Credit useage is wrong because I pay off my balance each month

[Anonymous]

Here's what I hope is a fair summary of the problem and solution:

WHO HAS THE PROBLEM?

People who spend a big chunk of their total credit limit on most months.  They pay in full (PIF) after the statement date, but it doesn't stop their reported balances to the credit bureaus from being high.

Note that two things have to combine to create the problem. 

      (1) The high spending (relative to CL) has to be happening most months.  If most months the spending is not high, then the score drop due to high utilization is a temporary blip that a consumer can ignore. 

      (2) He has to have a small total credit limit relative to his spending.

SHORT TERM SOLUTION -- MAKING TWO PAYMENTS:

     (1) Pay your cards down to $0 before they report (but always have at least one card report $5 or more)

     (2) Pay the statement balance in full as usual after the statement prints.

Note that step #2 can be automated.  Just set up all your cards to PIF via the card's autopay feature.  No work on your end.

Step #1 can also be automated if your spending is consistently high.  You could set up a "push" from your bank account to your card of its typical balance, programmed to occur about a week before the statement prints.

LONGER TERM SOLUTION -- BUILD A HIGHER CREDIT LIMIT

Anyone who is consistently spending a ton on cards can build a total credit limit that is 12 times his current spending.  The high spending actually makes such a person a great candidate for adding a new credit card every quarter that has a huge signup bonus.  Many people on these forums have a total CL of 200k or more.  Just keep applying for cards, downgrade them to no-annual-fee cards 11 months after you open them, and in a fairly short time you will have a high total CL.  (You can also be applying for CLIs with "soft pull only" tools.)

[Anonymous]

PS.  Regarding Chase and its policy of mid-cycle reports.....

*  Chase reports every time your current (positive) balance drops to $0 or less.  The only time this might not happen is if the last time Chase reported it was $0 -- I don't know about that corner case, but practically no one would care.

There are many CC issuers besides Chase who are willing to do mid-cycle reports, either as standard practice or if the consumer requests it.  Someone here on the forum began a thread (three months ago?) to summarize the policy of each major CC issuer.  Does anyone know where that thread is?

[Anonymous]

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@Anonymous wrote:

PS.  Regarding Chase and its policy of mid-cycle reports.....

*  Chase reports every time your current (positive) balance drops to $0 or less.  The only time this might not happen is if the last time Chase reported it was $0 -- I don't know about that corner case, but practically no one would care.

There are many CC issuers besides Chase who are willing to do mid-cycle reports, either as standard practice or if the consumer requests it.  Someone here on the forum began a thread (three months ago?) to summarize the policy of each major CC issuer.  Does anyone know where that thread is?

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I would like to see this thread and figure out if mine do that.

[Anonymous]

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@Anonymous wrote:

Here's what I hope is a fair summary of the problem and solution:

WHO HAS THE PROBLEM?

People who spend a big chunk of their total credit limit on most months.  They pay in full (PIF) after the statement date, but it doesn't stop their reported balances to the credit bureaus from being high.

Note that two things have to combine to create the problem. 

      (1) The high spending (relative to CL) has to be happening most months.  If most months the spending is not high, then the score drop due to high utilization is a temporary blip that a consumer can ignore. 

      (2) He has to have a small total credit limit relative to his spending.

SHORT TERM SOLUTION -- MAKING TWO PAYMENTS:

     (1) Pay your cards down to $0 before they report (but always have at least one card report $5 or more)

     (2) Pay the statement balance in full as usual after the statement prints.

Note that step #2 can be automated.  Just set up all your cards to PIF via the card's autopay feature.  No work on your end.

Step #1 can also be automated if your spending is consistently high.  You could set up a "push" from your bank account to your card of its typical balance, programmed to occur about a week before the statement prints.

LONGER TERM SOLUTION -- BUILD A HIGHER CREDIT LIMIT

Anyone who is consistently spending a ton on cards can build a total credit limit that is 12 times his current spending.  The high spending actually makes such a person a great candidate for adding a new credit card every quarter that has a huge signup bonus.  Many people on these forums have a total CL of 200k or more.  Just keep applying for cards, downgrade them to no-annual-fee cards 11 months after you open them, and in a fairly short time you will have a high total CL.  (You can also be applying for CLIs with "soft pull only" tools.)

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My problem is the card I use the most (best rewards) doesn't have my highest limit.  My other one does but the rewards are not as good.  I split what I charge between them because one gives better rewards in a category while another is a flat 1.5% cash rewards.

[Anonymous]

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@Anonymous wrote:

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My problem is the card I use the most (best rewards) doesn't have my highest limit.  My other one does but the rewards are not as good.  I split what I charge between them because one gives better rewards in a category while another is a flat 1.5% cash rewards.

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Very helpful!  Thanks.

My advice is then the basic twofold advice I give above. 

Short term, set up all cards on autopay.  Boom.  No more work to PIF after the statement prints.  As far as before the statement prints, it sounds like you only have one "problem" card to deal with, so that's just one manual payment per month.  Set up a monthly reminder to pay that card to $5 about a week before the statement typically prints.  Problem solved there.

Medium/long term.  I'd consider the idea of opening a new card once per quarter -- a card with a huge signup bonus.  The rewards you will get for doing that far exceed whatever you are getting on your current card.  Then, as I indicated earlier, downgrade each new card to a no-annual-fee cards 11 months after you open it.  Anybody who is doing a good deal of spending should be able to find a nice new card to put the spending on.  If not four times a year, then at least twice a year.  There are promotional offers that require a minimum spend as little as $500 in ninety days, and some that require a much higher minimum spend (e.g. 3k in ninety days).

[HeavenOhio]

CCID, I've seen Chase report zero at least three times in a cycle. Also, if you'd like to "print" a balance but not have it report, let the statement cut and pay it down right away. Chase will bypass reporting the positive balance and go straight to reporting zero. Making the payment the next business day is fine, but there might even be a little more leeway.

Here's the thread:

Credit Cards that Update with Zero Balance Mid-Cycle

[Anonymous]

Thanks Heaven!  It looks like the person who was maintaining that thread (Fedralist) may have stopped.  I have pinged Fedralist and asked if he/she can update it with the new information that perople have given in the last several posts (on that thread).  (Info on Citi, BOA, etc.)