topic HELP CC's GURU in Understanding FICO® Scoring

HELP CC's GURU

Anonymous — Sat, 19 Sep 2015 17:07:23 GMT

I just got my answer for a recent post I made, but raised more questions. So I'm posting this to hopefully have peace of mind.

I have 4 cc's, two of them are student cards with a limit of $500. One of them I don't use at all, I haven't closed them cause they are my oldest cc lines. The other two, I recently opened them with a limit of $11,00 and $13,000. Since the latter are new lines, they are not reporting like 2 months after opening, and this screw my credit score (786 to 730, and still waiting the other hit). Thus, this month I paid the balance of the student card and all cc's reported a 0% utilization, which caused the huge drop. My question is, is there a rule of how many cards I can have reporting 0 balance and how many I need to report a balance? For example, out of 4 cards, 2 reporting a 0 balance should not impact your credit score or make sure that only one reports a 0 balance, etc.

My other question is kinda of confusing at least for me. I've read many articles saying that paying in full the card is the best way to go, but what about the utilization ratio, that means is at zero, this will cause a score drop. So, I'm confused on paying in full vs having a small balance (<10%), what is best?

Re: HELP CC's GURU

jamie123 — Sat, 19 Sep 2015 18:15:07 GMT

Now, there is some wiggle room to this depending on your exact report details, but this is what you need to do to get your scores as high as they can get:

One CC reports a balance of less than 10% of its CL and all other CCs report $0. To be able to do this you might have to pay your reporting card twice a month. Make a payment 2 or 3 days before the due date to get the reporting balance to where you want it, let it report, then PIF after the due date.

You only need to do this if you want to find out how high you can get your scores or if you plan on applying for new credit in the next month.

You can and should use all your credit cards at least every couple of months to keep them active. Lenders will close accounts if they are not used enough.

If you don't need to keep your scores high, just use all your cards every month and pay them in full after the due date. This will build a strong relationship with your lenders and help to get CLIs.

Re: HELP CC's GURU

Anonymous — Sat, 19 Sep 2015 19:42:07 GMT

I posted this on the wrong thread so I'm copying it here...

"I've been doing a little searching to understand the whole reporting balance to the CB. So far this is what I understand (correct me if I'm wrong).

Best approach to boost CS is to:

1. Pay all cards in full except one

2. Play with 1-10% balance on that one card with balance (see what % gives a better boost)

3. Pay 2 times a month. One, before billing cycle ends so a low utilization ratio is reported (1-10%) and again before due date to avoid paying interest.

For example, in my case, my open date is the 8/24/15 and close date is 9/15/15 so if I'm using 45% of line credit, but I don't want my credit score getting hit by using more than 30% of my CL I should pay $X.XX BEFORE (3-5 days?) the CLOSING DATE and drop the utilization rate to <10%. This will result in a <10% utilization rate being reported to the CB instead of 45%. Then I should pay the remaining balance in full so I don't have to pay any interest. Repeat strategy.

Is this correct? I need to recover from this drop. Any other recommendations?"

Replying to your comment: Now, I'm confused... pay after due date? that's a late payment

Re: HELP CC's GURU

Anonymous — Sat, 19 Sep 2015 19:55:31 GMT

does it matter which one i leave with a balance? let's say old CL vs new CL?

Re: HELP CC's GURU

jamie123 — Sat, 19 Sep 2015 20:00:52 GMT

I think you are misunderstanding me...

The way to pay the REPORTING card is like this:

1. At least 3 days BEFORE the due date, make a payment to get the reporting balance where you want it at less than 10%.

2. Let the card report the small balance.

3. Pay the card in full AFTER the due date and take it to $0.

You want to pay all the other cards to $0 at least 2 to 3 days BEFORE the due date so they report a balance of $0.

Re: HELP CC's GURU

jamie123 — Sat, 19 Sep 2015 20:03:19 GMT

@Anonymous wrote:
does it matter which one i leave with a balance? let's say old CL vs new CL?

It really doesn't matter, but if you are doing this for the long term, it would be better to rotate which card is the reporting card every few months.

Re: HELP CC's GURU

Anonymous — Sat, 19 Sep 2015 20:08:04 GMT

ok.... you are assuming that the balance of the CC is reported at the due date. I read it was at the end of the billing cycle (close date).

Re: HELP CC's GURU

Anonymous — Sun, 20 Sep 2015 00:55:26 GMT

I'm confused with the cut date.... I've been reading and I'm getting different answers, some say the cut of date is a few days (2-3) after the due date and others say its at the end of the billing cycle (close date). So, can someone clarify this to me....Just in case it helps the accounts I have are with Chase

Re: HELP CC's GURU

jamie123 — Sun, 20 Sep 2015 03:24:27 GMT

@Anonymous wrote:
I'm confused with the cut date.... I've been reading and I'm getting different answers, some say the cut of date is a few days (2-3) after the due date and others say its at the end of the billing cycle (close date). So, can someone clarify this to me....Just in case it helps the accounts I have are with Chase

Okay, listen up...

You really don't want your Chase cards to be your reporting cards. If you pay your Chase accounts to $0 at any time during the month, they will report that $0 balance to the CRAs. Whenever the balance reaches $0, Chase will report it as $0. It has its good and bads. If you want to use it as your reporting card, you can't take the balance to $0.

I hate when everybody uses these slang terms for dates. It's also confusing to me.

The cut date refers to the date a new statement is generated. The cut date is usually 2 to 5 days after the due date. The balance on the account on the cut date is the balance that MIGHT be reported to the CRAs. So if you use your credit card after the due date but before the cut date (And the charge clears during that time.) the actual account balance on that date MAY be reported to the CRAs. It could mess up the balance that you thought would be the reporting balance on that card.

The most important thing that you need to do is set up auto payments for the minimum monthly payment. This way if you forget to make a payment at least the minimum payment will be made and you won't have to deal with repercussions.

Re: HELP CC's GURU

Anonymous — Sun, 20 Sep 2015 20:56:24 GMT

Why is not a good idea to let the Chase card be the reporting card?

Re: HELP CC's GURU

Revelate — Mon, 21 Sep 2015 07:38:16 GMT

@Anonymous wrote:
Why is not a good idea to let the Chase card be the reporting card?

Because when you pay it down to $0 post statement (so as to not be charged interest) Chase will report $0 to the bureaus... and all revolving tradelines at $0 is a straight penalty. As a result it's typically best to use some other card as the one to report a balance on, though any "emergency" spending that will wind up awkwardly on my reporting card when I have to maintain a pristine file and score (or as good as it gets in my world pre-application) winds up on a Chase card just for this very reason.

Re: HELP CC's GURU

Anonymous — Mon, 21 Sep 2015 12:35:58 GMT

english ain't my first language, so I kind of lost you here "though any "emergency" spending that will wind up awkwardly on my reporting card when I have to maintain a pristine file and score (or as good as it gets in my world pre-application) winds up on a Chase card just for this very reason". By the way, Im not saying Im going to let all card report zero balance, so I still don't get why letting 3 card report zero balance and 1 Chase card report a balance would not be a good idea. Isn't the idea to leave 1 card report balance regardless which card it is?

anyway, I just got an email from Chase and they report to the credit agencies at the statement date, so paying the balance before the due date won't report a zero balance. I just have to make sure that the 15th (statement date) of every other month I have a balance to get reported, then pay it.

Re: HELP CC's GURU

Revelate — Mon, 21 Sep 2015 17:39:34 GMT

@Anonymous wrote:
english ain't my first language, so I kind of lost you here "though any "emergency" spending that will wind up awkwardly on my reporting card when I have to maintain a pristine file and score (or as good as it gets in my world pre-application) winds up on a Chase card just for this very reason". By the way, Im not saying Im going to let all card report zero balance, so I still don't get why letting 3 card report zero balance and 1 Chase card report a balance would not be a good idea. Isn't the idea to leave 1 card report balance regardless which card it is?

anyway, I just got an email from Chase and they report to the credit agencies at the statement date, so paying the balance before the due date won't report a zero balance. I just have to make sure that the 15th (statement date) of every other month I have a balance to get reported, then pay it.

Because Chase has a very specific policy, and to our knowledge it's unique; namely, if you pay a Chase card to $0, Chase will do a mid-cycle update and re-report the tradeline as $0.

As a result, if you have 1 Chase card with balance, and the rest at zero, if you pay the Chase card in full, it will report zero, and then all of your cards report zero which is a straight FICO negative. I promise you this the way it works from personal experience with multiple Chase cards and the reports from MANY people on this forum.

As a result use some other card for your reported balance. What the CSR told you is not fully correct.

With regards to what I said, there's a lag time both in payment, and in transaction processing... so if I have some charges coming up close to a statement date, and I don't know if they'll clear in time for my being able to pay them, I put them on a Chase card because regardless of what Chase reports for a statement balance, I can zero it out by simply paying the Chase account in full. That's what I meant by emergency spending, something that wasn't planned that was going to mess up my pretty balances.

Also that delay time between payment being made and payment processed, is why the majority of people simply PIF on or before the due date (as usually statement generates a couple days afterwards and you need that extra time for the payment to process with multiple lenders) but that includes all the charges for the current month too... and therefore get a $0 statement balance. It's just sematics, you are correct that it's the statement balance which matters for everyone other than Chase, but you have to pay it ahead of time to get that.

Re: HELP CC's GURU

redbeard — Mon, 21 Sep 2015 17:54:41 GMT

@jamie123 wrote:
I think you are misunderstanding me...

The way to pay the REPORTING card is like this:

1. At least 3 days BEFORE the due date, make a payment to get the reporting balance where you want it at less than 10%.

2. Let the card report the small balance.

3. Pay the card in full AFTER the due date and take it to $0.

You want to pay all the other cards to $0 at least 2 to 3 days BEFORE the due date so they report a balance of $0.

I understand a lot of people say it exactly like this with the 2 payments, but for credit scoring, there is no need to make 2 payments. The balance on the statement date is usually the balance that reports.

If you pay after the due date and before the statement date, you may have a $0.00 balance reported, which will defeat the purpose of not paying it off by the due date.

Let me put this in real life example.

My capital one card has a $750 limit, due on the 5th of the month.

I have Netflix billed to this card. I pay Netflix 14.95 a month (say $15) on the 7th of the month.

My statement close date is the 9th of the month.

If I have $0.00 on the due date because I paid it off on the 3rd, before the due date, the Netflix charge will show up on my statement and credit report balance as the amount due.

If no other transactions, as long as I pay the $14.95 by the next due date, I don't have an interest charge.

Then Netflix strikes again.

I'll always have $14.95 reporting, unless I log in and pay it after it posts, but before the statement cuts, but it doesn't bother me that much.

Dan

Re: HELP CC's GURU

Revelate — Mon, 21 Sep 2015 18:01:58 GMT

@redbeard wrote:
@jamie123 wrote:
I think you are misunderstanding me...

The way to pay the REPORTING card is like this:

1. At least 3 days BEFORE the due date, make a payment to get the reporting balance where you want it at less than 10%.

2. Let the card report the small balance.

3. Pay the card in full AFTER the due date and take it to $0.

You want to pay all the other cards to $0 at least 2 to 3 days BEFORE the due date so they report a balance of $0.
I understand a lot of people say it exactly like this with the 2 payments, but for credit scoring, there is no need to make 2 payments. The balance on the statement date is usually the balance that reports.

If you pay after the due date and before the statement date, you may have a $0.00 balance reported, which will defeat the purpose of not paying it off by the due date.

Let me put this in real life example.

My capital one card has a $750 limit, due on the 5th of the month.
I have Netflix billed to this card. I pay Netflix 14.95 a month (say $15) on the 7th of the month.
My statement close date is the 9th of the month.

If I have $0.00 on the due date because I paid it off on the 3rd, before the due date, the Netflix charge will show up on my statement and credit report balance as the amount due.

If no other transactions, as long as I pay the $14.95 by the next due date, I don't have an interest charge.

Then Netflix strikes again.

I'll always have $14.95 reporting, unless I log in and pay it after it posts, but before the statement cuts, but it doesn't bother me that much.

Dan

That only applies to charges in a given month; after the following due date the grace period is smoked and you're being charged interest. That's why it's suggested 2 payments on the account which you are reporting a balance on, and that second payment needs to come on or before the due date of the following month and need to zero it out to prevent interest accumulation.

Admittedly that sort of assumes you aren't rotating your balances; I don't do that very much, pretty much my Sallie always reports a balance and I twiddle everything else when I have to get cleaned up but I don't micromanage when I'm not prepping for an application.

Any account that you want at zero, yes a single payment is sufficient.

Think that's the point Jamie and others were trying to get at.

Re: HELP CC's GURU

Anonymous — Tue, 22 Sep 2015 01:03:41 GMT

Revelate wrote:

Because Chase has a very specific policy, and to our knowledge it's unique; namely, if you pay a Chase card to $0, Chase will do a mid-cycle update and re-report the tradeline as $0.
As a result, if you have 1 Chase card with balance, and the rest at zero, if you pay the Chase card in full, it will report zero, and then all of your cards report zero which is a straight FICO negative. I promise you this the way it works from personal experience with multiple Chase cards and the reports from MANY people on this forum.
As a result use some other card for your reported balance. What the CSR told you is not fully correct.
With regards to what I said, there's a lag time both in payment, and in transaction processing... so if I have some charges coming up close to a statement date, and I don't know if they'll clear in time for my being able to pay them, I put them on a Chase card because regardless of what Chase reports for a statement balance, I can zero it out by simply paying the Chase account in full. That's what I meant by emergency spending, something that wasn't planned that was going to mess up my pretty balances.
Also that delay time between payment being made and payment processed, is why the majority of people simply PIF on or before the due date (as usually statement generates a couple days afterwards and you need that extra time for the payment to process with multiple lenders) but that includes all the charges for the current month too... and therefore get a $0 statement balance. It's just sematics, you are correct that it's the statement balance which matters for everyone other than Chase, but you have to pay it ahead of time to get that.

When you say it reports mid-cycle, is it literal? Let's use my billing cycle so I don't get lost My cycle ends Sept. 15 so I have ~25 days after that to pay the bill (lets say $500), until the due date, Oct. 12, without acquiring interest. You are saying that Chase does another report mid-cycle, so on Sept. 28-29 Chase re-reports the balance. 1) If I lower the balance from $500 to $400 does Chase reports that new balance mid-cycle or only if I pay the whole balance? 2) If it re-reports mid-cycle (Sept. 28-29), can I just simply pay the $500 between Sept 30th and Oct. 12?. Then it will not report a zero balance on all card. 3) I will just have to make sure anything I take on the card between Sept. 16 to Oct. 15 (idealy before Oct. 15 to account for procces time) I'll pay down to the desire util ratio.

Basically, if I use the card and charge another $600 (between Sept.16-Oct.12), I will pay by Oct 12, $500 + what ever amount I want of the $600 that will bring my util to <10%.

I know Im just complicating things up, I just want to make sure I understand how things work. I'll probaly just let the card tthat doesnt have a mid-cycle report as my balance card.

Re: HELP CC's GURU

Revelate — Tue, 22 Sep 2015 02:52:37 GMT

To use a personal example, my recent CSP.

Statement report: 7K and change. Paid in full four days later, Chase reported a second time (mid-cycle, i.e. between statements) landed a few days afterwards, $0.

This also holds true on my Freedom, and I would assume on their cobrands as well.

Re: HELP CC's GURU

jamie123 — Tue, 22 Sep 2015 03:09:06 GMT

@Anonymous wrote:
@Revelate wrote:
Because Chase has a very specific policy, and to our knowledge it's unique; namely, if you pay a Chase card to $0, Chase will do a mid-cycle update and re-report the tradeline as $0.
As a result, if you have 1 Chase card with balance, and the rest at zero, if you pay the Chase card in full, it will report zero, and then all of your cards report zero which is a straight FICO negative. I promise you this the way it works from personal experience with multiple Chase cards and the reports from MANY people on this forum.
As a result use some other card for your reported balance. What the CSR told you is not fully correct.
With regards to what I said, there's a lag time both in payment, and in transaction processing... so if I have some charges coming up close to a statement date, and I don't know if they'll clear in time for my being able to pay them, I put them on a Chase card because regardless of what Chase reports for a statement balance, I can zero it out by simply paying the Chase account in full. That's what I meant by emergency spending, something that wasn't planned that was going to mess up my pretty balances.
Also that delay time between payment being made and payment processed, is why the majority of people simply PIF on or before the due date (as usually statement generates a couple days afterwards and you need that extra time for the payment to process with multiple lenders) but that includes all the charges for the current month too... and therefore get a $0 statement balance. It's just sematics, you are correct that it's the statement balance which matters for everyone other than Chase, but you have to pay it ahead of time to get that.
When you say it reports mid-cycle, is it literal? Let's use my billing cycle so I don't get lost My cycle ends Sept. 15 so I have ~25 days after that to pay the bill (lets say $500), until the due date, Oct. 12, without acquiring interest. You are saying that Chase does another report mid-cycle, so on Sept. 28-29 Chase re-reports the balance. 1) If I lower the balance from $500 to $400 does Chase reports that new balance mid-cycle or only if I pay the whole balance? 2) If it re-reports mid-cycle (Sept. 28-29), can I just simply pay the $500 between Sept 30th and Oct. 12?. Then it will not report a zero balance on all card. 3) I will just have to make sure anything I take on the card between Sept. 16 to Oct. 15 (idealy before Oct. 15 to account for procces time) I'll pay down to the desire util ratio.

Basically, if I use the card and charge another $600 (between Sept.16-Oct.12), I will pay by Oct 12, $500 + what ever amount I want of the $600 that will bring my util to <10%.

I know Im just complicating things up, I just want to make sure I understand how things work. I'll probaly just let the card tthat doesnt have a mid-cycle report as my balance card.

Revelate probaly used the wrong term by saying mid-cycle.

Chase, and it is only Chase we are talking about here, will report a $0 balance to the CRAs as SOON AS YOUR PAYMENT CLEARS. It doesn't matter what time or day of the month that your account reaches a $0 balance. As soon as it gets to $0, Chase reports it to the CRAs as $0.

This is good and bad.

GOOD: You can have your Chase card report a $0 balance in three or four days after you PIF no matter what day of the month it is or where you are in your monthly billing cycle. They wait until your payment clears and then report the $0 balance to the CRAs.

BAD: If you want to use this card as a reporting card you can never take the card to a $0 balance. What you need to do is always use the card and pay the statement balance in full before the due date while making sure that you have additional charges on the card that month so the balance doesn't reach $0.

Re: HELP CC's GURU

Revelate — Tue, 22 Sep 2015 03:13:59 GMT

The entire CC forum bastardizes the term then

Mid-cycle report = any non-standard secondary report as a cycle would be defined as statement to statement (or month to month in the case of DCU and similar). May be a better word for it but I don't know of it.