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New Member
Posts: 6
Registered: ‎05-22-2012
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Utilization and payment history to increase credit score

I've looked through a bunch of threads on utilization, and from what I've read so far the ideal credit utilization rate is the smallest number possible that is greater than zero. Is this accurate, or is 0% utilization better than 1-9%?


If I want to improve my credit score, should I just buy a single $1 item with my credit card every month, to keep my utilization as low as possible?

 

Are all the payments you make regarded as equally valuable? If I put $1 on my card and pay off the balance in full every month, would that have the exact same impact on my payment history rating as putting a $1,000 balance on the card and paying it off every month? Does the amount actually matter, or is the payment history component of the credit score merely checking to see if you pay your bill every month, regardless of the value of the bill?

New Member
Posts: 13
Registered: ‎05-22-2012
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Re: Utilization and payment history to increase credit score

I second these questions! This is definitely something I've been wanting to know. Thanks for the help when it comes Smiley Happy

Senior Contributor
Posts: 3,197
Registered: ‎01-24-2010
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Re: Utilization and payment history to increase credit score


gx240 wrote:

I've looked through a bunch of threads on utilization, and from what I've read so far the ideal credit utilization rate is the smallest number possible that is greater than zero. Is this accurate, or is 0% utilization better than 1-9%?


If I want to improve my credit score, should I just buy a single $1 item with my credit card every month, to keep my utilization as low as possible?

 

Are all the payments you make regarded as equally valuable? If I put $1 on my card and pay off the balance in full every month, would that have the exact same impact on my payment history rating as putting a $1,000 balance on the card and paying it off every month? Does the amount actually matter, or is the payment history component of the credit score merely checking to see if you pay your bill every month, regardless of the value of the bill?


For credit score, size does not matter.

 

Utilization is a calculation, and it does not matter the size of the balances and CL w.r.t. your credit score.    You can control it by buying less or paying early before the statement closes or whenever they report.   Note that it is a point in time calculation with no history, so only todays calculation matters for your score.   Hence, it only matters when you apply for credit.   

 

On time payments on the other hand has a history and the longer the history of on time payments the better.   The amount does not matter from credit score point of view.  

 

IMO, However, from a customer point of view, if you use your card for much of  your expenses, the CC company makes money and you are more likely to get better offers and higher CL over the long run.   If you are spending $1 a month, you might get a good score, but you are not likely to get more than toy limits

 

My strategy is use your CC for all expenses you can,and PIF every month. Plan your credit applications in advance and get your utilization down during appication time.

Valued Contributor
Posts: 3,096
Registered: ‎01-26-2012
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Re: Utilization and payment history to increase credit score

1-9% util on one card and total utilization, and every other card at 0 is ideal. Remember it rounds so if you are at .4% util, it will be 0. Try and get balance on one card which both takes the card and your total util between the 1-9.
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New Member
Posts: 6
Registered: ‎05-22-2012
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Re: Utilization and payment history to increase credit score

[ Edited ]

Wolf3 wrote:

IMO, However, from a customer point of view, if you use your card for much of  your expenses, the CC company makes money and you are more likely to get better offers and higher CL over the long run.   If you are spending $1 a month, you might get a good score, but you are not likely to get more than toy limits


 

Is there any way for this information to pass from one CC company to another, since it doesn't show up in credit reports?

For example if I only ever spent $1 per month on a Capital One card and than applied for a Citi card next year, would Citi have any way of seeing how often I used the Capital One card and how much I put on it? Or would they just see the good credit score?

 

 


Wolf3 wrote:

 

Utilization is a calculation... You can control it by buying less or paying early before the statement closes or whenever they report.

 


I was actually wondering about this as well. How does paying early affect your payment history? If I pay all my charges right after I make them so that I don't have a statement at the end of the month, does that hurt my credit score? Would my credit report show no payments, since I didn't wait for the statement to come before paying?

Valued Contributor
Posts: 1,157
Registered: ‎05-21-2008
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Re: Utilization and payment history to increase credit score

[ Edited ]

gx240 wrote:

 

For example if I only ever spent $1 per month on a Capital One card and than applied for a Citi card next year, would Citi have any way of seeing how often I used the Capital One card and how much I put on it? Or would they just see the good credit score?

 

 

 

 No, there is no record on your credit report of what your statement balances are.

 

 

gx240 wrote:

 

I was actually wondering about this as well. How does paying early affect your paymet history? If I pay all my charges right after I make them so that I don't have a statement at the end of the month, does that hurt my credit score? Would my credit report show no payments, since I didn't wait for the statement to come before paying?



Paying early does not affect your payment history.  Carrying 0 balance does not affect your payment history.  Maxing out your card does not affect your payment history.  The only thing that can affect your payment history is making a payment at least 30 days late.


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Valued Contributor
Posts: 3,096
Registered: ‎01-26-2012
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Re: Utilization and payment history to increase credit score

Thrasher isn't accurate about no record of statement balances being on your credit report. Since most credit cards report to the cras around your statement cut date, your statement balance gets reported to them every month. In fact, the raw report has a monthly report of the following: balance, minimum payment due, actual payment made. However fico scoring models only take into account reported balance (which is statement balance for the most part) vs. your total credit. There is also a high balance line that reports the most recent high balance which is unclear how or even it is used by others, but in terms of fico scoring, not relevant aside from rare cases where it is used as total credit denominator in util calculations.
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Valued Contributor
Posts: 1,157
Registered: ‎05-21-2008
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Re: Utilization and payment history to increase credit score

[ Edited ]

Oh, well the reports issued to consumers don't show this.  I didn't know the actual reports sent to lenders showed a past balance report.  Is there a link to an example o f what is furnished to lenders?


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Regular Contributor
Posts: 165
Registered: ‎08-13-2009
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Re: Utilization and payment history to increase credit score

[ Edited ]

Just as an example, I took a look at my Experian report and it shows a balance history with the details: account balanace / date payment received / scheduled payment amount / actual payment amount.  This seems to show the last 24 months.  Now, I looked at my Transunion report and it was not on there in that way, just the last balance/high balance but I would imagine they keep track of that info also.

 

Update - just looked at Equifax and it also only shows just the latest/high balance.

Valued Contributor
Posts: 1,157
Registered: ‎05-21-2008
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Re: Utilization and payment history to increase credit score

The point is, it doesn't factor into your scoring in any way, which is the question you were asking.


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Current Score: EQ: 749 - TU: ---
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