Revolving & Installment Balances

[adamseve]

Ok...I PIF every month on my credit cards, but I want to make sure I don't get a ding in the near future.  So, here are my questions:

1.  If I PIF on ALL revolving debt will I get a drop in my score because they show $0 balances?

2.  If I PIF on ALL revolving debt, but still show installment loan balance will this cause a ding?

 I want to keep my scores as high as possible so I need to make sure I'm doing the PIF correct and handling balances correctly relative to the type of account.

Thanks for the assistance.

[Anonymous]

you should leave a small balance on one credit card.  you might get dinged for 0 balance. I did.

Installments are treated different i think.  As long as they are up to date I believe it is in your favor (at least with TU)

I'm sure you will get some more input from others.

[haulingthescoreup]

casinoannie has it right.

The exception (you know there's always an exception, right?) might be those who are up in the very high 700's and the 800's, who can show all $0 for a while and get away with it. TU alone just dinged DH for all $0's for six months running, go figure.

[Anonymous]

I thought it doesn't matter whether you PIF or not, your statement balance will be reported as such. On EQ, there is no way to distinguish between a revolving balance and PIF, unlike on EX.

I thought you will only get dinged on $0 balances if you PIF before the statement cuts, something you might consider with high balances.

[haulingthescoreup]

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Ulan wrote:

I thought it doesn't matter whether you PIF or not, your statement balance will be reported as such. On EQ, there is no way to distinguish between a revolving balance and PIF, unlike on EX.

I thought you will only get dinged on $0 balances if you PIF before the statement cuts, something you might consider with high balances.

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Not sure what you're asking, but what almost all CCC's report is the balance due on the statement. If you PIF beforehand, the balance will be reported as $0. If you partially pay beforehand or wait until after the statement posts to pay anything at all, the balance reported will be whatever is on the statement.

All three reports "know" if the card has been used within the previous cycle period.

The only ding is if all the reported balances are zero. So we usually say (for those who want to play this particular game) to let one or two report a minimal balance, and then PIF them after the statement drops, so that you don't pay any interest. I really hate paying any form of interest, other than on my mortgage and car loan, which are pretty much necessary evils.

[Anonymous]

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@Anonymous wrote:

I thought it doesn't matter whether you PIF or not, your statement balance will be reported as such. On EQ, there is no way to distinguish between a revolving balance and PIF, unlike on EX.

I thought you will only get dinged on $0 balances if you PIF before the statement cuts, something you might consider with high balances.

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Yep. If you hold off paying until the DUE DATE not earlier so it can still post the balance on your CR on at least 1 CC it should report a balance still. The trick to reporting a bal is PIF before or after it updates on your CR. For example. My statment for a CC closes on 20th of the month and reports to CRAs on the 25th shortly after. My due date is not until the 10th of the next month. As long as I PIF after the 25th it will report a bal. If I PIF before the 25th it reports a $0 bal.

Installments are there or not there. Can't really tweak them much. However for a general rule try to have as few accounts report a balance on your CR but not less than 1 revolving account reporting a small bal regardless of all else. Of course this only matters the day you need your credit score up. Otherwise it has no long term affect PIF or not PIF, $0 bal or not. What does matter is that you have activity on all accounts at least once every 6 months to prevent going dormant.

Message Edited by ilovepizza on 10-03-2008 03:59 PM

[jmbfl]

To add a slight layer of complexity to this matter, if I recollect correcty, for optimal UTIL you will require:

1) 1% to 9% UTIL on your revolving credit, and

2) balances reporting on less that 50% of your revolving accounts, and

3) two revolving lines for every installment line + 1 more. (This is the tricky part - I am not quite sure I worded this correctly.)

[Anonymous]

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@haulingthescoreup wrote:

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Not sure what you're asking, but what almost all CCC's report is the balance due on the statement. If you PIF beforehand, the balance will be reported as $0. If you partially pay beforehand or wait until after the statement posts to pay anything at all, the balance reported will be whatever is on the statement.

Well, neither the original post nor the answers specified when the PIF would take place. I just wanted to point out that PIF doesn't necessarily mean a reported balance of $0.

[haulingthescoreup]

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jmbfl wrote:

To add a slight layer of complexity to this matter, if I recollect correcty, for optimal UTIL you will require:

1) 1% to 9% UTIL on your revolving credit, and

2) balances reporting on less that 50% of your revolving accounts, and

3) two revolving lines for every installment line + 1 more. (This is the tricky part - I am not quite sure I worded this correctly.)

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Close!

1 and 2 are correct, and when it comes to the 1% part, FICO rounds up. I once had $7 reporting on around $85K total CL, and it showed up as 1%, when it was actually less than 1% of 1%.

For #3, it's half or fewer of all open tradelines, meaning any credit account: mortgages, installment loans, revolving, etc. The twice-as-many-revolving accounts is a good way to approximate the ideal number of accounts.

The big difference between #2 and #3 is "half or fewer" versus "fewer than half", plus of course which accounts are being counted.

#2 is looking specifically at your revolving (= CC) tradelines, so fewer than half of 5 cards would be 2 cards; fewer than half of 6 cards would also be 2 cards.

#3 says half or fewer of all TL's. If you have a mortgage, a car loan, a HELOC, and 5 cards, that's 8 TL's; half is 4; your mortgage, car loan, and (presumably) HELOC will always have balances, so that means only 1 of the 5 cards can report with a ding, rather than the two from #2. (You always go with the tougher version.)

So it is true that if you have twice as many revolving lines as installment lines, the extra CC's cancel out the pesky installment accounts. But it doesn't always happen, so work it out in your head first. (It's related to whether the number of accounts are odd or even, snore.)

Not trying to belabor the point; it's just that there are a lot of people who miss the distinction between "fewer than half" and "half or fewer."

Nap time!

[haulingthescoreup]

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Ulan wrote:

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@haulingthescoreup wrote:

Not sure what you're asking, but what almost all CCC's report is the balance due on the statement. If you PIF beforehand, the balance will be reported as $0. If you partially pay beforehand or wait until after the statement posts to pay anything at all, the balance reported will be whatever is on the statement.

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Well, neither the original post nor the answers specified when the PIF would take place. I just wanted to point out that PIF doesn't necessarily mean a reported balance of $0.

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Oh, OK, sorry. I just started meds for an asthma attack, so I am moving into the Prednisone Zone. Things are starting to wiggle away from me