topic Re: One Card Utilization Question! in Rebuilding Your Credit

One Card Utilization Question!

Anonymous — Thu, 30 Jun 2016 14:44:39 GMT

Hello all, so I am getting an Open Sky secured card in July, my question is I see numerous things on 3 cards is optimum but if I have ONE CARD what is the best gameplan? My card will be $200 so charge no more than $50 and PIF immediatly or pay down to 1% to 9% ASAP? Please advise. I'm trying to maximize everything to get the most effectiveness in this.

Re: One Card Utilization Question!

Anonymous — Thu, 30 Jun 2016 15:05:38 GMT

Yes before the statement cuts you want to pay down the balance to no more than 9% of your credit limit. The reason for three cards is so you can let less than half of your accounts report a small balance and the rest report zero this will maximize your FICO scores. If you are just starting you rebuilding this is not all that important unless you are looking to apply for a better card or an installment loan.

Re: One Card Utilization Question!

Anonymous — Thu, 30 Jun 2016 15:32:12 GMT

To reitarate, pay it ASAP @ 9% I.E pay $46 on on $50 balnce?

Re: One Card Utilization Question!

Anonymous — Thu, 30 Jun 2016 16:46:29 GMT

Sort of...

If your limit is $200, use the card as you will, pay it as you go to free up the credit limit for re-use, etc.

When you are about three days ahead of your statement date (the date they pull your balance and write out your statement) pay it down so that $15-18 is left on it, and then let them cut your statement with that as the balance. (This is a "reporting balance" of 7.5-9%)

If you need the statement date on a new card, you can generally get that information from the lender by calling customer service.

Of course, once your first statement comes out, you will know the date.

If your statement came out on June 8, for example, it will likely come out on the 8th of each month. So in that case, you'd need to make sure your "reporting balance" was at the right place on about the 5th and then not use the card at all each month until the 9th.

As previously stated, this is just a tactic to micromanage your FICO by squeezing a few points out for optimal utilization, prior to applying for new credit.

When you are in "maintain" mode - that is, just working on maintaining proper payments and building the credit you already have - then you dont' have to micromanage and should just make sure you stay below about 30% across the board on a monthly basis.

With small-limit cards like yours, of course, you will have to make payments frequently after card use, to free up credit to use again. There is nothing wrong with this, and it does not affect your FICO to make multiple payments. In rebuild mode it can actually help you, because most lenders will count the first payment you make after a statement is cut as your "required" monthly minimum payment, thereby ensuring that if you pay the card down/off every week or two, you will never have a late payment because you will "wipe out" the required monthly minimum payment well ahead of its due date each month.

As for interest, any amount that is reported on your statement must be paid in full before the due date on the statement to avoid interest.

That is to say, if your statement balance is $72 and you pay $25 (the minimum) by the due date but don't pay the whole thing off, you will be charged interest on the remaining $47 on the day after the due date. If you want to avoid interest altogether, just make sure your payments wipe out your statement balance before the due date rolls around.

Re: One Card Utilization Question!

Anonymous — Thu, 30 Jun 2016 16:50:41 GMT

thank you.

Re: One Card Utilization Question!

Anonymous — Thu, 30 Jun 2016 19:10:22 GMT

@Anonymous wrote:
Sort of...

If your limit is $200, use the card as you will, pay it as you go to free up the credit limit for re-use, etc.

When you are about three days ahead of your statement date (the date they pull your balance and write out your statement) pay it down so that $15-18 is left on it, and then let them cut your statement with that as the balance. (This is a "reporting balance" of 7.5-9%)

If you need the statement date on a new card, you can generally get that information from the lender by calling customer service.
Of course, once your first statement comes out, you will know the date.
If your statement came out on June 8, for example, it will likely come out on the 8th of each month. So in that case, you'd need to make sure your "reporting balance" was at the right place on about the 5th and then not use the card at all each month until the 9th.

As previously stated, this is just a tactic to micromanage your FICO by squeezing a few points out for optimal utilization, prior to applying for new credit.
When you are in "maintain" mode - that is, just working on maintaining proper payments and building the credit you already have - then you dont' have to micromanage and should just make sure you stay below about 30% across the board on a monthly basis.

With small-limit cards like yours, of course, you will have to make payments frequently after card use, to free up credit to use again. There is nothing wrong with this, and it does not affect your FICO to make multiple payments. In rebuild mode it can actually help you, because most lenders will count the first payment you make after a statement is cut as your "required" monthly minimum payment, thereby ensuring that if you pay the card down/off every week or two, you will never have a late payment because you will "wipe out" the required monthly minimum payment well ahead of its due date each month.

As for interest, any amount that is reported on your statement must be paid in full before the due date on the statement to avoid interest.
That is to say, if your statement balance is $72 and you pay $25 (the minimum) by the due date but don't pay the whole thing off, you will be charged interest on the remaining $47 on the day after the due date. If you want to avoid interest altogether, just make sure your payments wipe out your statement balance before the due date rolls around.

This actually varies from lender to lender. Credit One for instance, will charge interest from day one on every charge made, regardless of whether you pay in full or carry a balance (one of the reasons they are discouraged here). Some lenders will determine the amount of interest charged based on the average daily balance, some have other methods of calculating the interest, but as a general rule, if your payments made during a cycle are equal to (or exceed) the balance from the last statement, you will avoid all interest charges. Knowing this can allow you to carry a balance from month to month AND avoid interest on that balance.

Re: One Card Utilization Question!

surferchris — Fri, 01 Jul 2016 04:01:08 GMT

@Anonymous wrote:
Sort of...

If your limit is $200, use the card as you will, pay it as you go to free up the credit limit for re-use, etc.

When you are about three days ahead of your statement date (the date they pull your balance and write out your statement) pay it down so that $15-18 is left on it, and then let them cut your statement with that as the balance. (This is a "reporting balance" of 7.5-9%)

If you need the statement date on a new card, you can generally get that information from the lender by calling customer service.
Of course, once your first statement comes out, you will know the date.
If your statement came out on June 8, for example, it will likely come out on the 8th of each month. So in that case, you'd need to make sure your "reporting balance" was at the right place on about the 5th and then not use the card at all each month until the 9th.

As previously stated, this is just a tactic to micromanage your FICO by squeezing a few points out for optimal utilization, prior to applying for new credit.
When you are in "maintain" mode - that is, just working on maintaining proper payments and building the credit you already have - then you dont' have to micromanage and should just make sure you stay below about 30% across the board on a monthly basis.

With small-limit cards like yours, of course, you will have to make payments frequently after card use, to free up credit to use again. There is nothing wrong with this, and it does not affect your FICO to make multiple payments. In rebuild mode it can actually help you, because most lenders will count the first payment you make after a statement is cut as your "required" monthly minimum payment, thereby ensuring that if you pay the card down/off every week or two, you will never have a late payment because you will "wipe out" the required monthly minimum payment well ahead of its due date each month.

As for interest, any amount that is reported on your statement must be paid in full before the due date on the statement to avoid interest.
That is to say, if your statement balance is $72 and you pay $25 (the minimum) by the due date but don't pay the whole thing off, you will be charged interest on the remaining $47 on the day after the due date. If you want to avoid interest altogether, just make sure your payments wipe out your statement balance before the due date rolls around.

Good advice...

Re: One Card Utilization Question!

RonM21 — Fri, 01 Jul 2016 09:00:22 GMT

Good point Norman. It is good to check eeach lendef's policy on how they will handle the interest so you know how it will play out ahesd of time.

Re: One Card Utilization Question!

Anonymous — Fri, 01 Jul 2016 15:55:56 GMT

Thank you guys for all the awesome advice! I appreciate ya!!