topic Re: Best way to pay on a credit card in Understanding FICO® Scoring

Best way to pay on a credit card

Erika3o3 — Sun, 02 Dec 2018 23:16:18 GMT

Ok so I am working on rebuilding my credit. So I got approved for a Discover IT Secured card and put 200 on it. I havent received my first statement bill yet. However I spent $148 on it. Whats the best way to pay it?? Pay it in full? Leave a small balance? Pay it before I recieve the statement? Pay it after I receive the statement? Just want to make sure I am going about it the right way to best help my credit score. Thank you all!

Re: Best way to pay on a credit card

UpperNwGuy — Sun, 02 Dec 2018 23:23:54 GMT

Don't pay it until you get the statement. Then pay the statement balance in full via a "pull" transaction from the credit card's website.

Re: Best way to pay on a credit card

Anonymous — Sun, 02 Dec 2018 23:26:55 GMT

@Erika3o3 wrote:
Ok so I am working on rebuilding my credit. So I got approved for a Discover IT Secured card and put 200 on it. I havent received my first statement bill yet. However I spent $148 on it. Whats the best way to pay it?? Pay it in full? Leave a small balance? Pay it before I recieve the statement? Pay it after I receive the statement? Just want to make sure I am going about it the right way to best help my credit score. Thank you all!

The best way to maximize that card would be to let your statement cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me.

I always pay down my cards to optimal utilization before the statement cuts and then PIF when I get the statement and put new charges on.

Re: Best way to pay on a credit card

UpperNwGuy — Sun, 02 Dec 2018 23:26:38 GMT

@Anonymous wrote:
@Erika3o3 wrote:
Ok so I am working on rebuilding my credit. So I got approved for a Discover IT Secured card and put 200 on it. I havent received my first statement bill yet. However I spent $148 on it. Whats the best way to pay it?? Pay it in full? Leave a small balance? Pay it before I recieve the statement? Pay it after I receive the statement? Just want to make sure I am going about it the right way to best help my credit score. Thank you all!
The best way to maximize that card would be to let your statement cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me.

That sounds too much like a myFICO Forums gimmick. Why not do it the way the bank expects you to do it? That's how you build trust with the bank.

Re: Best way to pay on a credit card

Anonymous — Sun, 02 Dec 2018 23:30:58 GMT

@UpperNwGuy wrote:
@Anonymous wrote:
@Erika3o3 wrote:
Ok so I am working on rebuilding my credit. So I got approved for a Discover IT Secured card and put 200 on it. I havent received my first statement bill yet. However I spent $148 on it. Whats the best way to pay it?? Pay it in full? Leave a small balance? Pay it before I recieve the statement? Pay it after I receive the statement? Just want to make sure I am going about it the right way to best help my credit score. Thank you all!
The best way to maximize that card would be to let your statement cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me.
That sounds too much like a myFICO Forums gimmick. Why not do it the way the bank expects you to do it? That's how you build trust with the bank.

Because optimally you would get your score high enough to add a second card with more favorable terms and a usable limit and the quickest way to do that is to keep your utilization reported low.

Also these low low limit cards, the banks fully expect you to have odd payment behavior. There isn’t much you can do with such a low limit so the most appealing customers for them are going to be the ones who put lots of spend and thus multiple payments on the card.

Re: Best way to pay on a credit card

Anonymous — Sun, 02 Dec 2018 23:40:31 GMT

It really depends on what you're looking to do.

1. It comes with nice rewards (don't know if Discover IT secured comes with rewards) that you can benefit from - Pay the balance off weekly so you can charge more on it, rinse and repeat but leave some balance to report to the statement, make sure to pay off the remaining "statement balance" by due date to avoid interest.

2. Using it for immediate scoring boost for upcoming credit application - Pay off most before statement date but allow a balance of < 8.9% to report to statement, pay off the rest by due date.

3. Using it for profile rebuilding with no immediate credit application on the horizon - let everything report to statement then set your autopy to pay the full statement balance by due date.

Re: Best way to pay on a credit card

Anonymous — Sun, 02 Dec 2018 23:39:40 GMT

@UpperNwGuy wrote:
That sounds too much like a myFICO Forums gimmick. Why not do it the way the bank expects you to do it? That's how you build trust with the bank.

Banks, or in this case lending institutions, like to see responsible use over time. In this case, with a $200 limit, having a higher utilization percentage may not be the end of the world, but it's easier to develop good habits early than it is to break bad ones later. Plus, when it comes time for limit inreases, and card graduation, they will look at the overall pattern to get an idea of the behavior they can expect when the limit increases to $2000, or even $20000 over time.

I would definitely pay a big portion of it down and let the statement report a smaller balance for the reason above, but also because there are instances when you first link your bank account, they can limit your ability to pull multiple payments in a statement period. Granted, you can work around that by pushing the payments from your bank, but it is far easier to just pay from the Discover site or app. With a $200 limit, that will likely be something that you want to be able to do as soon as possible. I'm not 100% sure that Discover does this, but I know with Chase and Amex I had that issue.

@Also, congrats @Erika3o3 on putting in the effort to get off on the right foot.

Re: Best way to pay on a credit card

Anonymous — Mon, 03 Dec 2018 00:20:32 GMT

I'm in the same boat. I have a new Discover it secured card with a $200.
I stalked the graduation threads, as well as other credit card threads before getting it. You're reported utilization is really important but you still want to use your card and squeeze the most out of the cashback rewards.
I use mine as my mainstay for gas and dining out (because those are the highest cashback categories). I make a payment at least once a week (I consider it more of an atm card for now), so that I always have enough available and can get it down to under 8% right before the statement cuts. Then, when the statement cuts, I pay in full. My cashback for last month was just under $4.00, not bad for a $200 credit limit.

Re: Best way to pay on a credit card

staticvoidmain — Mon, 03 Dec 2018 00:46:03 GMT

Like the other poster said,

Make a payment to get it below 8.9% (or at least below 30%). Then pay the remaining balance in full when the statement cuts (PIF).

Explanation: The bank will see your usage. All of it. The 8.9% is not for the bank, but for the credit bureau. This way you are building trust with your bank AND the credit bureaus (i.e. improving your credit at the same time). Banks typically report on your statement date.

Re: Best way to pay on a credit card

Appleman — Mon, 03 Dec 2018 01:03:09 GMT

Make sure you turn on the auto pay for the minimum payment due so you do not miss a payment.

Make sure you always have the minimum payment available in your checking account so you don't bounce said payment.

Also, as others have said, pay down that balance to around $10 so that that is the balance that reports. The point is not to let the card report you using 90% of your credit line which would be easy to do with the current credit line.

Re: Best way to pay on a credit card

Anonymous — Mon, 03 Dec 2018 02:56:00 GMT

@Anonymous wrote:
t cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me.

While I am against micromanagemetn anyway, this bit seems way too much! Discover knows all your charges anyway, so this is for other issuers (perhaps at some later point). Why do you think that anyone is looking for different reported balanced each month? If I have a constant $20 subscription on a card, and that's all that reports, to my mind that shows adequate responsible credit card usage.

Re: Best way to pay on a credit card

Anonymous — Mon, 03 Dec 2018 03:16:58 GMT

@Anonymous wrote:
@Anonymous wrote:
t cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me.

While I am against micromanagemetn anyway, this bit seems way too much! Discover knows all your charges anyway, so this is for other issuers (perhaps at some later point). Why do you think that anyone is looking for different reported balanced each month? If I have a constant $20 subscription on a card, and that's all that reports, to my mind that shows adequate responsible credit card usage.

It’s absolutely for different issuers and not Discover. It makes it look more like you’re using the card if you’re having random amounts reporting though instead of the same recurring charge that could mean that you’ve sock drawered the card with just a monthly subscription. That looks fine when you’ve got another card you use regularly but what credit card company wants someone who has one card that they only put one charge on a month? They want those swipe fees. Just seems like a common sense thing to me but that’s why it says that is what I would do if it was me. I am very deliberate in the way I do just about everything in life and I have OCD (which I suspect a number of us have lol) so I do tend to micromanage things but I don’t ever want to end up caught like I did when I had to file Chapter 7 so if being an OCD micromanager is what it takes, oh well!

Re: Best way to pay on a credit card

Anonymous — Mon, 03 Dec 2018 03:23:55 GMT

Yes. Building credit takes work. When you begin (or begin again), you need to take extra care in the beginning. You are building relationships and a foundation.
It takes a little extra work. That's why these forums and so many programs exist. Lazy is no bueno for credit management.

Re: Best way to pay on a credit card

Anonymous — Mon, 03 Dec 2018 04:40:08 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
t cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me.

While I am against micromanagemetn anyway, this bit seems way too much! Discover knows all your charges anyway, so this is for other issuers (perhaps at some later point). Why do you think that anyone is looking for different reported balanced each month? If I have a constant $20 subscription on a card, and that's all that reports, to my mind that shows adequate responsible credit card usage.
It’s absolutely for different issuers and not Discover. It makes it look more like you’re using the card if you’re having random amounts reporting though instead of the same recurring charge that could mean that you’ve sock drawered the card with just a monthly subscription. That looks fine when you’ve got another card you use regularly but what credit card company wants someone who has one card that they only put one charge on a month? They want those swipe fees. Just seems like a common sense thing to me but that’s why it says that is what I would do if it was me. I am very deliberate in the way I do just about everything in life and I have OCD (which I suspect a number of us have lol) so I do tend to micromanage things but I don’t ever want to end up caught like I did when I had to file Chapter 7 so if being an OCD micromanager is what it takes, oh well!

For swipe fees, its the amount that matters, and a sock-drawered constant $15 per month is going to be as good a a random amount that averages that. My point was more that what you suggests requires extra work (varying the amount) and I wanted to know if there is any evidence that anyone would detect this or care. I guess basically I don't think it is common sense, any more than other things, such as making sure that the purchases are in different categories each month to ensure that it looks like you are using the card for a wide range of purchases. I can certainly argue that should help! But I would probably be wrong and the effort wouldn't be time well spent.

Re: Best way to pay on a credit card

Watchmann — Mon, 03 Dec 2018 05:08:22 GMT

Thank God my credit history is 38 years old and I have never missed a payment on any account (credit/charge card, auto loan or mortgage). When I first got my AX Gold card in 1980 I just used it and paid it off each month per the agreement, other credit cards came later and over the years the CL's increased on their own, never thought about asking for more and more credit. I'd hate to have to go through this silliness each month. Back in 1980 you didn't have the opportunity to know what was in your credit file, you just paid your bills when due. Now it's a game and a circus.

Re: Best way to pay on a credit card

Anonymous — Mon, 03 Dec 2018 05:03:18 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
t cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me.

While I am against micromanagemetn anyway, this bit seems way too much! Discover knows all your charges anyway, so this is for other issuers (perhaps at some later point). Why do you think that anyone is looking for different reported balanced each month? If I have a constant $20 subscription on a card, and that's all that reports, to my mind that shows adequate responsible credit card usage.
It’s absolutely for different issuers and not Discover. It makes it look more like you’re using the card if you’re having random amounts reporting though instead of the same recurring charge that could mean that you’ve sock drawered the card with just a monthly subscription. That looks fine when you’ve got another card you use regularly but what credit card company wants someone who has one card that they only put one charge on a month? They want those swipe fees. Just seems like a common sense thing to me but that’s why it says that is what I would do if it was me. I am very deliberate in the way I do just about everything in life and I have OCD (which I suspect a number of us have lol) so I do tend to micromanage things but I don’t ever want to end up caught like I did when I had to file Chapter 7 so if being an OCD micromanager is what it takes, oh well!
For swipe fees, its the amount that matters, and a sock-drawered constant $15 per month is going to be as good a a random amount that averages that. My point was more that what you suggests requires extra work (varying the amount) and I wanted to know if there is any evidence that anyone would detect this or care. I guess basically I don't think it is common sense, any more than other things, such as making sure that the purchases are in different categories each month to ensure that it looks like you are using the card for a wide range of purchases. I can certainly argue that should help! But I would probably be wrong and the effort wouldn't be time well spent.

I mean when these banks do their computer generated SP credit report exams, I guess none of us know what criteria they have. I don’t really find it that difficult to have varying payment amounts through organic use of the card. In fact, I can’t remember the last time I had a statement that reported the same unless it was a $0 balance because I tend to naturally gravitate towards AZEO - it’s just habit of mine to only have a balance on one card, long before I learned about it here.

Re: Best way to pay on a credit card

Anonymous — Mon, 03 Dec 2018 05:06:37 GMT

@Watchmann wrote:
Thank God my credit history is 39 years old and I have never missed a payment on any account; credit/charge card, auto loan or mortgage. I'd hate to have to go through this silliness each month. Back in 1980 you didn't have the opportunity to know what was in your credit file, you just paid your bills when due. Now it's a game and a circus.

Well for someone in your situation, you would never need to micromanage your credit like those of us who have had major missteps and bankruptcies.

These tips and tricks are all about recovering as quickly as possible. Without them, people still recover, just takes longer.

Re: Best way to pay on a credit card

Brian_Earl_Spilner — Mon, 03 Dec 2018 05:07:45 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
t cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me.

While I am against micromanagemetn anyway, this bit seems way too much! Discover knows all your charges anyway, so this is for other issuers (perhaps at some later point). Why do you think that anyone is looking for different reported balanced each month? If I have a constant $20 subscription on a card, and that's all that reports, to my mind that shows adequate responsible credit card usage.
It’s absolutely for different issuers and not Discover. It makes it look more like you’re using the card if you’re having random amounts reporting though instead of the same recurring charge that could mean that you’ve sock drawered the card with just a monthly subscription. That looks fine when you’ve got another card you use regularly but what credit card company wants someone who has one card that they only put one charge on a month? They want those swipe fees. Just seems like a common sense thing to me but that’s why it says that is what I would do if it was me. I am very deliberate in the way I do just about everything in life and I have OCD (which I suspect a number of us have lol) so I do tend to micromanage things but I don’t ever want to end up caught like I did when I had to file Chapter 7 so if being an OCD micromanager is what it takes, oh well!
For swipe fees, its the amount that matters, and a sock-drawered constant $15 per month is going to be as good a a random amount that averages that. My point was more that what you suggests requires extra work (varying the amount) and I wanted to know if there is any evidence that anyone would detect this or care. I guess basically I don't think it is common sense, any more than other things, such as making sure that the purchases are in different categories each month to ensure that it looks like you are using the card for a wide range of purchases. I can certainly argue that should help! But I would probably be wrong and the effort wouldn't be time well spent.
I mean when these banks do their computer generated SP credit report exams, I guess none of us know what criteria they have. I don’t really find it that difficult to have varying payment amounts through organic use of the card. In fact, I can’t remember the last time I had a statement that reported the same unless it was a $0 balance because I tend to naturally gravitate towards AZEO - it’s just habit of mine to only have a balance on one card, long before I learned about it here.

It's not organic use if you're trying to fake use by varying the total being reported. Most banks don't care what the amount being reported is as long as it gets used and they're not maxed out. And even then, most banks won't flinch at high utilization.

Re: Best way to pay on a credit card

Brian_Earl_Spilner — Mon, 03 Dec 2018 05:08:52 GMT

@Anonymous wrote:
It really depends on what you're looking to do.

1. It comes with nice rewards (don't know if Discover IT secured comes with rewards) that you can benefit from - Pay the balance off weekly so you can charge more on it, rinse and repeat but leave some balance to report to the statement, make sure to pay off the remaining "statement balance" by due date to avoid interest.

2. Using it for immediate scoring boost for upcoming credit application - Pay off most before statement date but allow a balance of < 8.9% to report to statement, pay off the rest by due date.

3. Using it for profile rebuilding with no immediate credit application on the horizon - let everything report to statement then set your autopy to pay the full statement balance by due date.

The secured cards are basically the same as regular cards they're secured and are bucketed when they unsecure.

Re: Best way to pay on a credit card

RonM21 — Mon, 03 Dec 2018 13:03:20 GMT

There are a lot of good debatable points in this thread related to whether to micromanage or go more the AZEO route, or just handle when and how much you pay another way. Neither is wrong in my opinion.

To me, it comes down to your profile and what you can and/or want to handle. If you feel the needs to try and squeeze every extra point, then by all means go the route you want to do so. If not, then as long as you don't go past due and pay what you need to pay to keep the balances down where you want, then that is fine also. Then, there are some who choose to do it a certain way just because that is what makes them feel comfortable, or even responsible in their own mind.

Either way, as long as the job is getting done to where you are not damaging your credit, that is what really matters. Choose what method works best for you