Does the appearance of 0 UT look bad?

Anonymous · ‎08-25-2016

So my SO has a few cards that she uses throughout the month for their rewards (ex: Chase Freedom 5% categories) but it has such a high APR (23%). Its not worth keeping a balance so we PIF within a day or two probably not enough time to report a balance. How does this play in terms of scoring?

creditguy · ‎08-25-2016

You would want to carry a small balance somewhere for reporting purposes, anything under 9 percent overall utilization is good. Doesn't matter if it's on one card or spread amongst several cards.

jeffm4688 · ‎08-26-2016

0 can look bad if the lender is capital one . Recently denied for not having balances on enough accounts. All jokes aside...

In the real credit world on a manual review it probably doesn't matter much, most paper reports show payments so technically I think if they wanted to look hard enough into it they can see it's had some usage.

As far as scoring, the best way to maximize your score is to pay all cards down to $0 before the statement cut date except for one and have it show less than 10% balance. If all the cards are paid off according to the report you technically usually lose a few points (5-10?) so it's nothing crazy.

Also you don't need to pay off your card within a day or two too avoid interest, the key is fully paying off the statement balance before the next due date. For example, Say you start with $0 and you charge $200 before the statement cuts on the 20th of the month. The statements due date is the 15th of next month. If you pay off last months balance in full before the due date you don't get charged interest. The key is to continually "pay in full" as if you don't pay in full by the due date one month you have to completely zero the card out again in order to start the grace period over again. If this makes sense.

Anonymous · ‎08-26-2016

I lost 18 points when all my cards reported 0. 14 points from Equifax and 19 points on Experian, just FYI.

I also dont think that only 1 reporting really works especially lets say if you have more than 5 cards. The only 1 reporting a balance works best if you have the regular folks who has 3 ... I dont know I maybe wrong but I'm going to keep experimenting which is best for me, out of 14 accounts to report 1 under 9% or have 2-4 reporting under 9% overall. Hopefully I get the right number to get the best boost on my score.

Berk · ‎08-26-2016

Just PIF on the due date and you will be fine. That is all I have ever done. Don't obsess about your scores.

TURNERHOOVER · ‎08-26-2016

You wouldn't think so but YES.

Anonymous · ‎08-26-2016

You do not need to PIF within a day or two of the purchase to avoid interest. You just have to pay before the due date. You want your cards to be reporting some utilization (ideally <30%, and for optimal scores, <10%). Since the two biggest parts of credit score are payment history and utilization, you do need to have reporting utilization and payments. (Technically you do have payments, just that they're so small and incremental and before you need to pay back, that this kind of defeats the point of credit cards and risk assessment in the first place.) One reason to pay before the statement cuts and reports your balance, is if you have high utilization and want to lower it first.

I always wait until my statement cuts, then PIF soon after (long before the due date). To "carry a balance" and accrue interest on it, which sounds like what you're concerned about, I would only be doing that if I still have a balance, from that statement period, after the due date.

So if your statement period is Jan 1 - Jan 30, and your due date for that period is Feb 28. In between Jan 1 - 30, you can charge up to the limit. Then your statement period ends, and they issue you the statement on Jan 30 with the reported current balance you have on your card (let's say $500), due by Feb 28. If you pay the entire $500 by Feb 28, no interest. They only start charging interest on whatever is left of the balance after Feb 28. This is why credit cards are essentially a short-term, no interest loan up until the due date. Then you get hit with those high interest rates.

Note that a NEW statement period would start on Feb 1 - Feb 28, with the due date as March 30. There's always overlap between the new statement period, and the old statement due date period. So let's say you charge $300 more in Feb 1-28. What's due on Feb 28 is still only the $500 from the old statement period. After Feb 28, interest is charged only on the leftover balance from the $500 (maybe you paid off $100 or so). The new $300 is only on the new statement. Hope that makes sense! And if you already knew all that, just ignore it lol.

Anonymous · ‎08-26-2016

How can I find when my statement period is (and for the other are you referring to when it says Minimum Payment due by this date?) via mobile banking?

My laptop recently crashed so I'm stuck on my iPhone for the time being.

So for your example the balance as of Feb 1st would be the reported balance?

Thanks for the info!

Anonymous · ‎08-26-2016

You should be able to see it if you can click to view or download your recent statement, and look for the statement period dates. Does your mobile banking for your credit card let you view or download statements?

Yes, when I say your due date period (I wish there was an official word for this!), I mean when the minimum payment is due. But that minimum payment amount is only to avoid late fees. So you can make the minimum payment by the due date and you won't pay late fees, but you will still accrue interest on what's left over after the due date.

Yes, the balance on Feb 1 would be the reported balance.

No problem! If you have other questions I'll do my best to help.

Anonymous · ‎08-26-2016

@creditguy wrote:
You would want to carry a small balance somewhere for reporting purposes, anything under 9 percent overall utilization is good. Doesn't matter if it's on one card or spread amongst several cards.

Slight tweak to your wording.... you probably don't intend to advise the OP to carry a balance. To carry a balance means to not pay your last statement in full. When you are carrying a balance it means you are paying interest to the CC company.

Example: Chase issues a statement to Bob for his Freedom Visa. On the statement it says Bob has an amount owed of $300 with a minimum payment of $25. Bob makes a payment of $200 before the due date. He has not paid the amount owed in full, so $100 is carried over to his next statement and he will be charged interest on it.

What you likely mean is that the OP needs to REPORT a small balance. That's great advice. It's just not the same thing as carrying a balance. When people pay their cards in full every month (but also continue to use at least one) it naturally results in reporting a balance.