topic Re: How to Use Credit Cards But Pay Off Before They Report? in General Credit Topics

How to Use Credit Cards But Pay Off Before They Report?

Alberio — Thu, 19 Jun 2014 15:17:19 GMT

I apologize if this is covered somewhere - I imagine it is, but couldn't find it.

I think I have enough of a cushion in funds to pay off my CCs each month, though I know I want between 1-9% reporting on one card.

I also want to use my cards for the various rewards I can get and so that they keep loving me back.

Until recently though, I had sockdrawered them all and just used my bank debit card. Now that I see that if I use them responsibly I could financially benefit myself, I am trying to educate myself on how best to do that.

When I used my Discover card recently though (to get the 5% back from home improvement stores), even though I paid it all off before the due date on the bill, Discover still reported the amount due to the CRAs and my FICO score dropped.

My question is - how to I avoid that in the future? How do I make sure that I pay it off before the CC reports the balance to the CRAs? Clearly just paying by the statement due date will not do it. So how do I know when they will report and how far in advance of that date to pay my balance?

Thanks!!

Re: How to Use Credit Cards But Pay Off Before They Report?

Anonymous — Thu, 19 Jun 2014 15:20:13 GMT

The usual approach is to pay just before the statement date.

Re: How to Use Credit Cards But Pay Off Before They Report?

kezia2410 — Fri, 20 Jun 2014 01:49:22 GMT

Re: How to Use Credit Cards But Pay Off Before They Report?

Anonymous — Thu, 19 Jun 2014 17:58:52 GMT

@kezia2410 wrote:
Most cc generate a statement and report 5-7 days after the due date.

For example my cc is due on the 21st and the statement is generated on the 26 of the month. I make a payment before the 21 and do not use the card until after the 26th when the statement has generated. Whatever is on the statement is what the cc will report.

There might be confusion here.

I believe that the reporting is driven by the statement date, which may appear to be "after" the due date, but is actually before.

In the case above, the statement date is the 26th, and then there's the 25-day period ending at the due date on the 21st of the next month, in which to pay the statement balance to avoid interest.

The reporting would be shortly after the 26th statement date.

Re: How to Use Credit Cards But Pay Off Before They Report?

kezia2410 — Thu, 19 Jun 2014 18:06:36 GMT

I make the payment by the due date and do not use the card until the statement is generated usually 5-7 days after my due date. Whatever is the balance is usually that what is reported to the CRA's. I've been usuing this method for the last 6 months and all my balances are reported under 20%.

Re: How to Use Credit Cards But Pay Off Before They Report?

Alberio — Thu, 19 Jun 2014 18:30:34 GMT

So it sounds like the key is to pay the balance due and then not use the card again until after the statement cuts. So if the due date is the 21st and I pay everything on the card on the 20th, with the next statement issuing on the 26th, I should not use the card between when I pay on the 20th and when the statement cuts on the 26th, or that amount that I used the card for will be reported to the CRAs, right?

Re: How to Use Credit Cards But Pay Off Before They Report?

Forte747 — Thu, 19 Jun 2014 18:37:51 GMT

@Alberio wrote:
I apologize if this is covered somewhere - I imagine it is, but couldn't find it.

I think I have enough of a cushion in funds to pay off my CCs each month, though I know I want between 1-9% reporting on one card.

I also want to use my cards for the various rewards I can get and so that they keep loving me back.

Until recently though, I had sockdrawered them all and just used my bank debit card. Now that I see that if I use them responsibly I could financially benefit myself, I am trying to educate myself on how best to do that.

When I used my Discover card recently though (to get the 5% back from home improvement stores), even though I paid it all off before the due date on the bill, Discover still reported the amount due to the CRAs and my FICO score dropped.

My question is - how to I avoid that in the future? How do I make sure that I pay it off before the CC reports the balance to the CRAs? Clearly just paying by the statement due date will not do it. So how do I know when they will report and how far in advance of that date to pay my balance?

Thanks!!

The easiest way I noticed to have a Zero Balance reported is to check your reports for the actual date the CC balance was reported. Then payoff or make sure your balance is Zero atleast two days prior to that date.

You could also call the Bank and ask the Reps what dates they update the CRAs.

Most Banks are usually consistent with the reporting dates.

Re: How to Use Credit Cards But Pay Off Before They Report?

kezia2410 — Thu, 19 Jun 2014 18:42:13 GMT

@Alberio wrote:
So it sounds like the key is to pay the balance due and then not use the card again until after the statement cuts. So if the due date is the 21st and I pay everything on the card on the 20th, with the next statement issuing on the 26th, I should not use the card between when I pay on the 20th and when the statement cuts on the 26th, or that amount that I used the card for will be reported to the CRAs, right?

Yes...That's what has worked for me.

But like Forte says you can all the cc company to find out extacly when the report to the CRA.

Re: How to Use Credit Cards But Pay Off Before They Report?

vanillabean — Fri, 20 Jun 2014 00:14:31 GMT

@kezia2410 wrote:
I make the payment by the due date and do not use the card until the statement is generated

I am idly curious now! Why stop using your card on precisely the prior cycle's due date?

Re: How to Use Credit Cards But Pay Off Before They Report?

kezia2410 — Fri, 20 Jun 2014 00:59:55 GMT

This is what works for me. I have a card that has a $300 cl. I use most of the limit every month. The bill is due on the 20th. On the 18th or so I pay it off and leave a balance of $10. From the 20th -25th I do not use the card. On the 25th my statement is generated with my next month due date and a $10 balance. A few days later my $10 bal is reported to the CRAs. Then I start using the card again. I do that will all 4 of my cc and my fiance does that with all 3 of his cc and we have never had a problem.

Re: How to Use Credit Cards But Pay Off Before They Report?

vanillabean — Fri, 20 Jun 2014 01:14:24 GMT

@kezia2410 wrote:
The bill is due on the 20th. On the 18th or so I pay it off

No, lol! What you pay is not a bill that's due, but rather what has accumulated in the present cycle so far.

Re: How to Use Credit Cards But Pay Off Before They Report?

Anonymous — Fri, 20 Jun 2014 01:15:48 GMT

@kezia2410 wrote:
This is what works for me. I have a card that has a $300 cl. I use most of the limit every month. The bill is due on the 20th. On the 18th or so I pay it off and leave a balance of $10. From the 20th -25th I do not use the card. On the 25th my statement is generated with my next month due date and a $10 balance. A few days later my $10 bal is reported to the CRAs. Then I start using the card again. I do that will all 4 of my cc and my fiance does that with all 3 of his cc and we have never had a problem.

I believe the confusion here is caused by the fact that the previous cycle's due date is a few days before the next cycle's statement date.

The original question had to do with optimizing utilization, and this can typically be done by paying off a CC before the statement date.

The date of such a payoff happens to be close to the due date of the previous cycle, but I would not recommend thinking about it in this way.

Re: How to Use Credit Cards But Pay Off Before They Report?

kezia2410 — Fri, 20 Jun 2014 01:54:46 GMT

Like I said previously it works for me. I have a system that I have been using for the last 6 months and my scores have increased while keeping my utl down. I'll continue doing it the way that works bes for me and everyone else can go about it the way that works for them.

Re: How to Use Credit Cards But Pay Off Before They Report?

takeshi74 — Fri, 20 Jun 2014 03:13:11 GMT

It works because you're effectively paying prior to statement end by paying on the due date and not using the card until statement end.

@Anonymous-own-fico wrote:
I am idly curious now! Why stop using your card on precisely the prior cycle's due date?

Because using that method if you use the card after the payment due date you're increasing the balance and the increased balance is what will report at statement end. That would be counterproductive if one is attempting to reduce the reported balance.

The key is to pay prior to statement end (assuming that card reports at statement end). The payment due date is irrelevant except for keeping the account current. In short:

Pay by due date to keep the account current.
Pay in full by the due date to avoid interest.
Pay prior to statement end (or other reporting date if required) to reduce reported utilization.

Re: How to Use Credit Cards But Pay Off Before They Report?

hopsimlp — Fri, 20 Jun 2014 18:01:44 GMT

I pay my cards twice a month. I could probably do it once but I like to break the payments up. My Discover due date is the middle of the month so I usually pay at the first of the month and then I’ll pay again a week before my due date. I do not only pay what the statement balance is but I pay everything on my account. My first payment is always over the statement balance so when I log it next it will tell me my statement balance is zero. Then my next payment is to get my current balance down so when it reports there isn’t much on there. I don’t pay it all, I will leave about 2%-5% balance still on it and that’s what reports. I do not use the card after my second payment until the card has reported. I do this with all of my cards and I usually have 5% utilization reporting each month. The thing to remember with discover if you make multiple payments like I do is that they only let you make a payment once every 4 days or so. I made the mistake the first month I had the card, I paid most of my balance 5 days before the due date and then I was going to make another payment 3 days before and I couldn’t do it.

Re: How to Use Credit Cards But Pay Off Before They Report?

helaurin — Wed, 02 Jul 2014 13:19:21 GMT

Different techniques work for different people.

In my case, I prefer to pay something towards my card almost every week, as I am paid weekly. And I use my Discover card as my primary card, so it gets used.... frequently. Looking at the last cycle, I used my card 27 out of the 31 days in the cycle.

Paying weekly has a benefit for me that I am constantly reminding myself of what I spent/bought. So, let's say I charge $150 for groceries and another $70 at a home improvement store for a total of $220 that night. It will show as a pending transaction for a day or two, and Discover doesn't let you pay more than what is actually owed (not including pending). But a few days after the charges move from pending to posted, I'll pay that $220. Of course, I might have used the card again in the meantime and now have another $50 for gas pending, but that's how I keep my reported balance low on that card - as well as remind myself if I'm thinking of exceeding a self-imposed category limit, say, on restaurants/eating out - that I might have already used that allocation up.

I imagine if someone is paid bi-weekly, semi-monthly or even monthly, a different approach might work.

However, be aware that with Discover, you don't want to make payments more often than every 3 days, because Discover will delay reflecting the payment in your credit for up to 8 days! Per their site: For the safety and security of your account, if you make payments more often than every 3 days, your payments may not be reflected in your available credit for up to 8 days."

You do need to watch the dates though. Looking at my most recent statement:

Statement Opening Date: May 19

Statement Close Date: June 18

Payment Due Date: July 13

The prior statement's due date was June 13th. But the Statement Close date was June 18th, which is the date Discover used to report to the credit bureaus.

If you are someone who typically pays your bill (say, in this, by the 13th) and then happen to charge up a few large purchases between the 13th and the 18th - well, guess what, those large purchases will be in that reported balance to the credit bureaus that month, even if you paid the balance due in full by the 13th.

Ostensibly, this is for your benefit, so that if a payment is delayed in processing, it will have time to be applied before they report the balance to the credit bureau.

Re: How to Use Credit Cards But Pay Off Before They Report?

Anonymous — Wed, 02 Jul 2014 22:13:46 GMT

Here's what works for me:

DCU and USBank report the balance on the last day of the month.

All others that I've encountered (including Amex, Barclay, CapOne, Chase, Discover, USAA) report the statement balance.

So if you want zeroes on the credit report, you need to generally focus on statement dates. Make sure that when the statement cuts, it has a 0 balance except for USBank and DCU, which require a 0 balance on the last day of the month. The only other odd exception out there lately has been that Chase will report 0 whenever you pay their card in full; otherwise, they report the statement balance.

Re: How to Use Credit Cards But Pay Off Before They Report?

Anonymous — Wed, 02 Jul 2014 22:18:49 GMT

I am confused.

Purpose of a credit card is flexibility. I pay the balance on all my cards by the due date in full, and usually charge about 6-10K a month depending on what I am doing. I look at it as an interest free loan for about 3 weeks.

So, I see that balance on my cards each month on my FICO report, however I have yet to see it impact my credit score (high 700s). I know that because I travel to remote places at times for hunting and not charge a thing on my cards. No difference, on credit score at all.

Maybe, it depends on the spending, and payment patterns along with available credit?

Re: How to Use Credit Cards But Pay Off Before They Report?

ddemari — Wed, 02 Jul 2014 22:19:25 GMT

For the past 6 months i have been alternating 4 cc's. Pay at least 2 days before its due and then dont use it till the cycle closes. Boa visa due on 7/7 and closes 7/10. I wont use it till 7 /11. Been doing that and my utilization has been around 3% total on Credit report. Fico has gone up about 15 points. Before i was revoling at about 20-30% a month.

Re: How to Use Credit Cards But Pay Off Before They Report?

Anonymous — Wed, 02 Jul 2014 22:20:03 GMT

Dont pay them off ! Leave 5%

Pay one week before the due date.

If by check, pay two weeks before the due date

Some firms reposrt a month late