topic Re: PIF vs. Minimum Balance!!!! in Credit Cards

PIF vs. Minimum Balance!!!!

GABrown — Wed, 31 Oct 2012 15:53:44 GMT

Hello All, My question is what is better PIF or minimum balance...it may seem like a rhetorical question so let me go in detail..I just received the BankAmericard Platinum Plus Visa also known as the 99/500 here on the forums and was wondering what is the best way to reflect good history and up my chance for other products and CLI in the future..any suggestions are appreciated.. oh a little history..I filed bankruptcy (chapter 13) in 09/2008 and it is due to be over in 09/2013...i have a new car loan for about 15k that is about 6 months old and just received BankAmericard 10/2012.. When last looked at my TU CR is was at 605 but now really sure what the other are and what that even means...

Re: PIF vs. Minimum Balance!!!!

jsucool76 — Wed, 31 Oct 2012 16:44:57 GMT

Always PIF.

Re: PIF vs. Minimum Balance!!!!

GABrown — Wed, 31 Oct 2012 16:46:45 GMT

why do some people say let a little balance carry over for reporting purposes? what does that mean?

Re: PIF vs. Minimum Balance!!!!

Epcot — Wed, 31 Oct 2012 16:49:04 GMT

I am pretty sure so that your utilization shows up around 9%, which seems to benefit for scoring purposes.

Re: PIF vs. Minimum Balance!!!!

Jutz — Wed, 31 Oct 2012 17:12:44 GMT

>1% and <9% on only one card seems to be the consensus.

Re: PIF vs. Minimum Balance!!!!

Anonymous — Wed, 31 Oct 2012 17:18:33 GMT

@GABrown wrote:
why do some people say let a little balance carry over for reporting purposes? what does that mean?

Because people don't understand the FICO model.

You do not need to carry a balance. If you are using your card and paying in full, your card will still report a balance. The balance reported by your bank will impact your utilization ratio. Figure out when your card reports. Pay down the balance before that day to an amount between $5 and $45. So if your balance was $200, you will need to pay at least $155 before it reports the balance. Otherwise your utilization will bring down your credit score.

Re: PIF vs. Minimum Balance!!!!

jsucool76 — Wed, 31 Oct 2012 17:29:54 GMT

Also...reporting a 1-9% balance does NOT need to be done every month. This is only "necessary" (and I quote necessary because it isn't really necessary to do at all) if you plan on applying for something during that time. Also, as dustink said, REPORTING a balance is different than CARRYING a balance.

In all honesty, if you are just trying to build a good history with you lender, PIF every month. Carrying a balance doesn't only cause an issue with FICO (because of high util), but it also means you're accruing interest. (unless you have a 0% offer)

Re: PIF vs. Minimum Balance!!!!

Anonymous — Wed, 31 Oct 2012 17:53:25 GMT

@jsucool76 wrote:
Also...reporting a 1-9% balance does NOT need to be done every month. This is only "necessary" (and I quote necessary because it isn't really necessary to do at all) if you plan on applying for something during that time. Also, as dustink said, REPORTING a balance is different than CARRYING a balance.

In all honesty, if you are just trying to build a good history with you lender, PIF every month. Carrying a balance doesn't only cause an issue with FICO (because of high util), but it also means you're accruing interest. (unless you have a 0% offer)

This process maximizes your credit score, but isn't really necessary at all.

I never went through it. My first credit card had a $300 limit, and I put $2500 through it every month. My utilization was not good on that card, but it didn't cause me any problems with getting a CLI and future cards.

Utilization changes every month, so don't stress over it if you aren't going to be apping for anything the next month.

Re: PIF vs. Minimum Balance!!!!

Anonymous — Wed, 31 Oct 2012 17:59:57 GMT

Minimum payment due = interest to be paid = as well as burning money. I'm PIF for a while now and only allow $5-10 to report on one card if I want to apply for something in the short-term. IMO, if you aren't taking a loan, mortgage or app for new CC, you are better off PIF. Since big purchases/loans should be planned ahead in advance you should have enough time to play with the Util % to maximize the score.

Re: PIF vs. Minimum Balance!!!!

GABrown — Wed, 31 Oct 2012 18:17:45 GMT

Thank you all for the responses..I don't plan on maxing out the card anyways so PIF is what I will do..I just thought for reporting purposes and to show I was using the card there needed to be some type of balance..Thanks for the clarifications..Much appreciated!!!!

Re: PIF vs. Minimum Balance!!!!

Anonymous — Wed, 31 Oct 2012 19:11:30 GMT

I'm fairly new to this too and the bofa 99/500 card was my first and I got it back in August. I pay it weekly because it's just easy to transfer from my checking to my visa on paydays. I don't know if this was just me but I pif before the first statement cut and so then no statement was cut at all for that month. This past statement I left a balance for the statemebts sake and then as soon as it posted, I paid in full. I don't know if it's like that for everyone but I just thought I would mention it.

Re: PIF vs. Minimum Balance!!!!

Duncanrr — Wed, 31 Oct 2012 19:28:15 GMT

I think it is also import to note two other critical times where PIF prior to statement being cut is important:

1. early stages of rebuild - your scores may be down due to problem accounts. The easiest way to bump your scores is to keep UTIL down. Once you have dealt with problem accounts the little you may lose scorewise from UTIL if you let some report isn't as bad as it is in the early game.

2. When you add several new accounts - during these times your new CC lenders will be SPing you like mad. Keep your UTIL down will help keep away an adverse actions (such as CL Decreases or closing accounts) and will set you up for your initial CLI requests.

(3. already mentioned earlier. Always keep UTIL down if you are about to app for something like a mortgage and keep it down so you avoid paying interest charges on cc's)

Re: PIF vs. Minimum Balance!!!!

cashnocredit — Wed, 31 Oct 2012 20:14:19 GMT

The oft repeated advice to pif before a statement cuts to maximize FICO is often counterproductive.

1. If you prepay in full then the CRA reported balance is zero. To other creditors it looks like you simply aren't using credit. This makes you less attractive to other potential issuers.

2. A long series of zero balances can actually impact your score negatively because scoring algorithms start to consider the CL dormant.

Let balances report and manually pay or set up autopay to pif. You don't pay interest but other creditors will know you are using credit - a good thing. A month or two before applying for credit it would be wise to prepay all balances except for one card but prepay it down to under 5%. This does produce the best FICO score but only if not a matter of routine so should be limited to the time just before apping.

Re: PIF vs. Minimum Balance!!!!

Duncanrr — Wed, 31 Oct 2012 20:24:16 GMT

I rotate which card(s) I allow to report a balance. If I'm not apping anytime soon and not in phase where I'm being SP then I plan on having more cards report balance at same time. RIght now I need every point I can get and with so many new open lines of credit I want to show management of those lines. After I get my NFCU card I'll have 8 cc's. I plan on letting two cards report a balance every month and the other 6 will be zero balance. Every three months I'll change which cards report a balance so by the end of the year each card would had a reported balance for 1/4 of the year.