low credit card utilized and still terrible score

[Anonymous]

---

haulingthescoreup wrote: 

[...] You don't need or want to have every card reporting a balance. Keep using all three, but pay two off before the statement drops so that they will report $0 balances. Let a token amount report on the third card, as you are doing now, and then immediately pay it off. That might help some, but I think that basically you're going to have to wait and let some years accumulate. [...]

---

So, the cost of having credit utilization reported is equivalent to the interest charges?  We can maintain our account with our credit card companies by making occasional purchases, and we can maintain a decent credit score without paying interest if we always pay off our balances in full, but in order to have a superior score with a credit utilization above zero percent, we need to pay interest.  If (say) 7% is an ideal credit utilization, then we are better off with low credit lines since it'll cost us less in interest charges to attain the desired credit utilization.  Interesting.

[smallfry]

---

@Anonymous wrote:

---

haulingthescoreup wrote: 

[...] You don't need or want to have every card reporting a balance. Keep using all three, but pay two off before the statement drops so that they will report $0 balances. Let a token amount report on the third card, as you are doing now, and then immediately pay it off. That might help some, but I think that basically you're going to have to wait and let some years accumulate. [...]

---

So, the cost of having credit utilization reported is equivalent to the interest charges?  We can maintain our account with our credit card companies by making occasional purchases, and we can maintain a decent credit score without paying interest if we always pay off our balances in full, but in order to have a superior score with a credit utilization above zero percent, we need to pay interest.  If (say) 7% is an ideal credit utilization, then we are better off with low credit lines since it'll cost us less in interest charges to attain the desired credit utilization.  Interesting.

---

No you don't have to pay interest. Pay it down to 0 before the due date but after the statement closes. You do of course understand the difference?

[Jazzzy]

---

@Anonymous wrote:

So, the cost of having credit utilization reported is equivalent to the interest charges?  We can maintain our account with our credit card companies by making occasional purchases, and we can maintain a decent credit score without paying interest if we always pay off our balances in full, but in order to have a superior score with a credit utilization above zero percent, we need to pay interest.  If (say) 7% is an ideal credit utilization, then we are better off with low credit lines since it'll cost us less in interest charges to attain the desired credit utilization.  Interesting.

---

No...as smallfry said above, no one needs to pay interest.

What we do at our house is pay most everything before the statements cut...but we leave a tiny charge on one. Then, when that statement drops, we pay that little bit off immediately. There is no interest paid that way because no balance is revolved from month to month.

I know it gets confusing. I finally put my accounts on an Excel spreadsheet to make sure I don't screw up. Of course, this kind of tweaking is only necessary if you are going to be applying for credit in the next few months.

[haulingthescoreup]

---

fast2 wrote:

So, the cost of having credit utilization reported is equivalent to the interest charges?  We can maintain our account with our credit card companies by making occasional purchases, and we can maintain a decent credit score without paying interest if we always pay off our balances in full, but in order to have a superior score with a credit utilization above zero percent, we need to pay interest.  If (say) 7% is an ideal credit utilization, then we are better off with low credit lines since it'll cost us less in interest charges to attain the desired credit utilization.  Interesting.

---

No, no, no, as the others said, that's the opposite of what I was trying to explain.

There are the balances that show on your credit reports <-- that's used in FICO scoring. A report doesn't show whether they're paid off immediately or carried for decades; it's just what your lenders reported as what is showing on your statement. (That's the usual pattern. NSBC/ Orchard bank cards and US Bank cards report the balance showing on the last business day of the month.

Then there are the balances that we think of as "carrying a balance," where you don't pay your cards off in full every month.

If you wait for your statement to post, and then pay in full in the next day or so, you have a balance showing on your credit report (a FICO scoring issue), but you aren't carrying a balance with the CCC, and you're not paying interest.

If you pay off the balance that displays a few days before your statement date, you will have $0 showing on your reports (a FICO issue), and you still aren't paying interest.

If you wait for your statement to post, and then pay only part of what displays, you will have a balance showing on your reports (FICO issue), and you will be carrying a balance into the next month, and you will owe interest on what you didn't pay.

It's confusing at first, I agree.

It would be a lot easier if lenders reported the balance as of the due date or the day after, but they chose to use the statement date (or the last business day of the month for some, as mentioned above), so there's this disconnect between what our credit reports make it look like we owe vs what we really owe.

[Anonymous]

>>Beam me Up 

What law states they cannot report after the BK filing date on a chapter 13 ?  I'd like to write the letters to dispute them

[Anonymous]

This dispute is so common that, if I remember correctly, it is one of the options on the drop down boxes on the CRA's online dispute.

I sent my disputes via snail mail and my paragraph read something like:  "This account was included in bankruptcy.  Bankruptcy was filed on month/date.  Please remove lates reported after that date."

We did have to do this for several accounts, and it worked swell.  I have no idea why they don't report correctly in the first place - very frustrating.  But the corrections were fairly easy.  If it doesn't work the first time, try again.  I think a few of them took two shots.

Good luck on getting your reports reporting properly - it's worth the effort.

[Anonymous]

---

haulingthescoreup wrote:

If you pay off the balance that displays a few days before your statement date, you will have $0 showing on your reports (a FICO issue), and you still aren't paying interest.

---

Displays where?

If I'm understanding this correctly, not only would I be paying before the due date (in order to show a lesser than otherwise balance on my credit reports), but I would be paying even before the statement itself is generated.  In cases where we pay some (but not all), doesn't this mean that two payments must be made?  I ask because someone I know inadvertently made her Wal-mart payment two days before the statement date, and the consequeces was a late payment, for instead of one payment being applied to one billing cycle and the other payment being applied to the latter billing cycle, two payments were applied to the former and none to the latter.

Summary of thoughts:

1) Pay in full before statement date: no interest paid & no balance shown on credit report

2) Pay in full after statement date: no interest paid & full balance shown on credit report

3) Partial payment before statement date: less interest paid & less balance shown on credit report

4) Partial payment after statement date: less interest paid & full balance shown on credit report

If option 3 is chosen, then a second payment must be made:

5) Partial payment before statement date & remainder paid after statement date: no interest paid & low balance shown on credit report.

[Jazzzy]

We normally make one payment per month on each card...the entire balance before the statement cuts. Then we do it again the next month.

We pay twice when we let a small charge show on a card. We pay all but the small charge before the statement cuts and then pay the small charge right after the statement cuts.

[Anonymous]

That clears it up for me.  Thanks a bunch.

[Anonymous]

aot2002 ...

.. dont get unrealistic expectations for huge increases in your score when the BK falls off. Im may be an isolated ( and Im curious what other's experience is ) case but I actually saw no change in my score when my Ch7 fell off after 10 years. I was bummed out because I had these expectations of a giant score inscrease. I think the effect is weighted over time and as someone said, Im guessing if you have more lates / derogs after your BK it may hurt more. I got my mortgage in 2005 and one thing the loan officer said was that as long as I had no lates within the last 12 months I would be ok, even with scores around 600 ... not so sure that would fly now in 2010, but that shows the importance of on time after a BK I think.

Im sure you have seen the breakdown of what goes into your score, but if not check it out and remember that your payment history is a third of your score so those lates are the real killers.

I have one big bad mark on my report ( a collection accnt from Sprint ( via AFNI - watch out!! ) ) while I was deployed overseas and they wouldnt budge to take it off .. anyway .. it keeps me hovering around the 700 mark plus or minus and really irritates the heck out of me! Keep the spirits up though, Ive raised my scores from the 580 range to the 700 range in 2.5 years by correcting my report via disputes and keeping my payments on time and a 1-9% Util on my CC's .. time heals all wounds it would seem!

Dave.