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Contributor
Eiso
Posts: 123
Registered: ‎03-29-2009
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Should I pay off my monthly credit card debt before the closing date?

As many said, the credit utilization ratio counts as an important factor of your credit score. For some people, like me, use up a high amount of the credit limit (but I pay them in full every month when its due).

 

So the question is, should I pay the credit card off before the closing date and leaving it to have $0 reported? or it is a good ideal to pay majority of the monthly debt to leave a little for reporting?

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FICO pulled by loan officer on 8/3/2009
EQ: 724
EX: 740
TU: 742
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SPACEMAV
Posts: 10
Registered: ‎01-02-2009
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Re: Should I pay off my monthly credit card debt before the closing date?

I am still new here, but from what I have gathered(somebody please correct me if I am mistaken) you should PIF before closing date because that is what is generally reported to the CRA's monthly. Another advantage of that is you don't get charged the in. rates or finance charges. But there is a catch and if you pay all of your revolving cards to zero each month it could bring down your score by a few points. I believe that most people leave a small balance on atleast one revolving account to avoid that hit. Have a good night.

Contributor
Eiso
Posts: 123
Registered: ‎03-29-2009
0

Re: Should I pay off my monthly credit card debt before the closing date?

Thanks for another quick reply. I'll certainly do so from now on. Feel like so much hassle to get a high credit score. It is really not like "as long as you have money to pay" then you will have good credit score. It all require tactics, understanding the system and use strategies against the system to achieve high credit score :smileytongue:
-----------------------------------------------------
FICO pulled by loan officer on 8/3/2009
EQ: 724
EX: 740
TU: 742
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008
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Re: Should I pay off my monthly credit card debt before the closing date?

Generally speaking, yes.  Most people find that only allowing a small balance to report on 1 or 2 cards and paying the other account in full before statement provides the best FICO results.  For example, if you have 6 accounts, you need to use them all regularly to keep active.  But you would only want less than a 9% utilization to report (9% of total CL's) on 1 or at most 2 of the 6 accounts and the others to report use, but zero balance.

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008
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Re: Should I pay off my monthly credit card debt before the closing date?

Only if you want to "Maximize" your FICO and credit.  If you are paying substantially more than minimum payments or paying in full each month and your debt to credit ratios are not too high or maxed, you are probably fine.

 

And you really only need to maximinze FICO if you are shopping for credit.  Other than that you don't have to necessarily worry about the "hassles."  A FICO score is not like body weight, which needs constant maintenance.  Credit is more like health.....do the right things (don't over extend, pay on time, pay in full or pay more than mins, etc.)

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
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haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
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Re: Should I pay off my monthly credit card debt before the closing date?


txjohn wrote:

Only if you want to "Maximize" your FICO and credit.  If you are paying substantially more than minimum payments or paying in full each month and your debt to credit ratios are not too high or maxed, you are probably fine.

 

And you really only need to maximinze FICO if you are shopping for credit.  Other than that you don't have to necessarily worry about the "hassles."  A FICO score is not like body weight, which needs constant maintenance.  Credit is more like health.....do the right things (don't over extend, pay on time, pay in full or pay more than mins, etc.)



I mostly agree. But with the level of hysteria on the part of banks these days, I'd hate to have a high level of util shown on CC's. Since the system doesn't have a way to show that these balances are immediately paid, edgy banks looking to minimize loss might try AA (adverse action), thinking that the consumer is staggering under debt. And unfortunately, they seem to shoot first and ask questions later, if at all.


SPACEMAV wrote:

I am still new here, but from what I have gathered(somebody please correct me if I am mistaken) you should PIF before closing date because that is what is generally reported to the CRA's monthly. Another advantage of that is you don't get charged the in. rates or finance charges. But there is a catch and if you pay all of your revolving cards to zero each month it could bring down your score by a few points. I believe that most people leave a small balance on atleast one revolving account to avoid that hit. Have a good night.



This is correct, although I did want to point out that OP seems to be paying his/her balances in full after the statement drops, but before the due date, meaning no interest is being paid.
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Senior Contributor
txjohn
Posts: 4,214
Registered: ‎09-12-2008
0

Re: Should I pay off my monthly credit card debt before the closing date?

Understand your point:  mine was speaking of the micro-hassles that many here go through to create max FICO at all times because FICO has become a hobby of sorts just to see how much we can tweak it.

 

Some are not so inclined and merely want to follow a healthy credit regimen :smileyhappy:

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
Frequently Requested Threads * FICO High Achievers  *  FICO Score Estimator


09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Contributor
Eiso
Posts: 123
Registered: ‎03-29-2009
0

Re: Should I pay off my monthly credit card debt before the closing date?


txjohn wrote:
Generally speaking, yes.  Most people find that only allowing a small balance to report on 1 or 2 cards and paying the other account in full before statement provides the best FICO results.  For example, if you have 6 accounts, you need to use them all regularly to keep active.  But you would only want less than a 9% utilization to report (9% of total CL's) on 1 or at most 2 of the 6 accounts and the others to report use, but zero balance.

When you say "and the others to report use but zero balance", but are those activities in-between opening and closing date reported to the CRAs? I heard some say if your closing is $0, it reports nothing meaningful to CRAs. Or do you mean the "activities" are just to show the issuers?

-----------------------------------------------------
FICO pulled by loan officer on 8/3/2009
EQ: 724
EX: 740
TU: 742
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Epic Contributor
haulingthescoreup
Posts: 28,115
Registered: ‎04-01-2007
0

Re: Should I pay off my monthly credit card debt before the closing date?

Your highest balance during the billing cycle is reported, even if you PIF down to $0 before the statement date.

Except for American Express, of course, which never does things the way anyone else does. :smileytongue: They only show the highest statement balance.

I once had $10,700 pop up as my new highest balance on a CC, and I nearly had a stroke until I saw that the $0 balance did post. But that $10,700 (new mahogany flooring :smileyhappy: ) continues to show on my reports as highest balance for that card. There are some indications that as banks lower consumer's CL's, they base it on the highest balance ever shown for that card. (Other theories include average balances for last X months, and variations on dartboard games.)
* Credit is a wonderful servant, but a terrible master. * Who's the boss --you or your credit?
FICO's: EQ 781 - TU 793 - EX 779 (from PSECU) - Done credit hunting; having fun with credit gardening. - EQ 590 on 5/14/2007
Contributor
Eiso
Posts: 123
Registered: ‎03-29-2009
0

Re: Should I pay off my monthly credit card debt before the closing date?


haulingthescoreup wrote:
Your highest balance during the billing cycle is reported, even if you PIF down to $0 before the statement date.

Except for American Express, of course, which never does things the way anyone else does. :smileytongue: They only show the highest statement balance.

I once had $10,700 pop up as my new highest balance on a CC, and I nearly had a stroke until I saw that the $0 balance did post. But that $10,700 (new mahogany flooring :smileyhappy: ) continues to show on my reports as highest balance for that card. There are some indications that as banks lower consumer's CL's, they base it on the highest balance ever shown for that card. (Other theories include average balances for last X months, and variations on dartboard games.)

Oh shoot. I have been using my cash-back cards all these years, and I have never paid interest I just use the cards for benefits and I always pay them both in full every month. Never knew that they still report my highest balance DURING the statement period. That must have hurt my utilization ratio.

 

Personal experience

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Ever since I got those cash-back cards, I have been paying them both in full 3 days before my statement closing dates, showing almost $0 on both of my cards when the statement closes. All my other cards are not in use at all.  My credit score had been up and down a few point around 749 to 771. Since the beginning of 2009, I gave it a try to use my new 0% interest card to pay my tuition. I have been paying it off 10% a month.My credit score went down to 703/Jan and 698/Feb. I decided to stop fooling around so I paid it off right away this month. As of yesterday, my score went back up to 729

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-----------------------------------------------------
FICO pulled by loan officer on 8/3/2009
EQ: 724
EX: 740
TU: 742

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