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I know that FICO scores are affected by the amout/percentage that reports to the CRA"s each month, but what about the usage that takes place during the month, prior to the reporting....does that matter?
For instance, if I have a $1500 limit and charge it up to $750 the first week of the statement, then pay the $750 off a few days later, then charge $900 the second week of the statement and pay it off a few days later, then charge $500 the third week of the statement and pay it off a few days later and when it is all said and done for the month, at the end of the statement, I have a balance of $150 (10% of the $1500) credit limit, will the excessive use of the card throughout the month affect my FICO score or is it only affected by the reporting balance?
The reason I ask this is because I have read several articles that say a person should never charge more than 20-30% of their CL at any given time.
Also, does this type of usage appear to the CC companies as responsible or irresponsible usage?
Your score is not affected by multiple payments throughout a billing cycle; it goes by the balance, which is generally reported following the statement date. As for the credit card companies, they may not care as long as you consistently pay in full by the due date. Some say to keep a reasonably low utilization throughout any cycle not to scare the lender, some say to go for high usage to show you qualify for a credit card limit increase. Some lenders view multiple payments as erratic behavior, others don’t mind as long as they get their money. Responsible consistency may well be the key.
> ... Some lenders view multiple payments as erratic behavior ...
Really? Any documentation? When I recently made significant payments to lower excessive balances on my BoA cards, they reported to the CRAs mid-cycle, which was to my benefit. Clearly, they didn't mind the multiple payments.
I'd have thought that 'pay-as-you-go' behavior would be considered responsible (if not desirable) by most issuers of credit.
EQ | 841 | 5 INQ (Auto, CC, HELOC, 2 mort) | 7y2m |
EX | 812 | 5 INQ (2 CC, 2 mort, HELoan) | 6y11m |
TU | 829 | 4 INQ (3 CC, 1 mort) | 6y6m |
5/24 | 3/12 | AoYA 0m | AoOA 23y6m | ~3% |
By erratic behavior, I am mostly referring to 1) excessive total of charges that may exceed your income and 2) obsession with immediate payments which may run into a limit of allowable or overlapping payments per billing cycle or forgetting to take the due date adequately into account. Some of this is discussed in the following amusing exchanges.
Amex FR from multiple payments per month?
http://ficoforums.myfico.com/t5/Credit-Cards/Amex-FR-from-multiple-payments-per-month/td-p/2775805
? on multiple payments on Discover IT
http://ficoforums.myfico.com/t5/Credit-Cards/on-multiple-payments-on-Discover-IT/td-p/1915545
Multiple payments per month to Cap 1
http://ficoforums.myfico.com/t5/Credit-Cards/Multiple-payments-per-month-to-Cap-1/m-p/1405108#U14051...
Making multiple payments causes 7 day hold
http://ficoforums.myfico.com/t5/Credit-Cards/Making-multiple-payments-causes-7-day-hold/td-p/1147695
Barclays holding payments 7 days?
http://ficoforums.myfico.com/t5/Credit-Cards/Barclays-holding-payments-7-days/td-p/2644109
Does paying a CC multiple times a month affect FICO score?
http://ficoforums.myfico.com/t5/Credit-Cards/How-Many-Times-Do-You-Pay-Your-CC-Per-Month/td-p/989368
@Anonymous-own-fico wrote:Your score is not affected by multiple payments throughout a billing cycle; it goes by the balance, which is generally reported following the statement date. As for the credit card companies, they may not care as long as you consistently pay in full by the due date. Some say to keep a reasonably low utilization throughout any cycle not to scare the lender, some say to go for high usage to show you qualify for a credit card limit increase. Some lenders view multiple payments as erratic behavior, others don’t mind as long as they get their money. Responsible consistency may well be the key.
This is the main reason I am doing this. I want them to see that I have the financial means to pay more than my credit limit in full each month so they will give me a substantial CLI. I have kept all charges below 50% so far, but I have put through over $2000 a month on a $1500 card for 2 months now and only left 10% reporting, so I hope to get a CLI very soon. I leave 10% for them to make a little interest on, hoping they will see me as an advantage. I have had the account for 6 months now with Barclay's.
I did notice on a couple of my CR's that there is a place to show how much the min pmt is each month and how much I actually paid. I am not sure if this is something creditors look at but there has to be a reason for it to be reporting.
@Divaofsongs wrote:
@Anonymous-own-fico wrote:Your score is not affected by multiple payments throughout a billing cycle; it goes by the balance, which is generally reported following the statement date. As for the credit card companies, they may not care as long as you consistently pay in full by the due date. Some say to keep a reasonably low utilization throughout any cycle not to scare the lender, some say to go for high usage to show you qualify for a credit card limit increase. Some lenders view multiple payments as erratic behavior, others don’t mind as long as they get their money. Responsible consistency may well be the key.
This is the main reason I am doing this. I want them to see that I have the financial means to pay more than my credit limit in full each month so they will give me a substantial CLI. I have kept all charges below 50% so far, but I have put through over $2000 a month on a $1500 card for 2 months now and only left 10% reporting, so I hope to get a CLI very soon. I leave 10% for them to make a little interest on, hoping they will see me as an advantage. I have had the account for 6 months now with Barclay's.
I did notice on a couple of my CR's that there is a place to show how much the min pmt is each month and how much I actually paid. I am not sure if this is something creditors look at but there has to be a reason for it to be reporting.
The minimum payment is more for installment loans, it doesn't have much to do with credit cards other than to potentially see if someone is making more than the minimum payment though it can factor into one's DTI calculation.
The likely main reason for the information is to see what historical balances have been for a given user: it's very, very easy to napkin math their financial situation based on income, reasonable expenses, and their credit card balances vs. their payments. Also it can show changes in behavior historically that might not show up otherwise (say for example someone starts floating balances but never gets to a 30+ day late) indicating financial instability or other things.
How precisely underwriters are using it isn't known; however, if it's on the credit report, it's 100% certain it's being used.
Paying multiple times a month when your CL isn't sufficient is absolutely a useful strategy for gaining a CLI in my book; however, paying multiple times per month outside of this situation is definitely not the consumer norm and as such I try to avoid that behavior as much as possible.