I have a question (mod please feel free to move if I posted in the wrong place). I have read that having 0% utilization is worse than having 1-10%. So how do you time it so that cc companies report usage of your card without carrying over a balance? For example, credit karma shows my two cards (cap oneo) reporting on the day that they are due. So does that mean I either have to carry a balance or they will report 0% utilization? I recently got a new Chase Freedom card which I use a lot, but will pay off every month if not multiple times a month. My two Cap one cards I use once a month each and pay before due date. I just don't understand how to report utilization while not carrying a balance. Thanks for answering my newbie question.
Most cards report the statement balance, so you would want to pay off most of the balance prior to statement cut off. Best FICO results do come from 1-9% util reporting on 1 card. The 0% util figures into FICO model as if carrying 20-30% util. You will have time to pay off the remaining balance for the month that gets reported to the CRA by the due date of the statement.
gdale,
Thanks for your response. I think I am just confused about the due dates and reporting because I always pay them off so soon after using them. For example, on ym two cap one cards the due date is always 3 days before the statement date. I know this is all going to sound very dumb, but are balances due the month AFTER accruing them? For example, one card has a due date of the 7th and a statement date of the tenth. Let's say I spend a hundred bucks on it from now until Jan 10th. Does that mean the next payment would be due Feb 7th, and the balance of $100 on the statement date (Jan 10th) is what would be reported. I always thought that whatever I spent that month would be due on that month's due date. Thanks for your patience with my ingorance :-P
Also, you said that only one card needs to show util between 1-9%? So the others I can just use and pay off immediately?
ok, what you charge in the current month is not due until the statement actually cycles and the due date is presented. You always want to pay the balance in full to avoid interest. There is basically a grace period that can sometimes be as much as 58 days before you actually have to pay it off. Example you charge $100 one day after statement cycles, you have 29 days before it is even billed on the statement, then you have an additional 29 days to pay it off (assuming due date is 29 days after stmt). Just be sure that the closing balance is always paid on or before the actual due date. The average number of days now from statement to due date is 23 days.
The way I control my utilization personally is to pay off all cards prior to statement date except for 1 that I let report approx 5% of its CL, this gives me the best possible FICO score. I then use the card throughout the month and again pay off the statement balance by the due date plus the charges I have made upto that point except for approx 5% of the CL that I will not pay off prior to statement cut and let report. Then the cycle starts all over again. I only do this when I know I am going to app for a new card in a month or so, this gives me time to get my utilization in order. If I am not going to app for anything then I will just let the balances report on all cards and pay them off in full by due date. Once you get the hang of it and understand it, its pretty easy.
OK, this makes a lot more sense. I thought that everything was due the month that you spend it. So for example, if I have a due date of the seventh, if I went out and charged $100 on my card right now, it would be due Jan 7th. That's why I couldn't figure out how to get cards to report. You're saying with a due date of the 7th and a statement date of the 10th, if I go out and spend $100 right now, the statement on Jan 10th will show $100, and today's $100 purchase will actually be due FEB 7th. Am I getting that right?
yep $100 today would be due Feb 7.
Got it, thank you so much, I really appreciate your patience in explaining things that I should know already.
