Revolving Balances

[TheFate]

When you take advantage of a no Interest till such and such date credit card, is it bad to revolve your balance? Of course I'm keeping the balance in the proper Uti range but was just curious if that looks bad as far as Fico's concerened?

[user5387]

Revolving a balance is a utilization issue, and for some people in some situations, there will be a major score impact.

For example, suppose that I'm approved for a $5000 CC with 0% on purchases for 12 months, and I carry a $4500 balance for a year before paying it off.

This may be a good deal from an interest perspective, but may harm my scores and increase AA risk at the same time.

[TheFate]

Let me rephrase

If I have a credit limit of $2,000 and I charge a balance of $400 (20%) and make the payment spread out over the full 12 month no interest promo ($34/mo) but pay it off just before the promo ends will that hurt my score?

I thought a uti issue was only if you went beyond 20-30% balances of the total limit?

[takeshi74]

The 30% max recommendation doesn't mean that utilization has no impact under 30%.  That's why for ideal utilization the recommendation is to only let one card report a balance at 10% or less.  Your score won't be as good as it would be with lower utilization but whether the impact is "bad" is tricky to answer.  If that's your only utilization across all revolvers then it probably isn't a big deal.  In any case, it really doesn't matter unless you're applying.  If you are applying then make sure you optimize your utilization first.  Your utilization is based on whatever your current reported balances happen to be.  Prior utilization does not matter.

[TheFate]

How do you allow only one card to report when each Company reports @ different times of the month and can flucuate on a month to month basis?

Also if I understand you right if applying for new cards you only need to get your utilization down for that month or two before? Not 3-4 months prior? I'm assuming that applies for CLI requests aswell

[user5387]

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@TheFate wrote:

@how do you allow only one card to report when each Company reports @ different times of the month and can flucuate on a month to month basis?

Also if I understand you right if applying for new cards you only need to get your utilization down for that month or two before? Not 3-4 months prior? I'm assuming that applies for CLI requests aswell

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You can pay off your balances just before the statement date.

As far as the issue of getting utilization down, it depends on how high it is and what you're trying to achieve.

For example, if you have a $1000 CL and let $985 report before you PIF, then other lenders may think you're maxed out, even if you're not paying any interest.  This can have negative consequences.

[TheFate]

I'm not sure I'm following as every month I always pay a few days before the statement date and the company reports way before that

[coldnmn]

To answer your original question if your not applying for anything and your not maxing the card and you say your keeping your utilization good. You'll be good and saving money to boot.

[takeshi74]

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@TheFate wrote:

I'm not sure I'm following as every month I always pay a few days before the statement date and the company reports way before that

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You're confusing due date with the statement end date.  Here's the order of events:

• Statement begin date
• Statement end date - balance is reported
• Grace period
• Payment due date

To adjust reported utilization the payment needs to be made before the statement end date.  If you aim for before the payment due date but pay after the statement end date then it's too late to adjust reported utilization for that cycle.

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@TheFate wrote:

Also if I understand you right if applying for new cards you only need to get your utilization down for that month or two before? Not 3-4 months prior? I'm assuming that applies for CLI requests aswell

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You only need to do so just prior to applying.  If you aren't using a CMS to verify your balances/utilization before applying then it may be safer to do so for 2 cycles.  Again, it's only the current utilization that matters.  You can do so for 3-4 cycles if desired but there's really no benefit.

[TheFate]

@Coldnmn Well the point is to get up to applying, thats why I want to have the cake and eat it too by taking advantage of charging a 20% balance while not having to pay much but the min and still building credit at the same time. Or does it look bad only paying the min?

@Takeshi Only reason I ask is because on my report it shows average Uti and didn't know if lenders check that or current Uti But thanks for clarifying!