Credit Card screw up!! More advice needed please.....

[JeffS]

Hi everyone,

I think I may have screwed up pretty bad! I recently got a secured cc, well, 4 mos. ago and I've paid it off every month before the due date but I've taken the balance just about to the limit. It reports the high balances along with the credit limit each month. My question is how bad is this going to kill my score? A friend told me as long as I have a 0 balance each month it won't hurt. He said it would actually help my score but I just read that you should never take your balance above 30% and I do recall my LO saying that! I didn't even want the stupid thing. It's more of a pain in the neck. Using it right or remembering to use it at all. As far as I'm seeing my score hasn't really budged. I'm trying to get a mortgage and have to be at 620 middle score, min. Thanks Jeff S   

[pizzadude]

Revolving utilization is a significant chunk of your FICO score, so having a maxed out card reporting ( moreso if it is your only card ) is going to significantly ding your score.

Ideally you would want to have around 3 open credit cards reporting, with 2 reporting zero balances, and 1 reporting a small balance less than 9% of your CL.

If you know your statement date for your CC, you can time your payments such that it reports the amount that you would want for optimal utilization.

[jocleveland]

So as long as you payoff the card before the statement date you can "max it out before hand"?

[RobertEG]

The impact of the high % util goes away as soon as the util is reduced.  Scoring of % util is based only on current utilization, not prior util.

With a low CL card, it is much easier both to reach high % util and to thereafter bring it down.  They require some tendering.

[atarvuzdar]

And don't worry that in the past you've let your balance report. Going forward, as soon as you start paying before your statement cuts then the credit card company will report the low % util to the agencies and your score will immediately improve. It's one of the quickest "fixes" to a credit score--so long as you can afford to make the payment, which doesn't sound like it's an issue for you since you already pay it off each month--just pay it off before you even get the bill from now on!

Good luck!

[JeffS]

Thank You all for your advice!!!! Really appreciate it! I don't mean to be a complete moron but I'm still a little lost. So I do or don't want a balance? My bill is due by the 4th but I usually pay it a week to 4 days before it's due. Apparently they report on the 7th. I spoke to a LO who said my score should be higher by now and it's not doing anything. Up or down. Guess that's better than going down - lol! Thanks Jeff S

[tsally862]

Hi JeffS,

I've been reading quite a few of the posts here and from what I've gathered it's best to have the lowest balance possible, but you still need to use your credit card a little bit here and there, just don't forget to pay them on time. I've seen people saying carrying a balance of 5% of your limit is good, but also seen 0%, 7%, 9%, 15%, and 19%, so it really depends on who you ask I guess as there doesn't seem to be any one magical number. Personally, I'm going use my credit cards for charging amounts between 5%-10% of my limit but still paying it all off before they report my balance, and that should be good, I hope

Sal.

[LS2982]

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@JeffS wrote:

Hi everyone,

I think I may have screwed up pretty bad! I recently got a secured cc, well, 4 mos. ago and I've paid it off every month before the due date but I've taken the balance just about to the limit. It reports the high balances along with the credit limit each month. My question is how bad is this going to kill my score? A friend told me as long as I have a 0 balance each month it won't hurt. He said it would actually help my score but I just read that you should never take your balance above 30% and I do recall my LO saying that! I didn't even want the stupid thing. It's more of a pain in the neck. Using it right or remembering to use it at all. As far as I'm seeing my score hasn't really budged. I'm trying to get a mortgage and have to be at 620 middle score, min. Thanks Jeff S   

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As long as you PIF before the statement closing date you'll be just fine.

[StartingOver10]

OP, what the others are saying is not that you have to pay before the due date - that is a given.

What they are saying is pay before the new statement date so your reported balance is zero or less than 9% of your credit line. Then you will see your score increase.

For example: lets say that your due date is the 12th of this month and the new statement comes out on the 15th of the month. You want to not only pay off your balances before the 12th but you don't want to change anything on your card until after the 17th.  You can double check with your card issuer to see which date they report your balance. If your statement date is the 15th, most of the creditors would report your balance on the 15th on the 16th or 17th. Not all, but most of them.

[Repo-ed]

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@StartingOver10 wrote:

OP, what the others are saying is not that you have to pay before the due date - that is a given.

What they are saying is pay before the new statement date so your reported balance is zero or less than 9% of your credit line. Then you will see your score increase.

For example: lets say that your due date is the 12th of this month and the new statement comes out on the 15th of the month. You want to not only pay off your balances before the 12th but you don't want to change anything on your card until after the 17th.  You can double check with your card issuer to see which date they report your balance. If your statement date is the 15th, most of the creditors would report your balance on the 15th on the 16th or 17th. Not all, but most of them.

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Great info, as I was still trying to figure this out myself.  I just reported 7% util, but it was pure luck and not a science.  Now I have a better idea how to set-up my pmts.