A zero credit card utilization ratio

[vanillabean]

A credit card prepayment is a great way to bring down a credit card's reported statement cycle balance. By prepayment, I mean making a payment inbetween the previous cycle's due date and the upcoming statement cycle date.

It's my impression (but I might be wrong) that bringing down a balance of $1 to $0 results a bigger credit score increase than from $100 to $1, at least when applied to some of your cards (probably not all of them).

But let's say you happened to use the card for cash just once within the cycle. Let's say you prepaid in full two days before the statement cycle date.

I'm guessing the cash then shouldn't collect any more interest. Still, the interest is not posted online until the statement is posted, at which time prepayment makes little sense. My question is this: is there a way around that?

[RobertEG]

I see your logic, but dont totally agree.
This is exrtreme fine tweaking of FICO scoring, but that is the thrust of your post.

Bringing down a balance from $100 to $1 dollar on one card, depending upon the CL on the card, may mean little to FICO scoring. Bringing it down to %0 may mean more.

A lot also depends on what other revolving cards you have,their balance, and their % util.

Revolving utill is scored three major ways.  As Fair Isaac has stated numerous times, approx. half of your util of revolving credit is scored based on your overall % util of all you revolving (CC) accounts, combined.

The remaining half of utili scoring is based on the combined scoring of the % util on each indiv card.  That remaining one-half has two components.  First, a view of the % util on each card, and then on the % of total cards reporting a $0 balance.  A fine-tweaking of monthly  FICO scoring is to have each indiv card under 10%, which of course, necessrily resutls in an overall % util of under 10%.   All experience from those who post on this site is that keeping % util under 10% approaches maximum FICO scoring as to % util.

But keeping $1 on a card shows it reporting a balance, and does not help you in their computation of the % of your cards showing any balance.

I all cards showed a $1 balance, then 100% of your cards would have a monthly balance.  Maybe play that game with one card, and keep some reported balance, but not with all.

[vanillabean]

RobertEG, thanks for your detailed response and for your comment the other day as well.

I am reminded of how the FICO scoring system may look at a balance on a card, whose company reports neither the card's credit limit nor its high balance to a given credit bureau.

I suspect it's not favorable. What if the balance is $2,000? The credit bureau has no way of telling if you have maxed out the card or if your credit limit is say $24,000.

[GregB]

Is there a CC that reports neither a Credit Limit nor High Balance? I'm wondering if it then is not reported in Revolving.

[vanillabean]

GregB wrote:

"Is there a CC that reports neither a Credit Limit nor High Balance? I'm wondering if it then is not reported in Revolving."

It is. But I'm also assuming that the credit bureau keeps track of the card's payment history and can calculate its high balance based on it.

I wonder if Fair Isaac does likewise, independently of the credit bureaus. Or do each of the credit bureaus provide Fair Isaac with a card's recent payment history complete with dollar amounts?

I'm asking because when one of my cards at some point was slightly above the 50% mark of its unlisted high balance, the Score Watch EQ dropped considerably compared to the month before when the balance was slightly below 50%.

It was a slip on my part of course and soon it didn't matter anyway, but the mystery stuck with me.

So if the unlisted high balance is known and is compared to the card's monthly balance for utilization, one can hope it's also added to credit limit total.

On the other side however, a credit bureau or Fair Isaac may simply consider the high balance to be $0, but then how do they assess the utilization for that card?