topic Re: Should I have let the balance post? in Understanding FICO® Scoring

Should I have let the balance post?

Anonymous — Mon, 18 May 2015 13:03:40 GMT

So question as I navigate this scoring and FICO mystery.......................

I charged over $2k on my Amex PRG purposely this month to meet the bonus spend.

I paid it before the statement date.

From an Amex internal standpoint, I am sure I am fine since they will be happy seeing spend and pay.

However, was that the wisest choice or should I have let it post so it showed as a carried balance this month for FICO and a PIF next month?

How does NSL work with FICO?

Thanks for the insight and advise for next time wise ones!!!!

Re: Should I have let the balance post?

vanillabean — Tue, 19 May 2015 01:20:16 GMT

I should start out by saying that to carry a balance means to carry it over to the next billing cycle.

If you have another card reporting a balance, you did the right thing by zeroing your PRG card.

Re: Should I have let the balance post?

NRB525 — Tue, 19 May 2015 03:46:22 GMT

@Anonymous-own-fico wrote:
I should start out by saying that to carry a balance means to carry it over to the next billing cycle.

If you have another card reporting a balance, you did the right thing by zeroing your PRG card.

Is it really the right thing to do? I think OP's question relates to how does a charge card get reflected in FICO scoring if it reports a balance. I thought there is a difference in how it is handled, because there is no stated credit limit. Rather than have the account report $2k with no visible limit, and have it appear as 100% utilization or worse, I thought FICO handled that charge card in a different manner?

And for long term usage, I don't think it is the right thing to zero all cards but one. It leads to misunderstandings by certain banks that are easily spooked by sudden appearance of balances. Best to let cards report balances like normal people use their cards, then PIF by the payment due date.

For getting a few extra points on the score short term, limiting the number of balances may be appropriate.

Re: Should I have let the balance post?

Anonymous — Tue, 19 May 2015 04:00:32 GMT

@NRB525 wrote:
@Anonymous-own-fico wrote:
I should start out by saying that to carry a balance means to carry it over to the next billing cycle.

If you have another card reporting a balance, you did the right thing by zeroing your PRG card.

Is it really the right thing to do? I think OP's question relates to how does a charge card get reflected in FICO scoring if it reports a balance. I thought there is a difference in how it is handled, because there is no stated credit limit. Rather than have the account report $2k with no visible limit, and have it appear as 100% utilization or worse, I thought FICO handled that charge card in a different manner?

And for long term usage, I don't think it is the right thing to zero all cards but one. It leads to misunderstandings by certain banks that are easily spooked by sudden appearance of balances. Best to let cards report balances like normal people use their cards, then PIF by the payment due date.

For getting a few extra points on the score short term, limiting the number of balances may be appropriate.

I've done it for years and nary a peep out of any issuer.

My experience only. YMMV.

Re: Should I have let the balance post?

NRB525 — Tue, 19 May 2015 04:56:31 GMT

True, if the cards constantly stay at zero, there are no balances for any bank to have issues with, but have you run up balances recently? I'm thinking maybe not

Having zeros and then starting to show balances is not a certainty to lead to AA, but in the case of files that don't have a lot of history (yours has extensive good history) the skitishness of particular lenders can be predicted.

One should thus weigh the intended "perfection" of the file, adding those precious extra points, vs the intent of having the credit in the first place, to borrow at good rates.

A constant debate, I know, but part of "understanding FICO".

Re: Should I have let the balance post?

Revelate — Tue, 19 May 2015 06:00:02 GMT

@NRB525 wrote:
True, if the cards constantly stay at zero, there are no balances for any bank to have issues with, but have you run up balances recently? I'm thinking maybe not

Having zeros and then starting to show balances is not a certainty to lead to AA, but in the case of files that don't have a lot of history (yours has extensive good history) the skitishness of particular lenders can be predicted.

One should thus weigh the intended "perfection" of the file, adding those precious extra points, vs the intent of having the credit in the first place, to borrow at good rates.

A constant debate, I know, but part of "understanding FICO".

Back when I was testing things nobody blinked when I suddenly maxxed out my BCP at 3K and then 9K after I got a CLI. This was 3ish and 9ish months after a spree and in my second year of credit building with a couple of tax liens, collections, and lates on my report, certainly 1 year AAOA at that point so I don't think the long / thick file makes that much difference.

An instant in time balance I think means virtually nothing to banks assuming they have any knowledge of your income (which you have to state) or assets (which some ask for). If you carry that balance month to month and that hasn't been a pattern previously, then I agree they might get spooked but one time / one off, w/e. BOFA is the only only one I ever had an issue with when I let a balance float one month (high balance setting) by only paying a couple hundred on it and they nearly declined my graduation as a result. Was secured and I was hoping to graduate with the full 5K after making an additional 3K deposit in thinking I needed to demonstrate use to justify it... only graduated me with $2500 after an internal reconsideration apparently. Whoops.

I absolutely subscribe to the needle in a haystack theory and try to mimic a "normal" consumer as much as possible; as such unless I'm prepping an app I tend to let balances fall where they will, but I also don't spend a tremendous amount either as a general rule... a description of frugal is likely charitable most months

@Anonymous: I would've let that balance report personally, I like other lenders to see a historical high balance to let them know I have used the card and paid it off responsibly in hopes they may want my business (I'm profitable, really!), but honestly I don't know if that really makes any difference so I may just be doing it for non-essential style points.

Re: Should I have let the balance post?

Anonymous — Tue, 19 May 2015 18:54:09 GMT

"@OP: I would've let that balance report personally, I like other lenders to see a historical high balance to let them know I have used the card and paid it off responsibly in hopes they may want my business (I'm profitable, really!), but honestly I don't know if that really makes any difference so I may just be doing it for non-essential style points."

That is exactly what I though of AFTER I hit the pay now button! LOL, oh well. Not like I wont get another chance to show "responsible usage"......I'm just now trying to garden and pick the weeds.

THANKS!!!

Re: Should I have let the balance post?

NRB525 — Wed, 20 May 2015 02:15:26 GMT

Paying before statement cut is not irresponsible card handling, so you have that going for you

Re: Should I have let the balance post?

vanillabean — Wed, 20 May 2015 02:25:18 GMT

@NRB525 wrote:
Paying before statement cut is not irresponsible card handling, so you have that going for you

Some may not agree, lol.

Re: Should I have let the balance post?

Revelate — Wed, 20 May 2015 06:03:21 GMT

@Anonymous-own-fico wrote:
@NRB525 wrote:
Paying before statement cut is not irresponsible card handling, so you have that going for you

Some may not agree, lol.

Sigh, that thread again?