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Optimal Payoff In Full (PIF) Method

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Anonymous
Not applicable

Re: Optimal Payoff In Full (PIF) Method

Joe six pack,  building credit isn't a month to month challange it is long term.  Sure you can get a few points here or there and lose a few points.  I use Myfico and rarely does a day go by that I don't get an alert of some type for balance changes, some impact scores and some do not.  Each creditor reports balances at a different time of the month and most don't appear to be connected to statement dates.    I think chasing a few points is a waste of energy,  if you simply pay your bills on time, keep your utilization low on each card and overall and don't apply for credit recreationally your scores will build steadily over time.  

Message 11 of 22
Anonymous
Not applicable

Re: Optimal Payoff In Full (PIF) Method

Great comments by everyone.

 

It looks like we have two people asking for advice... our OP (JoeSixPack) and anther reader of the thread (SkyCommander).

 

JoeSixPack has clarified that he totally "gets" that he does not not need to do this "All Zero Except One" (AZEO) strategy every single month.  He's explained that he is about to apply for credit and so he is trying to squeeze out every extra possible point in the next two months. 

 

SkyCommander, is that also clear to you?  As a month by month strategy, when you are trying to improve your credit over the long term, AZEO is not needed.  Instead, the other folks on the thread suggest that you just set up autopay, use your cards, always pay in full, and keep your cards far away from being maxxed out.  If a particular card goes up to 55% one month, or your total utilization goes up to 35% (say) it's really not a big deal.  Any scoring penalty will be completely temporary.

 

That's an incredibly important idea.

 

Now, as far as the strategy for what to do when you have a short term need to get every extra possible point, that's easy:  AZEO with the remaining card reporting a small positive balance.  Just make it $10-20 and you're done.  That remaining card should be....

      (1) A true credit card (not a charge card)

      (2) A card in your name (not an AU card)

      (3) A card with a balance of at least $5 (ultra small dollar values can be sometimes reported as $0)

      (4) A card with a credit limit of < 29k.

 

That last bullet is because some FICO models will exclude cards with an enormous credit limit from the util calculation.

 

Final thought:

Our OP felt like there might be a possible conflict between (a) the need to use each card to prevent it from being closed due to inactivity and (b) the need to keep most cards reporting at $0.

 

There's no conflict.  You can make a charge, which registers inside that issuer's system, and will prevent it from being considered inactive.  Then pay the card down to zero.  In other words, the card needs to be used, but it does not need to report a positive balance on the final statement.  That can be done once every six months if you like.  Many people report cards being inactive for far longer than that without being closed. 

 

And as we discuss above, this whole AZEO thing is not needed most of the time!  Just in the six weeks before an important credit pull.

Message 12 of 22
SouthJamaica
Mega Contributor

Re: Optimal Payoff In Full (PIF) Method


@SkyCommander wrote:

So in my case with my 5 cards use them as I would normally but PIF before the statement cuts but leave 1 card report 1-10% Util? That card should be the one I use most often?


Doesn't matter which card reports a balance, as long as one of them reports a balance and the other 4 don't.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 13 of 22
SkyCommander
Frequent Contributor

Re: Optimal Payoff In Full (PIF) Method

I won't be applying for any cards or loans soon so needing a few points up quickly isn't my goal. Higher scores over the long term is. I might be confusing building higher credit scores vs  just making my scores higher now and their ways. With that being said use my cards as normal and let all my cards post a balance, as long as the Util is low on all of them, PIF, carry on with life and repeat next month.

Chase Hyatt | Chase Sapphire Preferred | Chase Freedom Unlimited | Amex ED | Amex Hilton | Amex Bonvoy | BoA Amtrak | CapOne Quicksilver
Message 14 of 22
Anonymous
Not applicable

Re: Optimal Payoff In Full (PIF) Method


@SkyCommander wrote:

I won't be applying for any cards or loans soon so needing a few points up quickly isn't my goal. Higher scores over the long term is. I might be confusing building higher credit scores vs  just making my scores higher now and their ways. With that being said use my cards as normal and let all my cards post a balance, as long as the Util is low on all of them, PIF, carry on with life and repeat next month.


That's it, SkyC, except that you don't need to let all your cards report a balance.

 

The advice you were getting from most of the other people (as far as the long term strategy) is to use your cards naturally.  Some will probably report $0 that month, because you won't use them.  Some will report with a positive balance -- perhaps all will if you use all of the cards for some reason (unlikely but possible).  Just use them and PIF each month.

 

Even the PIF part can be automated so you don't have to think about it.

 

If you think your natural style of spending won't cause any particular card to get over 48%, you can even forget about trying to keep your utilization low.

Message 15 of 22
SouthJamaica
Mega Contributor

Re: Optimal Payoff In Full (PIF) Method


@SkyCommander wrote:

I won't be applying for any cards or loans soon so needing a few points up quickly isn't my goal. Higher scores over the long term is. I might be confusing building higher credit scores vs  just making my scores higher now and their ways. With that being said use my cards as normal and let all my cards post a balance, as long as the Util is low on all of them, PIF, carry on with life and repeat next month.


I personally have no interest in having all of my cards reporting a balance. Some people like that, I don't. i like to pay stuff off as fast as I can. Period.

 

Also I prefer having my scores as high as possible at all times; I don't find it to be so predictable when I'm going to want my scores to be good.


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 16 of 22
SkyCommander
Frequent Contributor

Re: Optimal Payoff In Full (PIF) Method

Yeah some months I won't use a card or two when it comes to my Freedom or Delta but I use my Hyatt  and ED often. I know for sure that my cards post with 1-10% Util.

Chase Hyatt | Chase Sapphire Preferred | Chase Freedom Unlimited | Amex ED | Amex Hilton | Amex Bonvoy | BoA Amtrak | CapOne Quicksilver
Message 17 of 22
DeeBee78
Valued Contributor

Re: Optimal Payoff In Full (PIF) Method


@SouthJamaica wrote:

@SkyCommander wrote:

I won't be applying for any cards or loans soon so needing a few points up quickly isn't my goal. Higher scores over the long term is. I might be confusing building higher credit scores vs  just making my scores higher now and their ways. With that being said use my cards as normal and let all my cards post a balance, as long as the Util is low on all of them, PIF, carry on with life and repeat next month.


I personally have no interest in having all of my cards reporting a balance. Some people like that, I don't. i like to pay stuff off as fast as I can. Period.

 

Also I prefer having my scores as high as possible at all times; I don't find it to be so predictable when I'm going to want my scores to be good.


On cards like my BBR, I have to let a balance post, or I don't get the $30 a quarter bonus. I just put my Netflix on there and pay the $9.99 a month statement balance. 

Message 18 of 22
Anonymous
Not applicable

Re: Optimal Payoff In Full (PIF) Method


@SouthJamaica wrote:
I personally have no interest in having all of my cards reporting a balance. Some people like that, I don't. i like to pay stuff off as fast as I can. Period.

 

Also I prefer having my scores as high as possible at all times; I don't find it to be so predictable when I'm going to want my scores to be good.


 

So you always PIF before the closing date so no balance is reported at all?  How has this bonus activity affected your credit score vs normal?

 

I do believe AZEO is overkill except maybe when you're gonna get scored.  So I compromised and just set all my cards to have staggered opening dates and use each card for a several days before switching to another.  That keeps them all active with a 6 week grace period and are always PIF (most also have very small monthly subscriptions to keep them active).  And thats how I repaired my credit in the first place over the past several years (I'm over 800 now).  It's a bit of a pain because not all cards support eBills for autopayment, but I think its less of a pain than managing AZEO.

 

To the other poster, I had a 25+ year old card from BOA with a $15K or $25K credit limit closed for inactivity.  That really hurt.  So it's not a hypothetical worry.

 

Message 19 of 22
SouthJamaica
Mega Contributor

Re: Optimal Payoff In Full (PIF) Method


@Anonymous wrote:

@SouthJamaica wrote:
I personally have no interest in having all of my cards reporting a balance. Some people like that, I don't. i like to pay stuff off as fast as I can. Period.

 

Also I prefer having my scores as high as possible at all times; I don't find it to be so predictable when I'm going to want my scores to be good.


 

So you always PIF before the closing date so no balance is reported at all?

 

I target that, but don't always succeed. Usually I'll have a few reporting balances, typically 2 to 5 out of the present 24.

 

 How has this bonus activity affected your credit score vs normal?

 

I've been doing it ever since I've been paying attention to FICO scores, so I have no idea. This is my normal. At the very beginning of this process I was under the misimpression that having a lot of small balances provided a score boost, so I let a $25 balance post on each card. When I stopped doing that I probably gained a few points, but I don't remember if that's so, and if so how many points.

 

I do believe AZEO is overkill except maybe when you're gonna get scored.

 

It probably is for FICO 8 purposes. But I've been told that the mortgage scores, which I don't get to monitor regularly, are particularly sensitive to number of accounts reporting. And the mortgage scores, which are used for a lot of things other than mortgages, are pretty important. Arguably they're the most important scores in the whole bunch.

 

 So I compromised and just set all my cards to have staggered opening dates and use each card for a several days before switching to another.

 

I do that too.

 

 That keeps them all active with a 6 week grace period and are always PIF (most also have very small monthly subscriptions to keep them active).  And thats how I repaired my credit in the first place over the past several years (I'm over 800 now).  It's a bit of a pain because not all cards support eBills for autopayment, but I think its less of a pain than managing AZEO.

 

I don't think it makes a difference, in terms of time and 'pain', to pay before statement date rather than after.

 

To the other poster, I had a 25+ year old card from BOA with a $15K or $25K credit limit closed for inactivity.  That really hurt.  So it's not a hypothetical worry.

 


 


Total revolving limits 741200 (620700 reporting) FICO 8: EQ 701 TU 704 EX 685

Message 20 of 22
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