topic Re: Is it best to pay a credit card off the day after you use it? in Understanding FICO® Scoring

Is it best to pay a credit card off the day after you use it?

Anonymous — Fri, 08 Aug 2014 04:13:42 GMT

I'm not a huge fan of credit cards, but good credit is something I would love to have for the future. I know it isn't needed, but I would still like to see a high score and be able to pay for an emergency if I don't have the cash, etc.

A quick question --

when is it best to pay your credit card off?

For instance, I just used it for $10 and want to pay it off.

The other day, I used it for gas, and paid it ($20) 8/7.

Is that too soon?

Shouldn't I wait a week or two, so that my 'Credit Karma' updates and see's the amount? I feel as if paying it off right away won't be recorded and my FICO score won't change.

My Citi card paying off every month, right on time, would bring my score up crazy points (10 usually) and I only paid the minimum.

Would paying it off right away do the same thing?

My final question is really, when should you pay your credit card off, and should you pay the complete balance OR let it roll-over so that it shows you didn't just win the lottery once, but you are persistent with payments.

Re: Is it best to pay a credit card off the day after you use it?

pizzadude — Fri, 08 Aug 2014 14:50:50 GMT

@Anonymous wrote:
I'm not a huge fan of credit cards, but good credit is something I would love to have for the future. I know it isn't needed, but I would still like to see a high score and be able to pay for an emergency if I don't have the cash, etc.

A quick question --

when is it best to pay your credit card off?
For instance, I just used it for $10 and want to pay it off.
The other day, I used it for gas, and paid it ($20) 8/7.

Is that too soon?
Shouldn't I wait a week or two, so that my 'Credit Karma' updates and see's the amount? I feel as if paying it off right away won't be recorded and my FICO score won't change.

My Citi card paying off every month, right on time, would bring my score up crazy points (10 usually) and I only paid the minimum.
Would paying it off right away do the same thing?

My final question is really, when should you pay your credit card off, and should you pay the complete balance OR let it roll-over so that it shows you didn't just win the lottery once, but you are persistent with payments.

Creditors are fine with getting paid early, although sometimes there are limits on how many payments you can make per cycle.

The CRAs receive updates from creditors monthly ( usually after statement cut ) so you won't see your balance fluctuate daily.

If you are trying to optimize your FICO score then let one card report a small balance, i.e. less than 9%, and make sure your other cards repor zero balances.

Re: Is it best to pay a credit card off the day after you use it?

Anonymous — Fri, 08 Aug 2014 15:32:07 GMT

I believe sometimes, the CC company would submit the score on the last business dayof the month and sometimes, they do submit on your statement date. It varies from one company to another.

Re: Is it best to pay a credit card off the day after you use it?

Anonymous — Sat, 09 Aug 2014 15:41:09 GMT

Thanks for the information!

I will let my other Citi card report $0 and then let my other card report a lower balance.

Re: Is it best to pay a credit card off the day after you use it?

Anonymous — Sun, 10 Aug 2014 05:34:48 GMT

Hi there! Great question, by the way!

I most certainly do not recommend paying off your balance the day after you use your credit card and the reasoning behind that is due to the fact that your CC will report a "credit utilization" of 0% to the bureaus whenever your statement cuts. Reporting a credit utilization of 1-10% after your statement cuts is where you see a great score from most folks on here.

Let's take this example to make it simple: You have a credit card with a credit limit of $1,000. You go out and spend... Say $450 on groceries... We put gasoline on the card next week, take the wife out to dinner, buy yourself some candy, etc... You now have racked up $700 on your card that you have spent.

Your card payment is coming up and you have to pay it on 09/01/14. Your statement cuts on 09/03/14. When your payment is due, only pay $650. That drops your balance down to $50. Let that balance report to the three major credit bureaus on 09/03/14. This will show that you are using a 5% credit utilization rate, which is the highest recommended scoring rate. Ater your statement cuts, go ahead and pay the rest of the $50 off and enjoy not having any small debt!

Repeat, repeat, repeat!

- Jesse

Re: Is it best to pay a credit card off the day after you use it?

TheFate — Sun, 10 Aug 2014 05:51:14 GMT

@Anonymous wrote:
Hi there! Great question, by the way!

I most certainly do not recommend paying off your balance the day after you use your credit card and the reasoning behind that is due to the fact that your CC will report a "credit utilization" of 0% to the bureaus whenever your statement cuts. Reporting a credit utilization of 1-10% after your statement cuts is where you see a great score from most folks on here.

Let's take this example to make it simple: You have a credit card with a credit limit of $1,000. You go out and spend... Say $450 on groceries... We put gasoline on the card next week, take the wife out to dinner, buy yourself some candy, etc... You now have racked up $700 on your card that you have spent.

Your card payment is coming up and you have to pay it on 09/01/14. Your statement cuts on 09/03/14. When your payment is due, only pay $650. That drops your balance down to $50. Let that balance report to the three major credit bureaus on 09/03/14. This will show that you are using a 5% credit utilization rate, which is the highest recommended scoring rate. Ater your statement cuts, go ahead and pay the rest of the $50 off and enjoy not having any small debt!
Repeat, repeat, repeat!

- Jesse

5% is the same as if the balance was reported at 9%, they both fall in the same UTL bracket

Re: Is it best to pay a credit card off the day after you use it?

Anonymous — Sun, 10 Aug 2014 17:30:18 GMT

Correct, they fall into the same bracket.

He mentioned 1%-10% utilization

Re: Is it best to pay a credit card off the day after you use it?

TheFate — Mon, 11 Aug 2014 04:51:51 GMT

@Anonymous wrote:
Correct, they fall into the same bracket.
He mentioned 1%-10% utilization

"This will show that you are using a 5% credit utilization rate, which is the highest recommended scoring rate"

Re: Is it best to pay a credit card off the day after you use it?

Anonymous — Mon, 11 Aug 2014 13:00:02 GMT

@Anonymous wrote:
Hi there! Great question, by the way!

I most certainly do not recommend paying off your balance the day after you use your credit card and the reasoning behind that is due to the fact that your CC will report a "credit utilization" of 0% to the bureaus whenever your statement cuts. Reporting a credit utilization of 1-10% after your statement cuts is where you see a great score from most folks on here.

Let's take this example to make it simple: You have a credit card with a credit limit of $1,000. You go out and spend... Say $450 on groceries... We put gasoline on the card next week, take the wife out to dinner, buy yourself some candy, etc... You now have racked up $700 on your card that you have spent.

Your card payment is coming up and you have to pay it on 09/01/14. Your statement cuts on 09/03/14. When your payment is due, only pay $650. That drops your balance down to $50. Let that balance report to the three major credit bureaus on 09/03/14. This will show that you are using a 5% credit utilization rate, which is the highest recommended scoring rate. Ater your statement cuts, go ahead and pay the rest of the $50 off and enjoy not having any small debt!
Repeat, repeat, repeat!

- Jesse

Reporting a credit utilization of 1-10% after your statement cuts is where you see a great score from most folks on here.

Re: Is it best to pay a credit card off the day after you use it?

TheFate — Mon, 11 Aug 2014 21:11:09 GMT

@Anonymous wrote:
@Anonymous wrote:
Hi there! Great question, by the way!

I most certainly do not recommend paying off your balance the day after you use your credit card and the reasoning behind that is due to the fact that your CC will report a "credit utilization" of 0% to the bureaus whenever your statement cuts. Reporting a credit utilization of 1-10% after your statement cuts is where you see a great score from most folks on here.

Let's take this example to make it simple: You have a credit card with a credit limit of $1,000. You go out and spend... Say $450 on groceries... We put gasoline on the card next week, take the wife out to dinner, buy yourself some candy, etc... You now have racked up $700 on your card that you have spent.

Your card payment is coming up and you have to pay it on 09/01/14. Your statement cuts on 09/03/14. When your payment is due, only pay $650. That drops your balance down to $50. Let that balance report to the three major credit bureaus on 09/03/14. This will show that you are using a 5% credit utilization rate, which is the highest recommended scoring rate. Ater your statement cuts, go ahead and pay the rest of the $50 off and enjoy not having any small debt!
Repeat, repeat, repeat!

- Jesse
Reporting a credit utilization of 1-10% after your statement cuts is where you see a great score from most folks on here.

You clearly missed my point

Re: Is it best to pay a credit card off the day after you use it?

09Lexie — Tue, 12 Aug 2014 05:00:44 GMT

@TheFate wrote:
@Anonymous wrote:
@Anonymous wrote:
Hi there! Great question, by the way!

I most certainly do not recommend paying off your balance the day after you use your credit card and the reasoning behind that is due to the fact that your CC will report a "credit utilization" of 0% to the bureaus whenever your statement cuts. Reporting a credit utilization of 1-10% after your statement cuts is where you see a great score from most folks on here.

Let's take this example to make it simple: You have a credit card with a credit limit of $1,000. You go out and spend... Say $450 on groceries... We put gasoline on the card next week, take the wife out to dinner, buy yourself some candy, etc... You now have racked up $700 on your card that you have spent.

Your card payment is coming up and you have to pay it on 09/01/14. Your statement cuts on 09/03/14. When your payment is due, only pay $650. That drops your balance down to $50. Let that balance report to the three major credit bureaus on 09/03/14. This will show that you are using a 5% credit utilization rate, which is the highest recommended scoring rate. Ater your statement cuts, go ahead and pay the rest of the $50 off and enjoy not having any small debt!
Repeat, repeat, repeat!

- Jesse
Reporting a credit utilization of 1-10% after your statement cuts is where you see a great score from most folks on here.
You clearly missed my point

As did I...what is your point?