Pay in Full vs. Paying after statement

[Anonymous]

Hi All,

Thanks for your input on this question. I've read many conflicting opinions on which payment system is better for credit scoring (pay in full before statement vs. paying in full after the statement is cut). I was wondering if anyone could shed some light on this issue, or at least hash out the differences so I know which is best for me. Currently, I pay in full before the statement, so my statements always show 0 is owed. 

Sorry for the newbie question. I appreciate the help. 

[yfan]

Assuming that you pay the balance in full before the due date, there is no difference between paying before the statement cuts and after except for the fact that once the statement cuts, the balance is reported on  your credit reports and counts for utilization purposes. If you pay in full before the statement cuts, it simply show zero balance. It's up to you and your situation how many balances you want to show on your CRs, but usually around here people recommend zero balance reporting on all cards but one to optimize your score - which, I should mention, you should only be doing when you are about to apply for new credit.

[SunriseEarth]

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@Anonymous wrote:

Hi All,

Thanks for your input on this question. I've read many conflicting opinions on which payment system is better for credit scoring (pay in full before statement vs. paying in full after the statement is cut). I was wondering if anyone could shed some light on this issue, or at least hash out the differences so I know which is best for me. Currently, I pay in full before the statement, so my statements always show 0 is owed. 

Sorry for the newbie question. I appreciate the help. 

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If you're doing this on all of your CCs, then it appears that you aren't using any of your credit and your score would be lower than letting a balance post on one card.   Typically, we recommend letting a balance post on one card, so long as the balance is <10% of your CL.   That can be paid off before the due date to avoid interest.  

[marty56]

There was an old thread (I wish I could rememeber it) where the OP complained that his FICO socre was very low.  He used them for his business to get the rewards but hey always reporeted as being close to maxed out even though he PIF'd each month.  What you are talking about heere is the FICO Score reporting game.  Some CCs repoprt the same day each month like clockwork, while others not so much.  GEMB sometimes takes 2 reporting cycles to report a zero balance.  It takes work but you can master this game and remember just being in a position to decide how much util is being reported on your CR is a blessing.

[MarineVietVet]

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@Anonymous wrote:

Hi All,

Thanks for your input on this question. I've read many conflicting opinions on which payment system is better for credit scoring (pay in full before statement vs. paying in full after the statement is cut). I was wondering if anyone could shed some light on this issue, or at least hash out the differences so I know which is best for me. Currently, I pay in full before the statement, so my statements always show 0 is owed. 

Sorry for the newbie question. I appreciate the help. 

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Hello and welcome to the FICO forums.

Everyone's situation is different and there is no one size fits all approach to this and therefore no "ideal" number but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.

[s_haliz]

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@MarineVietVet wrote:

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@Anonymous wrote:

Hi All,

Thanks for your input on this question. I've read many conflicting opinions on which payment system is better for credit scoring (pay in full before statement vs. paying in full after the statement is cut). I was wondering if anyone could shed some light on this issue, or at least hash out the differences so I know which is best for me. Currently, I pay in full before the statement, so my statements always show 0 is owed. 

Sorry for the newbie question. I appreciate the help. 

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Hello and welcome to the FICO forums.

Everyone's situation is different and there is no one size fits all approach to this and therefore no "ideal" number but what seems to work well for most people is to have only one of their cards report a small (<9% of it's credit limit) balance each month and then pay in full before the due date. You can use it as much as you want during the month but what's important is the reported balance because for most cards whatever is reported on the monthly statement is what is used to calculate utilization for the month.

You might have to play around with the percentages for a few months to see what works best for you. Some people say that 1-3% utilization helps the most. For others it might be 5-9%. As I said it's not one size fits all.

On any other cards always try and have them report a zero balance each month. That doesn't mean you can't use them just make sure that the desired zero balance on these accounts is achieved several days before their statements post.

Along with individual and overall utilization, FICO also scores the number of all types of accounts reporting a balance.at any one time Making sure less than half of all your accounts report a balance helps most people.

Now this approach really isn't necessary if you're not looking to apply for any credit in the near future or unless you are trying to tweak your score for maximum effect but some folks do this as a hobby just to see how high they can get their score.


I guess you had already achieved the highest!!! 

[vanillabean]

It’s just like enjoying the hors d’oeuvres at a gathering. You aren’t really partying if you don’t take any, and you are also viewed as less than sociable if you hog the shrimp. The same goes for using credit. Use some, not nothing or not too much (applies to the statement date; scoring doesn't care about the due date). This will always be ideal, the same for everyone, the one size approach that fits all, lol.

[Anonymous]

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@Anonymous-own-fico wrote:

It’s just like enjoying the hors d’oeuvres at a gathering. You aren’t really partying if you don’t take any, and you are also viewed as less than sociable if you hog the shrimp. The same goes for using credit. Use some, not nothing or not too much (applies to the statement date; scoring doesn't care about the due date). This will always be ideal, the same for everyone, the one size approach that fits all, lol.

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Love this outlook on it.

[Anonymous]

Of course, doing this is cheating the system, just as much as say, oh, MS.   The FICO score is meant to represent risk for the issuer, based on data from "normal" behavior, where people pay (either in full or in part) after the statement cuts.   So reducing balance before the statement cuts (just for that purpose) is a deliberate attempt to misrepresent risk to current and potential issuers.  I am shocked it is openly condoned.

[Anonymous]

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@Anonymous wrote:

Of course, doing this is cheating the system, just as much as say, oh, MS.   The FICO score is meant to represent risk for the issuer, based on data from "normal" behavior, where people pay (either in full or in part) after the statement cuts.   So reducing balance before the statement cuts (just for that purpose) is a deliberate attempt to misrepresent risk to current and potential issuers.  I am shocked it is openly condoned.

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 ROFL. Hate the player, not the game.