topic Re: Confused - should I PIF before or after statement cuts? in Credit Cards

Confused - should I PIF before or after statement cuts?

Anonymous — Mon, 26 Oct 2015 22:30:13 GMT

I've read so much that I've now confused myself, so I thought I'd just post my exact situation and see what you all recommend.

I've been recently discharged of a BK7 and am now starting to rebuild my credit. Let's just say I have 3 cards that I will use monthly and PIF.

Card 1 - $1000-1500 monthly spending - $2000 limit

Card 2 - $30-50 monthly spending - $1000 limit

Card 3 - $10-15 monthly spending - $300 limit

Should I PIF before or after statement cuts? Should I apply the same rules to all 3 cards (or should I pay some prior to statement, some after?)?

My concern with PIF before statement cuts is that if I always show no or only a very small balance on my CR, how am I proving to other creditors that I can trusted borrow and repay? My CR will only reflect small balances being paid.

My concern with PIF after statement cuts, particularly on card 1, is that assuming my monthly spending remains the same, it'll appear that I always have a 1000-1500 balance, basically not giving me credit for PIF every month.

If it matters any, I have no big applications in the near future (house or car), only potentially some new cards in a few months.

What would you do? Reading this site has changed me so much (for the better!) but probably also made me a little too obsessive!

Thanks in advance for the advice.

Re: Confused - should I PIF before or after statement cuts?

Anonymous — Mon, 26 Oct 2015 22:36:27 GMT

For credit score optimization, most people recommend that you use your cards as you would normally, then PIF all except for one card, which should report a balance giving you <10% utilization.

@Anonymous wrote:

What would you do? Reading this site has changed me so much (for the better!) but probably also made me a little too obsessive!

That's pretty typical of a good chunk of users on here you're in good company!

Since you don't have any big applications coming up, this level of detail probably doesn't matter too much; your scores will fluctuate from month to month due to changes in util, but if you're planning on applying for a card try to follow the strategy above to maximize your scores. Otherwise, there's no harm in PIF after statement cut, since util has no memory (literally the next month your score will go back up once you've paid those balances.

Re: Confused - should I PIF before or after statement cuts?

Anonymous — Mon, 26 Oct 2015 23:52:45 GMT

@Anonymous wrote:
For credit score optimization, most people recommend that you use your cards as you would normally, then PIF all except for one card, which should report a balance giving you <10% utilization.
@Anonymous wrote:

What would you do? Reading this site has changed me so much (for the better!) but probably also made me a little too obsessive!
That's pretty typical of a good chunk of users on here you're in good company!

Since you don't have any big applications coming up, this level of detail probably doesn't matter too much; your scores will fluctuate from month to month due to changes in util, but if you're planning on applying for a card try to follow the strategy above to maximize your scores. Otherwise, there's no harm in PIF after statement cut, since util has no memory (literally the next month your score will go back up once you've paid those balances.

But the question for O.P. (and me) - do you recommend PIF before statement cuts or before due date?

Re: Confused - should I PIF before or after statement cuts?

Anonymous — Tue, 27 Oct 2015 00:01:02 GMT

@Anonymous wrote:
But the question for O.P. (and me) - do you recommend PIF before statement cuts or before due date?

Honestly I think that as long as you PIF and you're not applying for anything, it's really just personal preference:

if you want your FICO score to be its absolute highest at all times, then PIF on all but one card before statements cut;
if you don't mind the score fluctuations due to util % and want to milk the grace period so you keep your money with you as long as possible, then PIF by the due date

The one exception would probably be if your overall util (or on any individual card) is over 30%; I'm pretty sure the bureaus don't like that. In that case I would recommend paying enough before the statement cuts so that your util is at least under the 30%.

Re: Confused - should I PIF before or after statement cuts?

NRB525 — Tue, 27 Oct 2015 00:29:20 GMT

@Anonymous wrote:

Card 1 - $1000-1500 monthly spending - $2000 limit

Card 2 - $30-50 monthly spending - $1000 limit

Card 3 - $10-15 monthly spending - $300 limit

Which credit cards are these? Are you giving up rewards by not allocating spend to the proper categories (assuming those are available) ?

If you are not apping anything in the near term, use the cards as you normally would, for rewards or spend timing, let them report the balance amount, then PIF by the payment due date printed on the statement.

If you see an app coming up, then time each card so that you start to reduce statement-displayed utilization by paying some prior to statement cut, but don't overdo it. As noted, you want at least one card reporting a balance, you don't want a time period where no cards are reporting any balance.

Re: Confused - should I PIF before or after statement cuts?

Anonymous — Tue, 27 Oct 2015 01:26:35 GMT

The only card of the 3 that has any sort of benefit/reward is card #1, which is a Capital One QS1 (1.5% cashback), which is why it will get the most use (it also happens to have the highest CL).

So, are my concerns about paying in full prior to statement (NEVER showing a large balance on CR) or not paying in full prior to statement (appearing to always carry a 1000-1500 balance) not worth worrying about, then?

Re: Confused - should I PIF before or after statement cuts?

NRB525 — Tue, 27 Oct 2015 01:41:19 GMT

Yes, you have other things to worry about.

I let the balances report where they are. When you know an app is coming up, you can decide how much reduction you want to do by paying prior to statement. Anything below 50% on a single card will give you some bump in scores, going below 30% on a card is another level. Below that? probably not much gain for the effort.

Re: Confused - should I PIF before or after statement cuts?

Anonymous — Tue, 27 Oct 2015 01:43:49 GMT

@Anonymous wrote:
The only card of the 3 that has any sort of benefit/reward is card #1, which is a Capital One QS1 (1.5% cashback), which is why it will get the most use (it also happens to have the highest CL).

So, are my concerns about paying in full prior to statement (NEVER showing a large balance on CR) or not paying in full prior to statement (appearing to always carry a 1000-1500 balance) not worth worrying about, then?

By my calculations, that's up to 75% util on one card and nearly 50% total util. I don't have personal experience with reporting util % that high, but if you want to be safe you can just make one payment ahead of time that lowers the reporting balances to under 30% (aka <$600 reporting on the QS1).

Re: Confused - should I PIF before or after statement cuts?

Anonymous — Tue, 27 Oct 2015 16:08:31 GMT

Thanks for the tips everyone.

What I think I will do is simply PIF all of the cards besides the QS1 prior to statement cut. I'll also pay down the QS1 to less than 30% utilization prior to statement cut.

When I am ready to apply for any new cards, I will PIF every card prior to statement cut. The only new cards I really want to get in the next year would be the next-tier Capital One cards, who I'm sure will know how much I spend/pay every month since 99% of my spending will go through the QS1.

Re: Confused - should I PIF before or after statement cuts?

Anonymous — Tue, 27 Oct 2015 17:46:03 GMT

Glad we were able to help!

@Anonymous wrote:

When I am ready to apply for any new cards, I will PIF every card prior to statement cut.

I think we weren't clear earlier, so let me clarify now: although there is debate about the merits of PIF before or after statement cut, one thing that is (almost) for certain is the fact that to get the highest score with regards to util you want to have all accounts PIF before statement cut EXCEPT one reporting a balance of less than 10%. People have seen their scores drop a bit after zeroing out all accounts, so don't fall into that trap!

Re: Confused - should I PIF before or after statement cuts?

Thomas_Thumb — Tue, 27 Oct 2015 18:29:11 GMT

@Anonymous wrote:
I've read so much that I've now confused myself, so I thought I'd just post my exact situation and see what you all recommend.

I've been recently discharged of a BK7 and am now starting to rebuild my credit. Let's just say I have 3 cards that I will use monthly and PIF.

Card 1 - $1000-1500 monthly spending - $2000 limit

Card 2 - $30-50 monthly spending - $1000 limit

Card 3 - $10-15 monthly spending - $300 limit

Should I PIF before or after statement cuts? Should I apply the same rules to all 3 cards (or should I pay some prior to statement, some after?)?

My concern with PIF before statement cuts is that if I always show no or only a very small balance on my CR, how am I proving to other creditors that I can trusted borrow and repay? My CR will only reflect small balances being paid.

My concern with PIF after statement cuts, particularly on card 1, is that assuming my monthly spending remains the same, it'll appear that I always have a 1000-1500 balance, basically not giving me credit for PIF every month.

If it matters any, I have no big applications in the near future (house or car), only potentially some new cards in a few months.

What would you do? Reading this site has changed me so much (for the better!) but probably also made me a little too obsessive!

Thanks in advance for the advice.

If it were me I would:

1) First rule always pay whatever reports on statements in full - always.

2) Allow balances to report on 1 or 2 of 3 cards in a given month [e.g. rotate between cards 2 and 3]. Don't report balances on 100% of cards.

3) Maintain aggregate utilization under 30% at all times - prepay some accumulated charges on the primary card as needed before statement cuts to stay under 30%

4) Maintain individual card utilization(s) under 50% at all times - pay off charges as needed to stay under 50%.

If you don't need any new credit near term, don't worry about "optimizing tactics" to maximize score. However, DO PIF statement balances on all cards to avoid any interest charges. The above approach will net you a good score but may be 20 points below maximum possible for your profile. This approach won't inhibit you from getting CLIs or new credit cards. You may not get "the best" APR but, if you PIF before due date, who cares.

I prefer to keep things simple - statement cuts, pay amount owed. Unfortunately with your monthly spend that potentially puts you over my suggested 30% AG, 50% Card guideline. You would need to make 2 payments per month on your primary card to meet the criteria [one before statement cuts and one for whatever reports on the statement) ... However, if you can request/receive a CLI on your primary card to $3500 (or $5000), it could simplify payment strategy. Suggest trying to increase CL on card #2 to $1500 as well.

Re: Confused - should I PIF before or after statement cuts?

Shooting-For-800 — Fri, 30 Oct 2015 03:15:52 GMT

PIF WEEKLY.

Let 1-5% of your CL go to statement then pay it off.

This insures that the payment gets reported.

See my signature - BK 18 months ago.

Hang in there, it gets better.

Re: Confused - should I PIF before or after statement cuts?

NRB525 — Fri, 30 Oct 2015 04:41:37 GMT

@Anonymous wrote:
Thanks for the tips everyone.

What I think I will do is simply PIF all of the cards besides the QS1 prior to statement cut. I'll also pay down the QS1 to less than 30% utilization prior to statement cut.

When I am ready to apply for any new cards, I will PIF every card prior to statement cut. The only new cards I really want to get in the next year would be the next-tier Capital One cards, who I'm sure will know how much I spend/pay every month since 99% of my spending will go through the QS1.

This is true. Which makes the whole "pay before statement cut" game pointless, except if you are close to the limit on any one card.

I've had my $10k Capital One card up to 87% (2004), re-upped it to 97% (2005) on a Forever 2.99% BT, took 8 years to pay it off, then charged it up to 50% in late 2013. Then got Venture this year for $30k.

Re: Confused - should I PIF before or after statement cuts?

takeshi74 — Fri, 30 Oct 2015 13:02:03 GMT

@Anonymous wrote:
should I PIF before or after statement cuts?

Instead of trying to remember every possible permutation of factors, number of cards, different balance amount, etc you really just need to consider what you're trying to accomplish. Otherwise you're missing the forest for the trees and it's no wonder that you're confused.

If you're looking to eke out every possible point when applying for credit then you might want to micromanage your revolving utilization and number of reporting balances. Personally, I don't but my revolving utilization is very low without it and my FICO 8's are well above the 740-760 mark.

Other than that, try to keep reported revolving utilization at 30% or less. Short term high utilization (e.g. no big deal if you're high one cycle) generally isn't an issue but prologned high utilization can lead to trouble.

@Anonymous wrote:
My concern with PIF before statement cuts is that if I always show no or only a very small balance on my CR, how am I proving to other creditors that I can trusted borrow and repay? My CR will only reflect small balances being paid.

Not as big a deal as people make it out to be IMO. Focus on the standard factors:

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

@Anonymous wrote:
I think we weren't clear earlier, so let me clarify now: although there is debate about the merits of PIF before or after statement cut

There's no debate. There is, however, plenty of confusion among people just starting out but it's very straightforward. The point of paying before the report date (not all cards report on statement date) is to reduce the reported balance and reported revolving utilization.

Re: Confused - should I PIF before or after statement cuts?

Anonymous — Fri, 30 Oct 2015 13:50:26 GMT

@takeshi74 wrote:
@Anonymous wrote:
I think we weren't clear earlier, so let me clarify now: although there is debate about the merits of PIF before or after statement cut
There's no debate. There is, however, plenty of confusion among people just starting out but it's very straightforward. The point of paying before the report date (not all cards report on statement date) is to reduce the reported balance and reported revolving utilization.

The debate isn't about "the point of paying before the report date" but rather whether or not it's worth the effort to do so vs. only paying before the due date. Considering several of the posts in this thread and several others have people going back and forth on this issue, I'd say it's a pretty clear indication that forum-goers are divided.