CC Utilization Question

ChiAndruw · ‎11-08-2011

Hi.

First post....be kind.

I'm new to credit, at least by lenders' eyes. I have a Citi $4000 CL (6 month ann is this Thursday/$1900 Bal {0% int thru 2013}), Discover More $2000 CL (6 month ann is Dec), Bill Me Later $1000 (4 months old/$500 bal) , & a personal loan of $1500 (2 months old but half paid ready).

While I used to think that paying my monthy payment (I always pay more than the min) was enough, that clearly is not the case from reading posts.

My question: If I use my card (Discover More) and use 25-30% monthly (by putting bills, food, gas, etc on it) and PIF, this actually hurts my FICO b/c I go over 9% utilization on the card? I PIF before the statement cuts. I am confused whether the utilization is pre post statement cutting. Thanks.

Anonymous · ‎11-08-2011

From what I understand for most cards the balance on the statement date is what is used to calculate utilization. It doesn't matter what you do before or after that, you can charge as much as you want but the balance due on your statement is what is used for your official utilization for the month.

Most people like to make a payment about 4 or 5 days before the statement cuts, but not PIF just to pay the balance down to report 5-9%, then after the statement cuts then they PIF the rest to avoid interest.

RobertEG · ‎11-08-2011

Welcome to the site!

As a preliminary, my opinion is that the "9% rule" is a bit overemphasized in normal importance. Since percent utilization is one of the few, if not the only, scoring category that retains no historical memory, what it is this month does not control your score next month. It is primarily a fine-tweaking tool that becomes of importance just before one is ready to actually use their score in the application for new credit. Of course, keeping util low is always a good habit so that you can resort to fine-tweaking when necessary.

You can gain some knowledge of when your CCC reports by varying your payment times over a few months, and see what balance is reported. Then you can use that knowledge when it becomes important to the actual fine-tweaking of your score.

Wolf3 · ‎11-08-2011

@ChiAndruw wrote:
Hi.
First post....be kind.
I'm new to credit, at least by lenders' eyes. I have a Citi $4000 CL (6 month ann is this Thursday/$1900 Bal {0% int thru 2013}), Discover More $2000 CL (6 month ann is Dec), Bill Me Later $1000 (4 months old/$500 bal) , & a personal loan of $1500 (2 months old but half paid ready).

While I used to think that paying my monthy payment (I always pay more than the min) was enough, that clearly is not the case from reading posts.

My question: If I use my card (Discover More) and use 25-30% monthly (by putting bills, food, gas, etc on it) and PIF, this actually hurts my FICO b/c I go over 9% utilization on the card? I PIF before the statement cuts. I am confused whether the utilization is pre post statement cutting. Thanks.

Bill Me Later does not report so do not count it in your utilization.

The statement closing balance is usually the reported value. Utilization is a point in time calculation, so your score will go up and down based upon it.

Personallly, I plan my applications in advance, so I only worry about utilization at application time.