Revolving & Installment Balances

[jmbfl]

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Ulan wrote:

Well, neither the original post nor the answers specified when the PIF would take place. I just wanted to point out that PIF doesn't necessarily mean a reported balance of $0.

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I don't have any problem using my accounts, PIFing and getting them to report a zero balance. Just pay the minimum balance prior to the payment date and the balance in sufficient time for it to post before the statement drops. Since I pay everything thorugh the computer this works out to be a day or two before the statement date. Then stop using that card until the statement drops. This will work with 95% of CL's. I believe it is Orchard that is the exception and that some of the Orchard cards report at the end of the month rather than on the statement date.

[jmbfl]

As far as installment loans and the UTIL calculation are concerned if you have two auto loans and a mortgage you are going to need a bunch of SD'ed, zeroed out CC's to offset their effect on your UTIL. If you have several installment loans (student loans, personal loans, mortgages, boat loans, auto loans, etc.) it is a good reason to have a bunch of CC's. This is the place where those store cards you are lukewarm about because of the APR's begin to pay off. They don't get closed down quickly when they are SD'ed!

[haulingthescoreup]

Yes, that example I gave of the mortgage, auto loan, HELOC, and 5 CC's was me this past winter. I went nuts trying to keep only one card reporting. Between a J.Crew store card that refused to update a paid-off balance, and an AU card which is really DH's, I got dinged regularly by TU. The other two were OK with 2 reporting, but then they'd get me for three.

Thus my February app spree. Haven't had that message since! Of course, now I have the new accounts ding. But it will be gone in 4 months, and I'll have a much better credit profile.

[jmbfl]

I think there is a good argument for adding one TL every six months. Right now I have to wait for a while until the BofA/PenFed/Discover acquisitions settle in. When Kohl's get's established down here that will be one I want for the discounts. Then there are those Citi pre-app's I just got. And that gasoline card I will never us because there is no cash back. Oh dear...

Message Edited by jmbfl on 10-03-2008 05:08 PM

[haulingthescoreup]

Yes, I'm sitting on the loveseat with the laptop and the cat (and the Ultra), surrounded by fun things that came in the mail, none of which I will touch until January, at the very earliest. They're going to have to show me how they will work to shine up my credit profile, though.

[adamseve]

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@haulingthescoreup wrote:

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@jmbfl wrote:

To add a slight layer of complexity to this matter, if I recollect correcty, for optimal UTIL you will require:

1) 1% to 9% UTIL on your revolving credit, and

2) balances reporting on less that 50% of your revolving accounts, and

3) two revolving lines for every installment line + 1 more. (This is the tricky part - I am not quite sure I worded this correctly.)

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#3 says half or fewer of all TL's. If you have a mortgage, a car loan, a HELOC, and 5 cards, that's 8 TL's; half is 4; your mortgage, car loan, and (presumably) HELOC will always have balances, so that means only 1 of the 5 cards can report with a ding, rather than the two from #2. (You always go with the tougher version.)

So it is true that if you have twice as many revolving lines as installment lines, the extra CC's cancel out the pesky installment accounts. But it doesn't always happen, so work it out in your head first. (It's related to whether the number of accounts are odd or even, snore.)

Not trying to belabor the point; it's just that there are a lot of people who miss the distinction between "fewer than half" and "half or fewer."

Nap time!

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Ok...let's see if I've got this right.  This is just an example to clarify in my head:

1.  One auto loan

2.  10 revolving accounts

This is 11 tradelines and since the auto loan is going to almost always have a balance only 5 (or less) of the 10 revolving accounts can show a balance.  Correct?

[adamseve]

One more thing:  since department store cards are revolving accounts does it matter that I only let these show a small balance versus say Capital One?

Also, how does anyone make this work with Household Bank?  My payment is due the 1st week of the month but they refuse to update with CRAs until the last of the month.  But, if I decide to make a purchase that's sizable they'll immediately update.  However, if I don't make a purchase they won't update. 

Any ideas on this?  I basically go buy a cup of coffee now and just don't use this card.

[Veee]

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@adamseve wrote:

Ok...let's see if I've got this right.  This is just an example to clarify in my head:

1.  One auto loan

2.  10 revolving accounts

This is 11 tradelines and since the auto loan is going to almost always have a balance only 5 (or less) of the 10 revolving accounts can show a balance.  Correct?

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Let see if I get this right ... You have 11 tradelines, half would be 5.5 so half or fewer would be 5 (or less) minus your auto loan leaves you with 4 that can show a balance that you would want to keep under 9% utli

[haulingthescoreup]

Veee has it:

rule #2 (from the list above) says half or fewer of all accounts should have balances, so 5.5 of all accounts can have balances --> 5 accounts, one of which is the loan, so 4 CC's

rule #3 says fewer than half of all revolving accounts (= CC's) should have balances, so fewer than half of 10 is 4 or fewer

So four is the magic number!

[Anonymous]

I have 11 credit cards (three of which will report a balance) and 2 auto loans.  If I then do a balance transfer from one of the balance-reporting credit cards to pay off one auto loan, and the util% on that card rises from 35% to 55%, but the auto loan goes from $11k/$15k to $0/$15k, will that tank my FICO score?

What if I leave like $50 on that auto loan and reamortize the payments, so I pay like $1.50 a month on it but it stays open, will that make a difference? (keep in mind I have another auto loan, which is at about $9k/$12k).

I already initiated the balance transfer, but if it would be horribly detrimental, I can simply pay off the CCC instead of the auto loan (the BT is going to end up in my bank, but it IS a BT, not a cash advance).