Re: Why Pay New Charges In Full Before Statement Closes?
10-10-2012 11:56 PM
I'm with OP, I use the float unless I anticipate applying for credit.
In my mind, good credit score is something we attain so that we can take advantage of credit offers, floats, 0%APRs, rewards, better interest rates, etc. Alot of people bypass many of the advantages (particularly the floats and the 0%APRs) so that they can keep their scores higher on a consistent basis. But other than the spontaneous app,
I don't see what benefit it has. Ther important thing to me is not that I know what my exact credit score is today, but that I know my credit score can range from 670-770 depending on how much util I have reporting, and that I can generally adjust it to where I want it to be within 30 days.
The benefit shows up when your creditors periodically soft pull you for account review. Increased limits, decreased APRs, promotions, cash back incentives, and other things are offered to people who keep their report in shape. And if you get your report in shape just to acquire new credit, and then you start floating balances and using 0% APR offers, it can make you appear as a higher risk to your creditors than you were when you opened the account; this can cause financial reviews and adverse action.
I do take advantage of 0% offers and sign-up bonuses, but I try to limit them enough to still keep my reports in excellent shape.
Good point. I think it is always good to keep utilization below 10%, but I feel banks won't inflict any adverse actions for 20%. That should be plenty to cover a months spending, or some 0% offers.
Case in point: Discover soft pulled me a few days ago, and today's statement shows my APR was reduced again from 16.24% to 14.24%. So it pays off to keep your file in good condition even if you're not actively seeking new credit.
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