Utilization

[PSouz]

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@SnackTrader wrote:
Carrying a balance is ALWAYS a bad thing!!!

There's a huge difference between reported utilization and carrying a balance. Going through it is difficult on a cell phone, but if you follow the links on this thread, and the links in the subsequently linked threads (it's a maze of links) you should be able to find the difference between reported utilization and carrying a balance.

Basically, carrying a balance means paying interest by not paying off ALL of your charges by the due date. Utilization only involves the balance reported to the credit bureaus (typically on the statement close date).

I really need to write a big sticky on this...

http://ficoforums.myfico.com/t5/Credit-Cards/Help-understanding-credit-cards-amp-the-best-way-to-use...

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oh, I didn't say carrying a balance, I was just talking about reported utlization, if you have a statement on your card being maxed out but you pay it off in full after the statement cut, its still going to be reported as being at the whole amount of the CL

but I know you should always pay off your balance by the end of the grace period each month so you do not get charged any interest

but as far as utilization goes, if you do pay interest and carry a balance it is only a short term loss of pionts, if you then pay off the balance and let it report at 1-9% your score will go back up, correct?

and paying interest?carrying a balance in its self doesn't affect your score does it?

because the CRAs dont know if its all new charges this month of if youre carrying a balance, right?

[SpiceIslander]

I'm sorry I misunderstood. If you pay the balance off before the statement cuts, you'll be fine. There are some exceptions, though. My CU reports the balance as of the day they report to the CRAs, NOT the statement balance. The statement cuts on the 11th and they report on the 24th. I've learned not to use the card until after the 24th.

[PSouz]

Right, but that's short term anyways

[SnackTrader]

I was attempting to clarify for mistasteve. The rest of you appear to have the basics on optimizing score down.

With that said - I rarely follow that method since I couldn't care less what my score is when I'm not applying for cards

[PSouz]

Same here, I'm just going to set up auto pay and not care about until I want to apply for credit

[mistasteve]

I misunstood the difference between carrying a balance and utilization. I was thinking that if you had a balance on your card you were OK as long as it was no more than 10% of your limit. 

So just owning a credit card and not using it can help your credit?