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Valued Member
DaBall
Posts: 28
Registered: ‎02-27-2012

To use? Or not to use?

I'm 8mos outside of a discharged chapter 13 and Ive been blessed with a good job and looking forward to rebuilding my credit. I recently signed up for a year of score watch and I've currently got 2 credit cards with zero balances currently but I did use 1 CC last statement but quickly paid it off prior to the due date. Well... I get a notice today claiming my score has dropped 5 points because that Cc reported a $129 balance. So... Should I be using my cards? Try to learn the report dates so I can make sure the balance is zero?

Thanks.
Chapter 13, Discharged 10/11
02/28/12 TU 595/ Eq 647/ Ex 647
01/30/13 TU 656/Eq 676
9/30/13 TU 694 EQ 687 Ex 727
10/25/13 Fico scores TU 740 EQ 680 EX 725
11/1/13 chapter 13 finally fell off EQ 702
Regular Contributor
omskillet
Posts: 118
Registered: ‎01-04-2012

Re: To use? Or not to use?


DaBall wrote:
I'm 8mos outside of a discharged chapter 13 and Ive been blessed with a good job and looking forward to rebuilding my credit. I recently signed up for a year of score watch and I've currently got 2 credit cards with zero balances currently but I did use 1 CC last statement but quickly paid it off prior to the due date. Well... I get a notice today claiming my score has dropped 5 points because that Cc reported a $129 balance. So... Should I be using my cards? Try to learn the report dates so I can make sure the balance is zero?

Thanks.

For maximum short term score potential yeah you should learn the dates when they are reported and try to maintain a 0 balance on all cards but 1. On that one card you want it to be a about 10% of available credit. That's something you can again for maximum score potential.

 

The other thing that you can do it just keep paying them on time! A solid history is the foundation for those util techniques that keep your score as high as possible.

Moderator
Revelate
Posts: 8,159
Registered: ‎12-30-2011

Re: To use? Or not to use?

[ Edited ]

Personally I run my life through my cards.  The more you use them, the more future creditors that you do business with are going to be able to see that... which can only help you later on from an approval perspective.

 

That said, omskillet's short-term maximization suggestion is a good one.  FICO scores don't mean especially much if you're not applying for something; however, I suppose if you're trying to track them over time, it's not a bad idea to max every month for the best comparison I suppose.  I do the 0's and <9% trick in the month leading up to when I pull a report but I don't pull more than every three months personally so I just let balances slide with whatever payment I make and don't worry about them in the between periods.

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 679, EQ 8 703, TU 708, EX 702* (05/30/14, EX older)
Goal Score: 700 in all three (01/01/15)


Take the myFICO Fitness Challenge
Valued Member
DaBall
Posts: 28
Registered: ‎02-27-2012

Re: To use? Or not to use?


Revelate wrote:

Personally I run my life through my cards.  The more you use them, the more future creditors that you do business with are going to be able to see that... which can only help you later on from an approval perspective.

 

That said, omskillet's short-term maximization suggestion is a good one.  FICO scores don't mean especially much if you're not applying for something; however, I suppose if you're trying to track them over time, it's not a bad idea to max every month for the best comparison I suppose.  I do the 0's and <9% trick in the month leading up to when I pull a report but I don't pull more than every three months personally so I just let balances slide with whatever payment I make and don't worry about them in the between periods.


That Makes Sense... I suppose since im in Rebuilding mode i really shouldnt worry about the small point movements based off a $0 balance versus <10%. Am i wrong in saying that if i leave that card at $0 dollars for the next report date that my 5 points will come back? Or is there more to it? 

 

Thanks

Chapter 13, Discharged 10/11
02/28/12 TU 595/ Eq 647/ Ex 647
01/30/13 TU 656/Eq 676
9/30/13 TU 694 EQ 687 Ex 727
10/25/13 Fico scores TU 740 EQ 680 EX 725
11/1/13 chapter 13 finally fell off EQ 702
Regular Contributor
omskillet
Posts: 118
Registered: ‎01-04-2012

Re: To use? Or not to use?


DaBall wrote:

Revelate wrote:

Personally I run my life through my cards.  The more you use them, the more future creditors that you do business with are going to be able to see that... which can only help you later on from an approval perspective.

 

That said, omskillet's short-term maximization suggestion is a good one.  FICO scores don't mean especially much if you're not applying for something; however, I suppose if you're trying to track them over time, it's not a bad idea to max every month for the best comparison I suppose.  I do the 0's and <9% trick in the month leading up to when I pull a report but I don't pull more than every three months personally so I just let balances slide with whatever payment I make and don't worry about them in the between periods.


That Makes Sense... I suppose since im in Rebuilding mode i really shouldnt worry about the small point movements based off a $0 balance versus <10%. Am i wrong in saying that if i leave that card at $0 dollars for the next report date that my 5 points will come back? Or is there more to it? 

 

Thanks


The number of cards that are reporting a balance factors into scoring. There is a really good thread about one members experiment with how many cards were posting a balance and how it effected his score. Its really interesting to read. Maybe someone has a link to that thread handy.

 

For sure based on reading that thread a 5 point swing with one card posting a 0 balance seems completely plausible.

Mega Contributor
RobertEG
Posts: 17,456
Registered: ‎03-19-2007

Re: To use? Or not to use?

While FICO does not score % util this month based on prior months, it can be dangerous to be lulled into the feeling that, since prior high util can be corrected, it is OK to run up the util, and then get it back down just prior to apping for credit.

Fine-tweaking at 10%, and letting util go up to 20-30%, is much different than letting util rise to the 50% + level.

 

First, it becomes much harder to get util back down, and thus take advantage of the 0 vs 10% tweaking when needed, and second, creditors review accounts, and sustained high util could lead to credit limit decreases.  

 

The remaining unknown in the equation is the extent to which FICO scores balances on accounts, as opposed to only % util.  Some have reported that FICO does score balances.  I am not sure, but it could be another factor....

 

My comfort zone is to keep revolving under 20% or so, which is the level at which I can get them down under 10% if app for new credit is needed, and I believe is also a level that will put grins rather than frowns on the faces of my existing creditors. 

 

 

Valued Member
DaBall
Posts: 28
Registered: ‎02-27-2012

Re: To use? Or not to use?

I learned enough from reading the forums that there is No perfect Strategy for Building your Credit score as fast as possible as there are many variables which are gonna very from person to person.

 

Here is what i Know..

 

1. Pay on Time your Bills on Time.

2. Keep Utilization at a Acceptable Rate. 

 

 

Here is what puzzles me.

 

Whether i shouldi leave a Balance on my Credit Cards or Pay them in Full Each month?

 

I have No Need to even Use the Credit cards i have, Im really only using them for the following Reasons.

 

1. Rebuild Credit after Discharged Bankruptcy.

2. Online Purchases where if my Number is Hacked, my Debit card isnt floating around the web.

3. Hotel Reservations/Rental Car etc.. 

 

Thanks in Advance..

Chapter 13, Discharged 10/11
02/28/12 TU 595/ Eq 647/ Ex 647
01/30/13 TU 656/Eq 676
9/30/13 TU 694 EQ 687 Ex 727
10/25/13 Fico scores TU 740 EQ 680 EX 725
11/1/13 chapter 13 finally fell off EQ 702
Moderator
Revelate
Posts: 8,159
Registered: ‎12-30-2011

Re: To use? Or not to use?

Because cash is absolutely not king in today's economy unless you can bring 30% down payment to a mortgage (which the vast majority of people, can't).

 

The more you use your cards responsibly, the more likely you're going to be granted future credit... and since FICO is not necessarily a risk assessment, hedge your bets by making yourself look as profitable as possible to lenders.

 

I don't suggest taking longer than the grace period to pay a balance, but I don't subscribe to paying before the statement date if you're not applying for anything in the next month.  I run my life through my cards, the cash I'm not spending piles up in my bank account, and since I don't live outside my means, I can simply write a check for the balance regardless of what it happens to be.

 

I also take it a step further, I max out each card and then pay it off to show responsible use; however, that's an unproven strategy that is something of a hold-over from the days where credit limits were sometimes not reported for cards.

 

Starting Score: EQ 561, TU 567, EX 599* (12/30/11, EX lender pull 12/29/11)
Current Score: EQ 04 679, EQ 8 703, TU 708, EX 702* (05/30/14, EX older)
Goal Score: 700 in all three (01/01/15)


Take the myFICO Fitness Challenge
Regular Contributor
omskillet
Posts: 118
Registered: ‎01-04-2012

Re: To use? Or not to use?


Revelate wrote:

Because cash is absolutely not king in today's economy unless you can bring 30% down payment to a mortgage (which the vast majority of people, can't).

 

The more you use your cards responsibly, the more likely you're going to be granted future credit... and since FICO is not necessarily a risk assessment, hedge your bets by making yourself look as profitable as possible to lenders.

 

I don't suggest taking longer than the grace period to pay a balance, but I don't subscribe to paying before the statement date if you're not applying for anything in the next month.  I run my life through my cards, the cash I'm not spending piles up in my bank account, and since I don't live outside my means, I can simply write a check for the balance regardless of what it happens to be.

 

I also take it a step further, I max out each card and then pay it off to show responsible use; however, that's an unproven strategy that is something of a hold-over from the days where credit limits were sometimes not reported for cards.

 


+++1

 

This is by far the best strategy to achieve financial success.


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