topic Re: Credit Card Utilization - Pay off every month or keep <10%? in General Credit Topics

Credit Card Utilization - Pay off every month or keep <10%?

sagekzin659 — Wed, 30 Nov 2022 23:40:16 GMT

Hola All,

I have looked on the forums and see 2 schools of thought. I am trying to figure out which is the best to keep a good credit score and not have it get out of hand (as it has in the past...lol)
2 credit cards with 9K and 5K credit limits. Which will benefit our credit score more?
Paying the balances down to zero before your due date each month?
Paying the balance down to 9% right before your due date each month?
Thanks In Advance!

Re: Credit Card Utilization - Pay off every month or keep <10%?

tcbofade — Wed, 30 Nov 2022 23:55:05 GMT

Best for your Fico 8 scores is to let one account report a small balance... less than 5%... and let the other report a zero balance.

Good luck!

Re: Credit Card Utilization - Pay off every month or keep <10%?

citymunky — Thu, 01 Dec 2022 00:22:39 GMT

I would only swap between which card is reporting Zero and which has the balance of less than 10%. It will show continued usage on the card while preventing one card from going dormant.

Re: Credit Card Utilization - Pay off every month or keep <10%?

sagekzin659 — Thu, 01 Dec 2022 02:49:55 GMT

@tcbofade wrote:
Best for your Fico 8 scores is to let one account report a small balance... less than 5%... and let the other report a zero balance.

Good luck!

Sounds good. Why is that, though? And is there a certain day to make sure that your balances are zero and 9% or do you make sure of that a few days before the due date? Thanks!

Re: Credit Card Utilization - Pay off every month or keep <10%?

sagekzin659 — Thu, 01 Dec 2022 02:50:28 GMT

@citymunky wrote:
I would only swap between which card is reporting Zero and which has the balance of less than 10%. It will show continued usage on the card while preventing one card from going dormant.

Great idea! Thanks!

Re: Credit Card Utilization - Pay off every month or keep <10%?

citymunky — Thu, 01 Dec 2022 03:04:06 GMT

Keep track and figure out what date your statement is going to post, and make your payment prior to the statement date. (i.e. one of my Capital One cards statement is always on the 15th of the month, I make a payment a maximum 3 business before hand).

Re: Credit Card Utilization - Pay off every month or keep <10%?

SouthJamaica — Thu, 01 Dec 2022 04:08:45 GMT

@sagekzin659 wrote:
Hola All,

I have looked on the forums and see 2 schools of thought. I am trying to figure out which is the best to keep a good credit score and not have it get out of hand (as it has in the past...lol)
2 credit cards with 9K and 5K credit limits. Which will benefit our credit score more?
Paying the balances down to zero before your due date each month?
Paying the balance down to 9% right before your due date each month?
Thanks In Advance!

There are no "schools of thought". These are the facts.

The "due dates" are irrelevant to the equation; FICO utilization is based on the reporting date which is in most cases, but not all, the statement date.

Optimal revolving utilization for a person with 2 cards would be for 1 to report a zero balance while the other reports a small balance (e.g. less than 6%), before paying it off.

Re: Credit Card Utilization - Pay off every month or keep <10%?

moto4man — Sun, 04 Dec 2022 14:26:54 GMT

This method I find to be a quick maximization of your credit score. For instance, if you needed your score to jump to its maximum potential quickly.

You COULD... put some pretty heavy spend on one card or another, or possibly even both. However, you'll need to pay those down heavily and responsibly. Meaning... don't max out the cards and continue to pay $5 more than the minimum payment monthly. If you charge $5k, have a plan to pay it back on your terms. Let's say... 5 months time you pay off those amounts. Your score will rebound to pre utilization numbers or higher. But, it'll take time to reflect and it's really not recommended because none of us know what the future holds. Things may come up that hinder the ability to pay these charges. I wouldn't consider this the smart way of doing things to put it bluntly. Determination and responsibility cannot be emphasized enough. Just a litte food for thought and what I've found on my journey, and how my personal scores have reflected my rebuild path. YMMV

Re: Credit Card Utilization - Pay off every month or keep <10%?

SouthJamaica — Sun, 04 Dec 2022 15:01:38 GMT

@moto4man wrote:
This method I find to be a quick maximization of your credit score. For instance, if you needed your score to jump to its maximum potential quickly.

You COULD... put some pretty heavy spend on one card or another, or possibly even both. However, you'll need to pay those down heavily and responsibly. Meaning... don't max out the cards and continue to pay $5 more than the minimum payment monthly. If you charge $5k, have a plan to pay it back on your terms. Let's say... 5 months time you pay off those amounts. Your score will rebound to pre utilization numbers or higher. But, it'll take time to reflect and it's really not recommended because none of us know what the future holds. Things may come up that hinder the ability to pay these charges. I wouldn't consider this the smart way of doing things to put it bluntly. Determination and responsibility cannot be emphasized enough. Just a litte food for thought and what I've found on my journey, and how my personal scores have reflected my rebuild path. YMMV

There is nothing in what you have described which would enhance one's scores.

Spending heavily? No.

Paying $5 more than the minimum? No.

Both completely irrelevant to enhancing one's FICO scores.

Re: Credit Card Utilization - Pay off every month or keep <10%?

Jnbmom — Sun, 04 Dec 2022 15:11:01 GMT

@SouthJamaica wrote:
@moto4man wrote:
This method I find to be a quick maximization of your credit score. For instance, if you needed your score to jump to its maximum potential quickly.

You COULD... put some pretty heavy spend on one card or another, or possibly even both. However, you'll need to pay those down heavily and responsibly. Meaning... don't max out the cards and continue to pay $5 more than the minimum payment monthly. If you charge $5k, have a plan to pay it back on your terms. Let's say... 5 months time you pay off those amounts. Your score will rebound to pre utilization numbers or higher. But, it'll take time to reflect and it's really not recommended because none of us know what the future holds. Things may come up that hinder the ability to pay these charges. I wouldn't consider this the smart way of doing things to put it bluntly. Determination and responsibility cannot be emphasized enough. Just a litte food for thought and what I've found on my journey, and how my personal scores have reflected my rebuild path. YMMV
There is nothing in what you have described which would enhance one's scores.

Spending heavily? No.

Paying $5 more than the minimum? No.

Both completely irrelevant to enhancing one's FICO scores.

I agree the above advice doesn't really help your scores at all .

Re: Credit Card Utilization - Pay off every month or keep <10%?

Revelate — Sun, 04 Dec 2022 16:02:15 GMT

To be clear none of this helps FICO scores over time. It doesn't matter as long as you never pay less than tbe minimum, never pay late, and never miss a payment.

FICO scoring long term is tbe abscense of negative information.

What SJ said though was correct, AZEO is instant in time optimization for when you are planning for an application and putting as much lipstick on the pig as possible.

Vis a vis my own payment adventure this morning where I zeroed out my Amazon and paid down tbe CFU to $15 because at some point I'm going to get another mortgage pull or two and may be this month so need to be pretty.