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Regular Contributor
Smooth954
Posts: 142
Registered: ‎07-26-2013

How to effectively pay your credit card balance in full monthly

Hello new to the forum been browsing for some time. My question is Can someone please explain the pay in full methods on a revolving credit cards. I have charged my capital one secured CC to near the max and paid if full a week later and when it reported a few days later my score jumped 40 points the thing is I have no idea what I did as this is my only positive TL currently and my report have a quite a few baddies. I've read somewhere where this method was discussed something about paying a week before due dates and something about your reporting date i believe this is also a great way to keep your interest charges low as. Apposed to carrying a balance. if anyone have any idea what I'm talking about can you please break this method down for me? Let use a due date of the 1st of the month to try to keep things simple. Any input on this would be appreciated.
Myfico (5/27/14): EQ:717, EX:624, TU:691
Wallet:


Established Contributor
InvincibleSummer3
Posts: 640
Registered: ‎11-20-2012

Re: How to effectively pay your credit card balance in full monthly

Welcome!  Basically the way it works is that you need to watch what balance reports to the credit bureaus. For example, if I have a $500 limit, and I max out my card and it reports with that $500 balance, my score drops. FICO scores are very sensitive to utilization, and a maxed-out card means you are using all of your available credit.

 

But let's say I pay all but $10 off before the due date. The credit card company then reports a small balance, and my utilization looks good. I have a cap one secured card, so I pay it down by the due date, it reports a couple of days later, and then I am free to charge again if I want to. Does that make sense?

 

There's more about utilization here: http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/Your-Guide-to-Credit-Scoring/m-p/718550#U7185...

and you should read this, just because it's full of good info.

Regular Contributor
Smooth954
Posts: 142
Registered: ‎07-26-2013

Re: How to effectively pay your credit card balance in full monthly

I get that but I always use to just use less then 50% of my 1200 limits since I'm in total rebuilding stage, but I rented a car for a month and it came out close to my max limit(1098$) I pay the whole balance off in full a week later and it took that big jump when cap1 reported. I understand its because the utilization was reported low. But I never seen a jump like that while I was keeping a 15% balance on it monthly because I was under the impression you must leave some kind of balance on your card in order to build credit. Since I been here browsing the forum I have been reading from time to time users alternating between two cards bi-monthly keeping one with a 0 balance while almost maxing the other on a big purchase then paying it in full a week later. Someone even got into the science of it like pay it a week before the due date they mentioned something about knowing your reporting date that your CC reports is a key factor. I wish I remember what thread I seen it on. But it seem like there may be some deep science to the pay balance in full method.

Thank you for the welcome.
Myfico (5/27/14): EQ:717, EX:624, TU:691
Wallet:


Moderator
guiness56
Posts: 22,408
Registered: ‎01-17-2008

Re: How to effectively pay your credit card balance in full monthly

If you only have one CC it is never a good idea to let it report a 0 balance.  FICO doesn't like to see you not using your credit.  Not as much as over using it though.

 

I think what you may be referring to is if you is letting the CCC see you make big purchases and pay them off promptly.  It lets them know you are capable of handling higher limits and will give CLI sooner.

 

You can use as much of the limit as you like as long as it is paid down to 9% or under before they report the balance to the CRAs.  That is normally around the time the statement cuts.  Then you can pay off the rest before the due date to keep from paying interest.

 

Alternating cards is also a good idea, if you have more than one, so the other CCC sees you use their card.

 

You saw that huge jump because your utilization dropped significantly.  Doing what you are talking about will not make a difference in your score because the cards would not report the huge balance.  That is why they pay them off before they report.

 

Some do not carry a balance and it fits their situation.  For the most part, letting is small balance report is what gives the best score. 

Valued Member
cegpn
Posts: 34
Registered: ‎05-07-2013

Re: How to effectively pay your credit card balance in full monthly

You have the right idea...

For example, my cc statement cuts on the 16th and reports on the 20th. I can do anything I like with the card all month except around those dates. I need to pay in full before the 16th and let whatever balance I want to report post by the 20th (ex $30 on $1k line).

Are you sure there were no other changes to your report for the score jump? That is an unusual increase if it previously reported at 15%. Maybe since it is your only revolving line?
Moderator
guiness56
Posts: 22,408
Registered: ‎01-17-2008

Re: How to effectively pay your credit card balance in full monthly


cegpn wrote:
You have the right idea...

For example, my cc statement cuts on the 16th and reports on the 20th. I can do anything I like with the card all month except around those dates. I need to pay in full before the 16th and let whatever balance I want to report post by the 20th (ex $30 on $1k line).

Are you sure there were no other changes to your report for the score jump? That is an unusual increase if it previously reported at 15%. Maybe since it is your only revolving line?

It was previously maxed out then he paid in full to get that jump in score.  That would do it.

Established Member
tesha873
Posts: 21
Registered: ‎07-25-2013

Re: How to effectively pay your credit card balance in full monthly

FICO doesn't like to see you not using your credit.  Not as much as over using it though. Thanks I learn something new everyday. Joining this community has helped me rebuild my credit.

Valued Member
cegpn
Posts: 34
Registered: ‎05-07-2013

Re: How to effectively pay your credit card balance in full monthly

Ahhh! I missed that the car rental was for a month...thought that all occurred within the billing cycle.
Regular Contributor
Smooth954
Posts: 142
Registered: ‎07-26-2013

Re: How to effectively pay your credit card balance in full monthly

Yea the mayor jump was most likely due the the reduction of the utilization. Because there is no other activity other than that. I will take the advise I get here and keep my utilization under 9% and see what happens. I want to add a boa secured card and maybe a first premiere in the next few weeks my aunt is will to add my ass a AU to of e of her best cards with over 10 years of history the question is will that help my AAOA? Which is way I been sceptic all of adding more secured cards as my cap 1 is only a 1year and 6months old.
Myfico (5/27/14): EQ:717, EX:624, TU:691
Wallet:


Moderator
guiness56
Posts: 22,408
Registered: ‎01-17-2008

Re: How to effectively pay your credit card balance in full monthly

Normally, when you are added as AU you get the cards history instantly.  If your oldest is only a year and hers is 10, yes it will definitely help AAoA.

 

Does it have pristine payment history?


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