Scoring - using credit card(s) question

[bigtim]

I'm familiar with optimal utilization, etc.

In general, all other things being 'equal' or irrelevant - considering only one card is showing a balance below 9%, etc., is it better for scoring to make a charge on one of your cards and pay it down over time - sort of like an installment loan, or can I just PIF each month? Or will it not matter in terms of scoring.

My normal routine is to use each of my cards periodically, on a regular basis, and PIF each month, sometimes leaving a small balance on a card. I want to give maximum increase to my score over the next year or two, and intuition is telling me (for max scoring) to make a relatively large purchase, which I am planning on anyway, and pay it off gradually over several months. Am I correct? I do already have an installment loan...

Thanks

[creditwherecreditisdue]

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@bigtim wrote:

I'm familiar with optimal utilization, etc.

In general, all other things being 'equal' or irrelevant - considering only one card is showing a balance below 9%, etc., is it better for scoring to make a charge on one of your cards and pay it down over time - sort of like an installment loan, or can I just PIF each month? Or will it not matter in terms of scoring.

My normal routine is to use each of my cards periodically, on a regular basis, and PIF each month, sometimes leaving a small balance on a card. I want to give maximum increase to my score over the next year or two, and intuition is telling me (for max scoring) to make a relatively large purchase, which I am planning on anyway, and pay it off gradually over several months. Am I correct? I do already have an installment loan...

Thanks

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This won't do it. It won't make your score any higher in the long run and may make it lower in the short run.

Just to be clear:

Optimal credit UTIL is:

• Total UTIL of >0 and <=9%, the lower the better, and
• Reporting a balance on less than half of your revolving TL's, and
• Reporting a balance on half or less of all TL's.

[Anonymous]

and I think the %UTIL of installment loans is figured in there too (several threads discussing this).

[haulingthescoreup]

The score formula has no memory for whether you're paying down (or letting balances inch up.) It just looks at what's there at that moment, and it cranks the numbers.

Many people think there's a benefit to dragging out payments due to what they see on the sim --"reduce your balances over 24 months." That just means reduce your balances + keep your nose clean for 24 months. If you paid them off immediately, and then behaved for two years, that's where you'd wind up.

But in the meantime, dragging out repayment invites AA. I'd never recommend doing that.

[Anonymous]

Many people belive that draggin out payments will increase your score because the simulator shows it this way. On mine it shows a 30 point increase by letting it drag out 3 months. Why would that be? I only have 3 accounts reashing anniversary on those dates could that be it? i wouldnt think so.

[haulingthescoreup]

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riknunez wrote:
Many people belive that draggin out payments will increase your score because the simulator shows it this way. On mine it shows a 30 point increase by letting it drag out 3 months. Why would that be? I only have 3 accounts reashing anniversary on those dates could that be it? i wouldnt think so.

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Please read my post above again.

The sim is combining the effect of paying down your balance with the effect of X months of clean reporting history.

If you paid your balance(s) now, and maintained perfect history for the next three months, the result would be the same as dragging it out.

The problem with dragging it out is that lenders reviewing your reports might wonder why you weren't paying off your balances promptly. Job loss? Financial irresponsibility? Brand new debts that they don't know about? And so forth.

[Anonymous]

I

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@haulingthescoreup wrote:

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@Anonymous wrote:
Many people belive that draggin out payments will increase your score because the simulator shows it this way. On mine it shows a 30 point increase by letting it drag out 3 months. Why would that be? I only have 3 accounts reashing anniversary on those dates could that be it? i wouldnt think so.

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Please read my post above again.

The sim is combining the effect of paying down your balance with the effect of X months of clean reporting history.

If you paid your balance(s) now, and maintained perfect history for the next three months, the result would be the same as dragging it out.

The problem with dragging it out is that lenders reviewing your reports might wonder why you weren't paying off your balances promptly. Job loss? Financial irresponsibility? Brand new debts that they don't know about? And so forth.

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I don't need to read it again. I understood your post. It's just hard to imagine an extra 30 points for just paying on time and have 1 account reach its anniversary. I will post in 2 months and see what happens. I am currently at 85% utilization but will be at about 13% by the end of September. Hopefully all my CC's will report within a month after. I appreciate your answer though, thanks.

[bigtim]

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@Anonymous wrote:
On mine it shows a 30 point increase by letting it drag out 3 months. Why would that be? I only have 3 accounts reashing anniversary on those dates could that be it? i wouldnt think so.

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Thanks everybody, I got my answer. Now I won't have to worry about managing an installment payment on my CC - I can PIF as usual - thanks.

In reply to the above quote - it very well might be the reason for a 30 point increase. I guess it would depend on your credit profile, but 3 accounts reaching an aniv is pretty good, along with keeping your current credit in good standing it wouldn't be so unusual I don't think to see that kind of increase, again, depending on your overall profile.

[haulingthescoreup]

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riknunez wrote:
I

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@haulingthescoreup wrote:

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@Anonymous wrote:
Many people belive that draggin out payments will increase your score because the simulator shows it this way. On mine it shows a 30 point increase by letting it drag out 3 months. Why would that be? I only have 3 accounts reashing anniversary on those dates could that be it? i wouldnt think so.

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Please read my post above again.

The sim is combining the effect of paying down your balance with the effect of X months of clean reporting history.

If you paid your balance(s) now, and maintained perfect history for the next three months, the result would be the same as dragging it out.

The problem with dragging it out is that lenders reviewing your reports might wonder why you weren't paying off your balances promptly. Job loss? Financial irresponsibility? Brand new debts that they don't know about? And so forth.

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I don't need to read it again. I understood your post. It's just hard to imagine an extra 30 points for just paying on time and have 1 account reach its anniversary. I will post in 2 months and see what happens. I am currently at 85% utilization but will be at about 13% by the end of September. Hopefully all my CC's will report within a month after. I appreciate your answer though, thanks.

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Sorry, my reply sounded a bit snarky, didn't it? Didn't mean it to. If that account turning one year old is your newest account, that might have something to do with the score jump.

Let us know your score changes after such a great reduction in util! Those posts are always great.

[Anonymous]

Not a problem, I guess we are all too passionate about this stuff. I will post my scores once I drop my utilization....