Frequent Contributor
Posts: 410
Registered: ‎02-06-2009
##### Re: Newbie Question......

I think there's some confusion in this thread, so let me try to clarify with a couple of points.

• You ALWAYS want to make a payment BEFORE the Payment Due date. This payment should be AT LEAST the Minimum Payment Due.
• If you don't pay the full Statement Balance before the Payment Due date, you will be charged interest. (in most cases)
• The balance on your account on the Statement Date is what gets reported to the credit reporting agencies EQ, TU and EX. (in most cases)
• Best Practice: To maximize your credit score, let all your cards report zero balance EXCEPT ONE. For the one card that reports a non-zero balance, let balance reflect 1% of the credit line for that card.

Let's use a real example... the first statement for my brand new Chase Amazon rewards card

Credit Line: \$5000

Statement Date: 11/9/2012

New Balance: \$378.08

Minimum Payment: \$25.00

Payment Due Date: 12/6/2012

From this we can calculate 378/5000 = 7.56% utilization. This will get reported to the credit agencies.

I've made additional charges of \$208.32 since the 11/9/2012 statement date. So my up-to-today balance is 378.08 + 208.32 = \$586.04

(For the purpose of this example, let's assume that's all the additional charges I incur from now till the next statement date. In reality, you should keep track and recalculate just before you make a payment, taking into account any future charges you may make before the next statement date.)

What are my payment options?

1. Pay nothing. I will get hit with a 30-day late derogatory that will stay on my CR for 7 years! Plus, I incur interest.
2. Pay the \$25 minimum due. I won't get hit with a late derogatory but I'll have to pay interest.
3. Pay the \$378.08 statement balance. I won't get a late derogatory and I won't pay interest. The balance on my next statement (estimated 12/9/2012) will be \$208.32. Calculate 208/5000 = 4.16% utilization. Not bad, but we can do better!
4. Pay such that only \$50 balance appears on the next statement. Why \$50? Because that's 1% of the 5000 credit limit. Calculate the payment 586.04 - 50 = \$536.04.
5. Pay everything I owe which is \$586.04. This results in zero balance on the next statement. And thus 0% utilization.

In the eyes of a credit agency

1. Get hit with a 30-day late on your report. Higher utilization reported.
2. No late derogatory but higher utilization reported.
3. Lower utilization reported but not optimal utilization.
4. 1% utilization reported.
5. 0% utilization reported.

BEST PRACTICE: Do #5 for all cards except one. For that one card, do #4.

Does that make sense?

06/28/2016 - EX 806 (Credit Scorecard EX FICO® Score 8, range 300-850)
06/20/2016 - TU 817 (Discover TU FICO® Score 8, range 300-850)
05/24/2016 - EQ 807 (Citi EQ FICO® Bankcard Score 8, range 250-900)
GOAL - 800! - App free since 12/13/2015