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Utilization

Contributor

Utilization

Last month when I only had 2 cards and not 5 I used to pay both off almost weekly, and make sure to not have a balance when my statement cut.

Now that I have 5 cards and have been reading on here that 1-9% is ideal and 0% isn't

I am wondering if I just set up all my credit cards to be paid in full, (through the auto pay on all of them, so it will be after the statement cuts)
If having 4 or 5 cards report with a balance is a bad thing?

9% of my credit is around 2k, so I'll never spend that much, so I don't need to worry about going over the 9% but will having multiple cards post with a balance be a bad thing? Should I pay off some in full before the statement and let one or two have auto pay?







Amex BCE $14k (backdated to 1/11), Chase Freedom $500 (11/2012)
Discover It Student $3k (3/13), Citi Dividend Platinum Visa $3k (3/13)
Capital One Cash Rewards Visa $3.5k (3/13)
Starting Score 3/20/13 - TransUnion FICO 758 - Goal Score 800
Message 1 of 16
15 REPLIES
Frequent Contributor

Re: Utilization


PSouz wrote:
Last month when I only had 2 cards and not 5 I used to pay both off almost weekly, and make sure to not have a balance when my statement cut.

Now that I have 5 cards and have been reading on here that 1-9% is ideal and 0% isn't

I am wondering if I just set up all my credit cards to be paid in full, (through the auto pay on all of them, so it will be after the statement cuts)
If having 4 or 5 cards report with a balance is a bad thing?

9% of my credit is around 2k, so I'll never spend that much, so I don't need to worry about going over the 9% but will having multiple cards post with a balance be a bad thing? Should I pay off some in full before the statement and let one or two have auto pay?

Its best to only have one, maybe two showing a balance.  I believe the number of accounts carrying a balance is factored into the score, 1 being the best.

Message 2 of 16
Valued Contributor

Re: Utilization

As the scoring process doesn't care about utilization history, you need only consider utilization when you are going to app for something.   I think it's a good idea to have all cards on auto-pay, (to avoid interest/late charges/penalty rates if you forget to pay) and then, when you think you will be apping do the "PIF on all but one card, before the statements cut"   Of course this needs some lead time, as each card reports just once a month.

Message 3 of 16
Contributor

Re: Utilization

I understand utilization has no history, so having them all on auto for that reason will make no long term difference, But does the affect using more than one credit card in a month has on my score have a history? As in if I use all 5 and just use auto pay so they all post with a balance for a year and then decide I want to apply for something I pif before the statement ends on all but one, it wouldn't matter I was using more than one for that year right?







Amex BCE $14k (backdated to 1/11), Chase Freedom $500 (11/2012)
Discover It Student $3k (3/13), Citi Dividend Platinum Visa $3k (3/13)
Capital One Cash Rewards Visa $3.5k (3/13)
Starting Score 3/20/13 - TransUnion FICO 758 - Goal Score 800
Message 4 of 16
Valued Contributor

Re: Utilization


PSouz wrote:
I understand utilization has no history, so having them all on auto for that reason will make no long term difference, But does the affect using more than one credit card in a month has on my score have a history? As in if I use all 5 and just use auto pay so they all post with a balance for a year and then decide I want to apply for something I pif before the statement ends on all but one, it wouldn't matter I was using more than one for that year right?

Right.  (And remember this is all "As far as we know" since FICO doesn't reveal all the details).  So the understanding is that your credit report gets pulled and one of the factors is "How many accounts have a non-zero balance".   This is just a snapshot at the time the report is pulled, so no history.

 

I don't know why some things don't have history, maybe they found that doing so isn't very predictive.  Obviously some things need to have history, I want to see if you were late in the past, or had a BK etc.  Knowing that you didn't have a BK THIS month is probably not enough for some of those picky lenders!

Message 5 of 16
Contributor

Re: Utilization

Awesome. Thanks, it'll be nice to just have auto pay and not worry about PIF before 5 statements end







Amex BCE $14k (backdated to 1/11), Chase Freedom $500 (11/2012)
Discover It Student $3k (3/13), Citi Dividend Platinum Visa $3k (3/13)
Capital One Cash Rewards Visa $3.5k (3/13)
Starting Score 3/20/13 - TransUnion FICO 758 - Goal Score 800
Message 6 of 16
Member

Re: Utilization

So carrying a balance is not necessarily bad thing as long as you are only utilizing below 10 - 20% of your total credit limit...correct?

Message 7 of 16
Contributor

Re: Utilization

From what I understand, for short term scores, you want to be between 1-9%

 

but long term your Utilization doesn't matter because there is no history so if you have 75% utilization one month your score may go down, but if you pay it down to between 1% and 9% it will go back up.

 

It is my understanding that unless you are going to be applying for something in the coming month you do not need to worry about your utilization.

 

But remember it can take over a month for the new balances to be on your report








Amex BCE $14k (backdated to 1/11), Chase Freedom $500 (11/2012)
Discover It Student $3k (3/13), Citi Dividend Platinum Visa $3k (3/13)
Capital One Cash Rewards Visa $3.5k (3/13)
Starting Score 3/20/13 - TransUnion FICO 758 - Goal Score 800
Message 8 of 16
Valued Contributor

Re: Utilization

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...


In My Wallet: Amex BCP (12/12) $50,000, Chase Freedom (12/12) $16,500, Cap1 Quicksilver (6/12) $14,000, Barclaycard Rewards (5/13) $10,500, Citi Prestige (4/16) $30,000

Last App: June 27, 2015
Message 9 of 16
Frequent Contributor

Re: Utilization

I believe it's no MORE than 9%.

Meg.

FICO: 4/2016 - TU 841 | EQ 840 | EX 837

FNBO 23,600 | Amex SPG 13,900 | Amex BCP 13,400 | Barclays/Sallie Mae13,000 | Discover IT 12,500 | Lowes 10,000 | PLOC 9,300 | NASA FCU 8,700 | Citi Simplicity 6,200 | BOA Platinum+ 6,000 | Achieva CU 5,500 | Chase CSP 5,000 | Sam's Club 3,000 | Sears 900
Message 10 of 16