topic Re: Why PIF before the statement? in Credit Cards

Why PIF before the statement?

pdxuser — Sun, 19 Oct 2008 22:59:50 GMT

People talk about how they PIF before the statement, but I don't understand how that's helpful. Won't that just put a bunch of zeroes on your CR, which just makes it look like you don't use your credit — responsibly or otherwise? Would it not be better to pay down to 1-9% util before the statement, then PIF right after?

Re: Why PIF before the statement?

Miner — Sun, 19 Oct 2008 23:19:00 GMT

I pay the full balance on my statement by its due date so that I don't pay any interest. My balance is never $0 on my CR because I charge stuff on my card every month. Even if I pay off what was on the old statement by its due date, a new balance will be on my new statement when it cuts and that will be reported. Now if you don't charge stuff every month on one of your CCs then yes, it will report a $0 balance.

Now there may be times when you may want to overpay want is shown on your statement since you know that what you have charged since the statement cut will take your UTIL higher then you want. For instance, say my last statement was $500 and it is 10% of my Util. and I have charged $1200 since that statement cut. I then PIF, but my new statement will show $1200 and my CR will have 24% util. But if I care about keeping my utilization down under 10%, I would have had to pay an extra $700 on top of the $500 before my new statement cuts so that the balance owed would remain $500. I don't pay interest but the Util remains 10%. This only makes sense if you need your score to stay low that month since you could have floated that extra $700 for a full month without interest.

Message Edited by Miner on 10-19-2008 04:19 PM

Re: Why PIF before the statement?

Anonymous — Sun, 19 Oct 2008 23:25:03 GMT

pdx,

FICO formulas penalize for having too many revolving accounts with balances. In most scoring buckets it is best to let a lone card report a 1-9 percent balance and the others report a 0 balance. It is good to use other cards but pay them off before the statement cuts, that way FICO will see you using all your credit cards but only having a small balance on one. Now if you have a decent score and you aren't applying for a loan in the next 2 months, there is no need to have only 1 account report, having half or under should be fine. If you need every last point, only 1 account reporting a 3 percent util or so should maximize your utility points.

@pdxuser wrote:
People talk about how they PIF before the statement, but I don't understand how that's helpful. Won't that just put a bunch of zeroes on your CR, which just makes it look like you don't use your credit — responsibly or otherwise? Would it not be better to pay down to 1-9% util before the statement, then PIF right after?

Re: Why PIF before the statement?

pdxuser — Sun, 19 Oct 2008 23:51:45 GMT

I'm having a heck of a time with the quoting, but a few points:

- I get why you would want a zero balance on some but not all cards.

- Isn't using one card to pay another a bad thing -- robbing Peter to pay Paul?

- How would FICO know you've used a card if there's a zero balance on it?

- Isn't a FICO score only affected by the util currently on the CR? How would it know last month's util if it can't see that (unless last month's util was the historic high util, which is recorded)? So if I want a loan in 3 months, can't I have whatever util I please this month, then 1% next month and no one would be the wiser?

Re: Why PIF before the statement?

haulingthescoreup — Mon, 20 Oct 2008 01:21:18 GMT

pdxuser wrote:

I'm having a heck of a time with the quoting, but a few points:
- I get why you would want a zero balance on some but not all cards.
- Isn't using one card to pay another a bad thing -- robbing Peter to pay Paul?
- How would FICO know you've used a card if there's a zero balance on it?
- Isn't a FICO score only affected by the util currently on the CR? How would it know last month's util if it can't see that (unless last month's util was the historic high util, which is recorded)? So if I want a loan in 3 months, can't I have whatever util I please this month, then 1% next month and no one would be the wiser?

- The more cards with $0 reported balances, the better, as long as one reports a balance. It's not just a question of util; it's also a question of how many accounts are reporting balances.

- Sorry, not sure which post the robbing Peter to pay Paul bit was responding to.

- It doesn't show on the consumer versions of our credit reports, but the CCC's do report every month whether the card was used or not. If your intracycle balance was the highest it's ever been, even if you've already paid it off, that figure will be posted in the "high balance" box.

- It's true that FICO doesn't track historical util, and technically you could have any util you wanted until a month before a major app. But those of us who have had to dispute reported balances to force CCC's to update our records, and those of us who have barked at the moon waiting for TU to update can tell you that you shouldn't expect that smooth and easy one-month turnaround. Do your paydown several months ahead, just in case.

Re: Why PIF before the statement?

GFer — Mon, 20 Oct 2008 02:02:29 GMT

"...those of us who have barked at the moon waiting for TU to update..."

...been howling for about 3 months now!

Re: Why PIF before the statement?

pdxuser — Mon, 20 Oct 2008 03:33:53 GMT

I misread about the robbing Peter part.

So as long as I charge something on each card each month, I can PIF immediately and have $0 balances on all my cards and be in good shape? Is it important that I use all my cards each month? Is a small balance on at least one card each month not any more helpful that a $0 balance?

Re: Why PIF before the statement?

laz98 — Mon, 20 Oct 2008 04:56:59 GMT

@Miner wrote:
I pay the full balance on my statement by its due date so that I don't pay any interest. My balance is never $0 on my CR because I charge stuff on my card every month. Even if I pay off what was on the old statement by its due date, a new balance will be on my new statement when it cuts and that will be reported. Now if you don't charge stuff every month on one of your CCs then yes, it will report a $0 balance.

Now there may be times when you may want to overpay want is shown on your statement since you know that what you have charged since the statement cut will take your UTIL higher then you want. For instance, say my last statement was $500 and it is 10% of my Util. and I have charged $1200 since that statement cut. I then PIF, but my new statement will show $1200 and my CR will have 24% util. But if I care about keeping my utilization down under 10%, I would have had to pay an extra $700 on top of the $500 before my new statement cuts so that the balance owed would remain $500. I don't pay interest but the Util remains 10%. This only makes sense if you need your score to stay low that month since you could have floated that extra $700 for a full month without interest.

Message Edited by Miner on 10-19-2008 04:19 PM

i have no idea what any of this means! can you please dumb it down for me? thank you!!!

Re: Why PIF before the statement?

Anonymous — Mon, 20 Oct 2008 10:41:22 GMT

pdxuser--are you checking your balances online? You can see the amounts before the statement cuts and you can see the statement date. So make your payment a couple of days before the statement is due to be sent to cras and it will show 0 balance but it will also show that you have used your card and the amount of the last payment. Leaving a small balance on one card seems to be the best for scoring. It really is a game.

Message Edited by casinoannie97 on 10-20-2008 03:41 AM

Re: Why PIF before the statement?

plasticguy — Mon, 20 Oct 2008 11:29:25 GMT

Common sense: Look at your Fico Report. On it you will see the last activity date on the card. So if you PIF , for example In October , the balance will say 0 but last activity will be October, thus card is being used and not in danger of closure due to non usage. That how my scores got to where they are. Fico also claims that you should have no more than 3 balances. Therefore , I only let 3 report/revolve

Re: Why PIF before the statement?

haulingthescoreup — Mon, 20 Oct 2008 11:57:10 GMT

pdxuser wrote:

I misread about the robbing Peter part.

So as long as I charge something on each card each month, I can PIF immediately and have $0 balances on all my cards and be in good shape? Is it important that I use all my cards each month? Is a small balance on at least one card each month not any more helpful that a $0 balance?

You want to use each card every 3-4 months; more frequently if it's an HSBC bank card. (They'll shut you down in a heartbeat.) This does two things: it keeps the card "alive" from the CCC's point of view, so that they won't cancel you for inactivity, and it keeps the card looking active from the scoring perspective.

I PIF all my cards before statement date, and only the 0% BT card reports a balance. For my particular scoring situation, that keeps TU happy, which is the crankiest score. I can have one or two more report without a problem from EQ or EX, but that would drop TU 7-10 points. Again, this is my particular situation, observed over time. Others have different magic numbers.

Many people rightfully consider this over the top, and a form of self-torture. To me, I don't see a whole lot of difference between paying on the 3rd and paying on the 9th, for instance, and I never have to worry about due dates, and my scores are tuned as precisely as they can be. (At this point in my credit, there's nothing else I can do but let time continue healing, so this gives me the illusion of having some control. )

I'd rather see my current scores showing if someone goes sniffing about my credit than 10-15 points lower.

Another poster mentioned that he can only have 3 with balances. That is his particular credit profile; it's different for others. In general, the more open installment and mortgage accounts you have, the fewer cards can report without dropping your scores, unless you have a mess of cards.

Re: Why PIF before the statement?

My2cents — Mon, 20 Oct 2008 15:30:33 GMT

pdxuser, you are correct. Your score can actually go down if a ton of zeros start to report. The best way is to have low utilization between 1-9% to gain the max amount of points.

My2cents

Re: Why PIF before the statement?

Anonymous — Mon, 20 Oct 2008 17:51:47 GMT

What if you're are rebuilding and only have 1 measly $300 card? Should I pay that in full, or leave a small under 10% util on it?

Re: Why PIF before the statement?

haulingthescoreup — Mon, 20 Oct 2008 20:00:15 GMT

OntheWayUp wrote:
What if you're are rebuilding and only have 1 measly $300 card? Should I pay that in full, or leave a small under 10% util on it?

I'd try it one month one way, and the next month the other.

You're a pretty rare bird here with just the one card, so you might have to be our guinea pig!

Re: Why PIF before the statement?

Anonymous — Mon, 20 Oct 2008 20:26:27 GMT

Fair enough.. i'll be the guinea pig.. or as Doc would say, "I'll be your huckleberry."

Re: Why PIF before the statement?

pdxuser — Tue, 21 Oct 2008 08:05:56 GMT

So if I have 3 cards, can I do a "one month on, two months off" rotation where I use one card for a month, pay it down to a $1 balance before the statement, then PIF afterward and move on to the next card? Or would this create a spotty record of mostly blank spaces and a few OKs on each card rather than a nice solid block of OKs, making my record look thin on a manual review or perhaps harming my score?

Message Edited by pdxuser on 10-21-2008 01:05 AM

Re: Why PIF before the statement?

haulingthescoreup — Tue, 21 Oct 2008 10:51:27 GMT

You're talking about what I call the "card of the month club," and that's a simple way of keeping cards active without going nuts, trying to keep track of multiple due dates. Just plan on stopping use on the active card about 6 days before the statement date (and sometimes those dates wander around a bit), making your primary payment about 3 days before, letting it post, and then cleaning it off.

It wouldn't hurt a thing to have intermittent use like that. I'd post a screen shot of my TrueCredit reports to show all the $0's, except that it's gotta kinda long.

TU and EX will show those highest-ever balances in a separate box, which would indicate on a soft review that you do use your cards. EQ doesn't show this on "secondary" reports (those from myFICO, TC, etc.), and their server is down now, so I can't check my full report to see if it's there on the full consumer version. And I'll betcha the report version that lenders gets shows a bit more in this department than what we see, but that's speculation on my part.

Once you get comfortable with your system, you might want to see if there are any recurring bills in your life that could be assigned, one per card, so that each card does have monthly activity. I've started doing that because I've gotten a few too many cards for card-of-the-month. You do have to remember to keep track of its date, though.

Message Edited by haulingthescoreup on 10-21-2008 03:51 AM