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pay in full vs. balance

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NikoD
Regular Contributor

Re: pay in full vs. Balance

Sorry for hijacking your thread.  I'm rather ignorant about how this stuff is reported and am just trying to figure things out. Just to clarify things for me, is this right?: If the billing period is 1/10 to 2/10 and I charge $500 during this period and the payment due date is 3/5 but I have charged an additional $100 between 2/10 and  3/5 then if I pay what my statement says ($500) it will be reported that I have a $100 balance (even though I don't carry a balance over from month to month). However, if I had gone online on 3/5 and seen the additional charges and paid the total $600, then it would be reported that I have a $0 balance? 

 

So assuming I understand things correctly and this is how the OP is getting his 0$ balances on all but one card, is this the best way to do things?

Message 11 of 15
Smooth954
Regular Contributor

Re: pay in full vs. Balance


@NikoD wrote:

What does "after the statement date" mean? Do people think that if they pay even before they get the CC statement that that makes a difference? As long as you pay before the due date so nothing is rolling over into the next month, I thought it didn't matter if you pay it off the day you made the purchase or the day your CC payment is due. Or am I confused about what you guys are talking about here?


There is strong possiblity a balance have at some point been report in all those years. For example for my i have paperless statements so I receive emails when my statements are ready. If I receive a email and then go check the statement and it have a balance then that is the balance that is reported. my BofA statement cut and it had a balance of 5 dollars when I paid the 5$ the min I seen the statement even though my account updated the next day when I pulled my TU a few days after the balance that showed up under BofA was 5$. My cap1 167 was the statement balance 167 was reported etc.. I find that whatever the statement balnce is is the amount that will report to the CB the trick is the statement usually cuts a couple days are so after the due date atleast for me. 

Myfico (7/16/14): EQ:736, EX:678(Prosper 7/16/14), TU:691(5/29/14)
Wallet:


Message 12 of 15
evil_ducky
Contributor

Re: pay in full vs. balance

FICO scores tend to be maximized when only one card out of an individual's collection has a reported balance, usually between 1-9% of that card's credit limit, with the rest reporting no balances. The exact percentage varies among individuals, so you'll need to experiment to see what brings your score up the most. However, FICO scoring has no memory, meaning that your score(s) will be based off of whatever information is reporting at the moment. When any of that changes, including balance amounts, your score is recalculated.

To recap what others here have already said, carrying a balance is different from having a balance report. A credit card company will generate a statement detailing how much is owed at the end of the billing month, and that amount is reported to the bureaus. They then give you several weeks to make a payment on that amount. If you make a partial payment, the balance left is "carried over" to the next month. And even if you pay in full without carrying a balance, the amount already reported to the bureaus remains unchanged until the next billing statement. As a result, many people trying to optimize their scores will pay in the middle of the month before they receive the statement in order to lower the end balance.

If you are trying to optimize your score for a future credit application or simply for fun, your current habits will do that for you. However, how much you actually charge to your cards every month will not affect your credit if you make payments before your statement is generated as described above. So feel free to charge whatever you can afford to pay cash for, especially if any of your cards offer rewards.

And to answer OP's other question about a 0-balance months, it depends on the credit company as to whether it shows up that month as 'paid as agreed' or simply blank since some will wait until there is a balance to then update the previous months' status, but your payment history will always retroactively show that you haven't missed any payments if that is the case.
Message 13 of 15
NikoD
Regular Contributor

Re: pay in full vs. Balance

Thank you evil_ducky and everyone else. Everything is much clearer to me now. I feel better equipped now to keep my score up where it is.Smiley Happy

Message 14 of 15
indiolatino61
Valued Contributor

Re: pay in full vs. balance


@titanofold wrote:

For score optimization you want all but one CC reporting $0. That final CC you want to report between 1% and 9% of its CL.

 

You may use the cards how you like, but you want to use them in lieu of using your check card or cash so you're able to PIF each month.

 

You only need to worry about optimization when you're going to apply for a new TL or if you're seeking a CLI. The FICO score has no memory of your utilization.

 

As long as you're paying as agreed or better than agreed, it will report as pays as agreed to the bureaus. The CCCs, however, only report when there's something to report. Typically they'll report monthly, but some won't report unless there's a change to the balance or the CL besides you making a payment.


+1...excellent answer...do this!

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Message 15 of 15
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