Valued Contributor
Posts: 1,236
Registered: ‎03-22-2012
Re: When to pay Credit Card for best Utilization

Welcome to the forums!


Okay...Let me preface this by saying, "You only need to do this for 2 reasons, one, you will be applying for NEW credit within the next 30 to 60 days, two, you want to see how high you can get your scores." This is how to groom your scores to be their best:


You want 1 card to report a balance that is less than 9% of ALL your credit cards' credit lines and all the rest of your cards to report a zero balance. Lenders report your credit card balance anywhere from the payment due date to 3 or 4 days after the payment due date. You need to go online and pay your cards accordingly to set-up these reporting balances. So for the reporting card you would go online a few days BEFORE the payment due date and pay down the balance to less than 9% of all your CC's CLs. You cannot use this card again until 5 days after your payment due date. This insures that the CCC will report the balance you have set-up. You do the same thing for the rest of your cards except you need to pay those balances down to zero. The actual percentage to give you your absolute highest score could actually be any of the reporting percentages from 1% to 9%, it varies by individual. If you pay all your cards off in full your scores can actually be 5 to 12 points lower than if you allow 1 card to report a small balance. Doing this could actually save you thousands of dollars if when applying for a mortgage those 5 to 12 points kicked you into the next lower interest rate group.


The answers to your questions more directly are as follows:


1. Companies report balances anywhere from the payment due date till the payment due date + 4 days.


2. You want 1 card to report less than 9% and all other cards to report zero. If you actually had 2 cards reporting just $5 each you would loose a few points. For each additional card more than the first card that reports a balance, FICO subtracts a few points.


3. You can use your cards as much as you want, it is the REPORTING balance that counts. You could max out your cards every month as long as you paid the balances down before the payment due date.


I hope that was clear enough?

Starting Score: EQ 658 6/18/12
Current Score: EQ 705 6/21/15 - EX 783 6/21/15 - TU 707 6/21/15
Goal Score: EQ 720+
Take the FICO Fitness Challenge