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New Member
Allnight
Posts: 5
Registered: ‎11-23-2012
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How many cards to charge per month ideally?

I have an amex card, well fargo, and chase along with a macys card. I never needed to use credit in the past so my use history is limited. For the past 7 months I've used all 3 of my major cards monthly and kept my utilization low on each. I figure it's better to use all 3 since it would build more history, but I'm wondering if I could get better credit results if I used just one or 2 of them, every point counts for me. I checked my score on myfico and it was 702. I'm looking to get my loan qualification for a home done but I think I'll get better rates if I score 700+ on the lender credit check. Should I be using all 3 monthly with low utilizations of course or less for ideal credit results? I could care less about using the card I'm just playing the game. Bonus points if you know if the lender will do a check through myfico or one of the other agencies? Extra bonus if you know if the inquiry that the lender makes affects the current score he sees. 

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brother7
Posts: 377
Registered: ‎02-06-2009
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Re: How many cards to charge per month ideally?

It's the general consensus on the myFICO forums that to optimize credit score, have all credit cards report zero balance EXCEPT one. For the one that reports, let it report 1% utilization.

 

In your particular case, this would mean paying off the Macy's, AMEX, and Wells Fargo card in full, then putting them away in a drawer.

 

With the remaining Chase card, let's assume it has a $1000 credit line, the due date is 12/1, the next statement date is 12/5 and the current balance today (not the statement balance) is $300. To have 1% utilization report to the CRAs, you need a $10 balance on the statement date. Therefore, make a $290 payment before the due date, let $10 report on the statement date.

 

If you continue to use the card from today to the next statement date 12/5, you should increase your payment by the same amount to make sure that only $10 reports on the statement date.

 

Does that make sense?


11/02/2012 Peak - EQ 790 (ScoreWatch EQ FICO)
08/22/2014 Current - EQ 796 (Priceline TU FICO 08 Classic)
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New Member
Allnight
Posts: 5
Registered: ‎11-23-2012
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Re: How many cards to charge per month ideally?

I think I got it. I want to make sure I pay all but 1% of the bill and let it carry a balance over to the next statement date (which is when they give tell me how much money is due I think)? I did think paying in full each month was best. If I do use the card between the closing and next statement date I should pay it to lower it to 1% before the actual statement date right? I'm assuming either they will only see the utilization ratio balance on statement dates or they just perceive it was being better whether I pay the card before the statement date or I happened to use 1% only? I'm assuming they can see how much was spent on the card and paid off because I can see that on the credit report. If I spent 300 dollars and paid 290 before the statement date they would only report 10 dollars? I think I'm a little more confused from being up all night lol. That's weird, my other cards seem like a waste. Intuitively I would think the more I pay off the more positive credit history proof I would have. If I only use one a month maybe I should rotate them. 

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brother7
Posts: 377
Registered: ‎02-06-2009
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Re: How many cards to charge per month ideally?

To keep things simple, instead or rotating cards, just stick with using ONE card on a regular basis. You only need to use the other cards once every 6 months or so, for the purpose of showing activitiy so that the issuer will not automatically close it.

 

Credit reports and credit scores are a snapshot in time.

 

Credit card issuers feed the CRAs data on a periodic basis. In most cases, the data is fed monthly. The actual data reported is usually what is on the monthly statement. And the data is reported to the CRAs a short time after the monthly statement date.

 

So what you're really doing is optimizing what appears on your monthly statement, which is what gets fed to the CRAs.

 

A couple of comments:

1. ALWAYS pay AT LEAST the Minimum Payment Due. This keeps any delinquencies from appearing on your report.

2. If possible, PAY IN FULL (the statement balance) to avoid interest charges.

 

In the scenario I gave, if the statement balance is $300 and you pay $290, you WILL incur an interest charge. However, in practice, you will be using the card throughout the month. So let's say you charge an additional $50 during the month. The balance is now $350. To show 1% utilization, you make a payment of $340 before the due date. So you kill 2 birds with 1 stone: you PAID IN FULL to avoid interest charges and you reported 1% UTILIZATION :smileyvery-happy:


11/02/2012 Peak - EQ 790 (ScoreWatch EQ FICO)
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HiLine
Posts: 2,944
Registered: ‎10-19-2012
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Re: How many cards to charge per month ideally?

[ Edited ]

If you're not applying for credit any time soon, keeping utilization low does not do you any good. If this is your case, I would charge all cards just for the sake of keeping the accounts open.

Frequent Contributor
brother7
Posts: 377
Registered: ‎02-06-2009
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Re: How many cards to charge per month ideally?


HiLine wrote:

If you're not applying for credit any time soon, keeping utilization low does not do you any good.


The OP said "I'm looking to get my loan qualification for a home done"


11/02/2012 Peak - EQ 790 (ScoreWatch EQ FICO)
08/22/2014 Current - EQ 796 (Priceline TU FICO 08 Classic)
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New Member
Allnight
Posts: 5
Registered: ‎11-23-2012
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Re: How many cards to charge per month ideally?

"In the scenario I gave, if the statement balance is $300 and you pay $290, you WILL incur an interest charge."

 

I thought the goal was to have a 1% utilization on the statement balance? 

Frequent Contributor
brother7
Posts: 377
Registered: ‎02-06-2009
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Re: How many cards to charge per month ideally?

For optimal credit score, 1% utilization on one card is ideal.

 

If 1% utilization is your primary goal AND you're willing to achieve that goal, no matter what the cost, then pay $290. If the last statement balance was > $290, then you WILL incur interest charges because the statement balance was not paid-in-full. However, since 1% utilization was the goal, no matter what the cost, the goal was achieved.

 

If no interest charges is the goal, then you must pay the statement balance in full ($300). If you do, you will have 0% utilization.

 

But like I mentioned, it is possible to accomplish both goals (pay-in-full AND 1% utilization). You do this by continuing to use your card throughout the month, AFTER the last statement date.

 

I'll spell out the scenario again on how to do this:

 

On statement date 12/1/2012, the statement balance is $300.

On due date 12/5/2012, you pay-in-full $300.

On 12/6/2012, you buy $10 worth of gas.

On 1/1/2013, the new statement is printed. This is what it says.

  Previous Statement Balance $300

  Payment Made - $300

  New Charges + $10

  New Statement Balance $10

 

Voila! You paid-in-full so you didn't incur any interest charges AND 1% utilization is reported!

 

Now fast forward to the next month:

 

On statement date 1/1/2013, the statement balance is $10.

On due date 1/5/2013, you pay-in-full $10.

On 1/6/2012, you buy $10 worth of gas.

On 2/1/2013, the new statement is printed. This is what it says.

  Previous Statement Balance $10

  Payment Made - $10

  New Charges + $10

  New Statement Balance $10

 

Voila! You did it again! Keep doing this every month and you'll accomplish both tasks at once.


11/02/2012 Peak - EQ 790 (ScoreWatch EQ FICO)
08/22/2014 Current - EQ 796 (Priceline TU FICO 08 Classic)
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Valued Contributor
my-own-fico
Posts: 1,232
Registered: ‎01-05-2010
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Re: How many cards to charge per month ideally?


brother7 wrote:

I'll spell out the scenario again on how to do this:

 

On statement date 12/1/2012, the statement balance is $300.

On due date 12/5/2012, you pay-in-full $300.


 

Did you just shoot yourself in the foot? :smileysurprised: :smileytongue: :smileyvery-happy:

 

Reported credit card debt EQ $0 TU $0 EX $0
Frequent Contributor
brother7
Posts: 377
Registered: ‎02-06-2009
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Re: How many cards to charge per month ideally?


my-own-fico wrote:

brother7 wrote:

I'll spell out the scenario again on how to do this:

 

On statement date 12/1/2012, the statement balance is $300.

On due date 12/5/2012, you pay-in-full $300.


 

Did you just shoot yourself in the foot? :smileysurprised: :smileytongue: :smileyvery-happy:

 


I don't think so because "On 12/6/2012, you buy $10 worth of gas." so the next statement will report $10. With a $1000 CL, that's 1% utilization.


11/02/2012 Peak - EQ 790 (ScoreWatch EQ FICO)
08/22/2014 Current - EQ 796 (Priceline TU FICO 08 Classic)
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