topic Re: Utilization/balance reporting in Credit Cards

Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 06:27:43 GMT

What is the best strategy for boosting credit score when it comes utilization reporting??? Should all cards be paid down to 0? Should all cards carry a small balance? Any tips would be much appreciated!

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 06:42:51 GMT

For best scoring, all cards should be at 0% except for one, and that one should report under 9%. But that's just for best scoring. For best SLs when you're apping for new cards, it's better to have a balance under 30% on at least 2 cards.

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 06:55:16 GMT

How do I go about having a card report at 0 or 1%. Meaning like if my due date is the 16th each month, clearly I understand that I need to pay in full for a $0 balance, but when does that balance report?? On the due date??? How soon can I make purchases after the due date, in order for the balance to report at 0.

Same question for the 1%. Do I pay the balance except for a small amount? Or do I pay the balance, and recharge a small amount? And how can I find out what day it reports?

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 08:27:13 GMT

@Anonymous wrote:
How do I go about having a card report at 0 or 1%. Meaning like if my due date is the 16th each month, clearly I understand that I need to pay in full for a $0 balance, but when does that balance report?? On the due date??? How soon can I make purchases after the due date, in order for the balance to report at 0.
Same question for the 1%. Do I pay the balance except for a small amount? Or do I pay the balance, and recharge a small amount? And how can I find out what day it reports?

The balance will report after your statement cuts, not on the due date. Each lender is different, so you'll have to look at your statements to see what the closing date is for each of your cards. For example, Capital One cuts my statement 3 days after the due date, but Amex cuts my statement 5 days after the due date. So once you figure out when your statement cuts, then you can spend again after that date. And in order to have say 5% util report, you just leave a small balance on your card until after the due date (still pay your minimum payment though) and after the statement cuts. Example; say you have a $1000 limit and you charge $100 that month. When your due date comes you can pay $50 and leave the remaining $50 until after your statement cuts. This will have 5% utilization report to the credit bureaus. After statement cuts pay off the remaining $50. Rinse and repeat.

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 07:53:33 GMT

So I think im starting to be confused, let me see if I got this...............

I'll use one of my cards as an example

Capital one with $750 limit.

Due Date is the 20th of each month

Statement generates on the 23rd of each month

So say my current balance is $0.

I charge $150 on the card.............

That's where i become confused.

I need to pay all but $37.50 of that by the due date of the 16th, even though a statement hasn't generated?

Or do I let the statement generate, pay all except 5%, and then pay the rest after the next statement generates?

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 08:03:27 GMT

@Anonymous wrote:
So I think im starting to be confused, let me see if I got this...............

I'll use one of my cards as an example
Capital one with $750 limit.
Due Date is the 20th of each month
Statement generates on the 23rd of each month
So say my current balance is $0.
I charge $150 on the card.............
That's where i become confused.
I need to pay all but $37.50 of that by the due date of the 16th, even though a statement hasn't generated?
Or do I let the statement generate, pay all except 5%, and then pay the rest after the next statement generates?

You got it. But in the example you provided, if you charged $150, you can pay $140 by (or preferably before) your due date on the 20th. That will leave you with a $10 balance. Leave that $10 on there until after the statement cuts on the 23rd.

Make it as simple as you can. You can even leave a $5 balance. Just whatever you do make sure you pay the majority of it by (or before) your due date.

And really, with this whole utilization thing, sure it will help your scores, but I think it's over rated. The most important thing to remember is always pay by your due date, try to pay more than the minimum due, and try not to let a balance greater than 30% report - cause that will hurt your score.

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 08:06:13 GMT

@Anonymous wrote:
So I think im starting to be confused, let me see if I got this...............

I'll use one of my cards as an example
Capital one with $750 limit.
Due Date is the 20th of each month
Statement generates on the 23rd of each month
So say my current balance is $0.
I charge $150 on the card.............
That's where i become confused.
I need to pay all but $37.50 of that by the due date of the 16th, even though a statement hasn't generated?
Or do I let the statement generate, pay all except 5%, and then pay the rest after the next statement generates?

Pay that by the 20th down to 37.50 or even 8.00 and let it report. Once the statement cuts (generates) then it will show your new balance. Most people get confused with this method. They will pay by the due date and charge again right after which will make the statement cut with the new charges instead of your old balance. Once you see your new low balance, you can charge again and repeat if you want.

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 08:25:25 GMT

@Anonymous wrote:
Pay that by the 20th down to 37.50 or even 8.00 and let it report. Once the statement cuts (generates) then it will show your new balance. Most people get confused with this method. They will pay by the due date and charge again right after which will make the statement cut with the new charges instead of your old balance. Once you see your new low balance, you can charge again and repeat if you want.

Thanks Sandi, I always have a tough time explaining it, and I think I end up confusing people more

OP, just make sure you pay the majority of what you charged for the month by your DUE DATE (leaving a small balance, like a $5). Then don't charge anything on the card again until AFTER your statement generates.

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 08:32:51 GMT

@Anonymous wrote:
@Anonymous wrote:
Pay that by the 20th down to 37.50 or even 8.00 and let it report. Once the statement cuts (generates) then it will show your new balance. Most people get confused with this method. They will pay by the due date and charge again right after which will make the statement cut with the new charges instead of your old balance. Once you see your new low balance, you can charge again and repeat if you want.
Thanks Sandi, I always have a tough time explaining it, and I think I end up confusing people more

OP, just make sure you pay the majority of what you charged for the month by your DUE DATE (leaving a small balance, like a $5). Then don't charge anything on the card again until AFTER your statement generates.

So is it bad to pay a statement in full? I'm not quite understanding by leaving $5 in the balance. Wouldn't credit bureaus like to see everything be paid off?

I would rather pay my statement in full so I get a sense of completion...

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 12:29:33 GMT

From what I think I'm understanding, it is so you have a card reporting, with a utilization between 1-9%. That's another part that I think im still confused on though. If I carry any balance, doesn't that cause me to be charged interest? Like currently have a zero balance and no payment due. So if I would make a charge today for $100, I think they are saying I should pay down to $5 or $10, and only let the small amount repor, when my statement generates on the 23rd. If I were to wait to pay anything at all until after the statement generates, a higher utilization would report, and then I'd have to pay the full amount before the due date, to avoid interest. I think.

Re: Utilization/balance reporting

takeshi74 — Tue, 04 Aug 2015 13:01:27 GMT

@Anonymous wrote:
For example, Capital One cuts my statement 3 days after the due date

People tend to look at it this way but it's not quite correct.

The statement date for the following cycle falls after the due date of the prior cycle. The order of events for a given cycle is always:

- Start of cycle

- End of cycle/statement date (most cards report on this date)

- Grace period, if applicable

- Due date

Cycles do overlap a bit so that's what makes it look like the statement date falls after the due date. However, if you look at a statement generated on a given date you'll clearly see that the due date for the statement falls after and not before the statement date.

@Anonymous wrote:
So I think im starting to be confused, let me see if I got this...............

I'll use one of my cards as an example
Capital one with $750 limit.
Due Date is the 20th of each month
Statement generates on the 23rd of each month
So say my current balance is $0.
I charge $150 on the card.............
That's where i become confused.
I need to pay all but $37.50 of that by the due date of the 16th, even though a statement hasn't generated?
Or do I let the statement generate, pay all except 5%, and then pay the rest after the next statement generates?

The due date is irrelevant in this context.

Report date is what matters. For most cards that's statement date. The balance on report date is what is reported. If you want to reduce the reported balance then you need to pay it down by the report date. If your accounts report on statment date then you need to pay the balance down by statement date.

See my above comment as well. A statement cycle will always close before you're billed for it.

As stated above, there's really no need to do this unless you're applying for credit and you want to eke out every possible point. In general just keep in under 30% but definitely pay your statements in full.

@Anonymous wrote:
So is it bad to pay a statement in full?

No. You're confusing reporting and carrying. You definitely want to pay your statement balance in full. This thread is about adjusting the reported balance. You can have a balance report and pay in full. If you're paying after the report date but by the due date then you're already doing this.

@Anonymous wrote:
Wouldn't credit bureaus like to see everything be paid off?

The CRA's don't care. They just collect data and report it. It's the creditors that determine the underwriting criteria for their own products. They don't necessarily want everything paid off. Optimal utilization was discussed above and the reason for the recommendation is that there is a hit for having all zeros report for revolving accounts. Installments are a completely different beast and assessed differently. Paying off installments generally incurs a bit of a hit as well.

@Anonymous wrote:
From what I think I'm understanding, it is so you have a card reporting, with a utilization between 1-9%. That's another part that I think im still confused on though. If I carry any balance, doesn't that cause me to be charged interest?

Again, report and carry are two different things. If you pay in full after report date and by due date then you already have balances reporting even if you're paying in full. Payments after the report date do not reduce the reported balance as the balance was reported well before the due date. That's why you need to pay prior to the report date if you want to reduce the reported utilization. If you do leave a balance to report then the remainder of the statement balance does need to be paid in full prior to its due date.

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 19:23:26 GMT

@Anonymous wrote:

So is it bad to pay a statement in full? I'm not quite understanding by leaving $5 in the balance. Wouldn't credit bureaus like to see everything be paid off?

I would rather pay my statement in full so I get a sense of completion...

It will hurt your score if all of your accounts report a zero balance. For best scoring, you're supposed to pay all of your cards in full except for one. And that one card that you don't pay in full, should report a balance less than 9%.

But that's only if you're trying to get the best possible score. If it's easier for you to pay everything in full, and you don't mind the points loss, then go for it. Although I should mention that there are a few lenders that actually look to see if you have a balance on at least 2 cards when you are applying for their cards - having a balance on 2 cards can be a good thing because it shows lenders that you use the credit extended to you. Barclay is one lender who looks for this.

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 19:32:14 GMT

@takeshi74 wrote:
@Anonymous wrote:
For example, Capital One cuts my statement 3 days after the due date

People tend to look at it this way but it's not quite correct.
The statement date for the following cycle falls after the due date of the prior cycle. The order of events for a given cycle is always:
- Start of cycle
- End of cycle/statement date (most cards report on this date)
- Grace period, if applicable
- Due date

Cycles do overlap a bit so that's what makes it look like the statement date falls after the due date. However, if you look at a statement generated on a given date you'll clearly see that the due date for the statement falls after and not before the statement date.

I think this is going to confuse them more.

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 20:14:33 GMT

Okay I think I got it. Say my statement generated on the 23rd of last month had a new balance of $100, with a due date of the 20th.I paid that in full. Now today say I charge $100. If I make no additional payments before the statement generates, then that will be the utilization reported, and will be my new balance on my next statement. So ideally, if I was to have it report at a lower utilization, I would need to make a payment, early enough to have payment post, before the next statement is generated

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 20:21:08 GMT

@Anonymous wrote:
Okay I think I got it. Say my statement generated on the 23rd of last month had a new balance of $100, with a due date of the 20th.I paid that in full. Now today say I charge $100. If I make no additional payments before the statement generates, then that will be the utilization reported, and will be my new balance on my next statement. So ideally, if I was to have it report at a lower utilization, I would need to make a payment, early enough to have payment post, before the next statement is generated

You got it. Just don't forget you have to pay at least the minimum by your due date - don't be late paying your bill trying to figure all this out

Re: Utilization/balance reporting

Anonymous — Tue, 04 Aug 2015 21:53:23 GMT

@Anonymous wrote:
@Anonymous wrote:
So is it bad to pay a statement in full? I'm not quite understanding by leaving $5 in the balance. Wouldn't credit bureaus like to see everything be paid off?

I would rather pay my statement in full so I get a sense of completion...
It will hurt your score if all of your accounts report a zero balance. For best scoring, you're supposed to pay all of your cards in full except for one. And that one card that you don't pay in full, should report a balance less than 9%.

But that's only if you're trying to get the best possible score. If it's easier for you to pay everything in full, and you don't mind the points loss, then go for it. Although I should mention that there are a few lenders that actually look to see if you have a balance on at least 2 cards when you are applying for their cards - having a balance on 2 cards can be a good thing because it shows lenders that you use the credit extended to you. Barclay is one lender who looks for this.

Wouldn't I have to pay interest if I hold a balance after my due date? Or am I thinking about this wrong?