No credit card required
Browse credit cards from a variety of issuers to see if there's a better card for you.
@killer_queen229 wrote:
1. I don't see anything wrong with how I pay my credit card bills. It works for me, right? Then thats all that should matter. It takes a few days to almost a week for the money order to actually get to it's location that it needs to go to.
I agree but gave an opinion. Similar to when you said, for example: "Either way it is bad to max out a card, even close to it even if you pay in full. Never do that. To a creditor it looks like you can max out a card with the possibility of not paying it back. I wouldn't recommend doing it even if someone disagrees."
@andiruleu wrote:Hello,
I'm new to this forum, and I hope this is in the right place for this question.
I was wondering if it is bad to pay for something in your credit card that will almost max it out, but pay the credit card in full right after? I'm doing this to so I can rack up points on my credit card. I know that its only good idea to use 1/3 of your credit limit. But in this case, if I decide to pay my credit card back in full say the next day or even right after the purchase, is it bad?
Thanks
My first card was the Cap1, and I was new to credit rebuilding. I also thought that maxing out a card and paying in full was a "good" thing. Perhaps internally it is, but as far as FICO scores go, mine never went up until I started paying before the statement close, so as not to show a balance. It is quite difficult to not max out a $300 or $500 CL card, so I had to pay multiple times since I only had the one card. FWIW, that's my experience.
@indiolatino61 wrote:
@andiruleu wrote:Hello,
I'm new to this forum, and I hope this is in the right place for this question.
I was wondering if it is bad to pay for something in your credit card that will almost max it out, but pay the credit card in full right after? I'm doing this to so I can rack up points on my credit card. I know that its only good idea to use 1/3 of your credit limit. But in this case, if I decide to pay my credit card back in full say the next day or even right after the purchase, is it bad?
Thanks
My first card was the Cap1, and I was new to credit rebuilding. I also thought that maxing out a card and paying in full was a "good" thing. Perhaps internally it is, but as far as FICO scores go, mine never went up until I started paying before the statement close, so as not to show a balance. It is quite difficult to not max out a $300 or $500 CL card, so I had to pay multiple times since I only had the one card. FWIW, that's my experience.
Yes, there are at least two measures that are impacted differently. FICO score is maximized by not reporting large balances, and this matters if you are apping from new issuers or possibly getting CLIs from existing ones. However, as discussed in other recent threads, it seems plausible that maxing and PIF shows the issuer of that card that you a) need more credit and b) are reliable at paying off debt.
Counter-examples both ways (people who don't get CLIs and those that do on cards they hardly use) make it hard to evaluate!
I've many times let multiple cards max out and just pay them down over time. Worst case scenario is that I get CLD, but as soon as I pay off everything typically a CLI will happen, so do what you need to do. Preferably it's better to not let the maxed out balance report, but if you do, it is not the end of the world.
I've had 100k of balance with 90% utilization for 3-4 months. I subsequently paid it off and everything was back to normal.
Unless you are about to apply for something, a few points, even 50+ point drop generally isn't the end of the world.
@killer_queen229 wrote:Either way it is bad to max out a card, even close to it even if you pay in full. Never do that. To a creditor it looks like you can max out a card with the possibility of not paying it back. I wouldn't recommend doing it even if someone disagrees.
That's really not what the OP is talking about. The OP is reducing the balance prior to statement close. The card does not report as maxed. It's not really the usage during the statement period that matters so much as the reported balance. The reported balance is what is used to determine utilization.
@killer_queen229 wrote:But how can you pay a bill when the statement isn't made out yet? That's what I am trying to get at. If the statement isn't posted online, or even mailed to you.. how can you do that? Why pay for every transaction on a card every time you buy something when it's a waste of time.
OP isn't paying the bill. OP is reducing the balance after transactions post. Payments can be made online as transactions post. Or, if the desire is to pay prior to post, the payments can be pushed using online bill pay.
Keep in mind that the "works for me" blade cuts both ways. You may see it as a waste but others see it as a necessity as their spend would otherwise exceed the ideal or generally recommeneded utilization limits.
Is there no one in this board who knows how the internal scorimg algorithms actually work? I guess it is all big time trade secrets.
In my experience, racking up debts then rapidly paying them off, is a sure-fire way to show the creditor they should loan you more money.