit-Cards/Spiking-Utilization-to-Trigger-Targeted-Offers/td-p/227...
08-14-2013 09:31 AM - edited 08-14-2013 09:53 AM
I thought lenders determined usage by Date of Last Activity? I don't think HB plays any role in systematic decisions but probably even manual. I have never seen anyone approved or declined because of what's reported as the high balance.