Using Debit Cards to reduce outstanding balances reported

[Anonymous]

myFICO says my revolving credit balance is too high, even though I pay my credit cards in full each month.  Would switching to using Debit Cards instead solve this problem altogether?

Will my score suffer if we don't use credit cards at all?

[injustifiiable]

The scoring uses whatever balance that's on your statement and sent to the CRA's.

You can run as much as you want through your card, just pay it down to under 10% of the limit before your statement date closes. The ideal is to have 1 or 2 cards report between 1 - 9% with the rest of your cards reporting 0.

Using a debit card won't help at all!

[bribro]

I don't see any sense in using a debit card (forgoing rewards being the biggest issue). Just pay down your card before the statement hits. The statement balance is what MOST credit card companies use to report to the CRAs.

[Anonymous]

I probably wasn't clear enough in the original post.  We have enough money to pay down the balances of our CCs in full every month.   However, we charge a lot on our CCs, and that balance each month gets reported (and is more than 9% of our credit limit).

The proposed solution from the posters seems to be to pay the CCs down even before receiving the statement each month.  I suppose this will work, but seems quite onerous.

Debit cards seem to be another alternative, since there's never a balance to begin with.  Losing the miles is definitely a bummer though.

[-Cain-]

Welcome to the forums. Paying before the due date may seem onerous, but it is the best way to maximize your score. You probably do not need to do this every month if you will not be applying for any new credit.

[Wolf3]

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@Anonymous wrote:

I probably wasn't clear enough in the original post.  We have enough money to pay down the balances of our CCs in full every month.   However, we charge a lot on our CCs, and that balance each month gets reported (and is more than 9% of our credit limit).

The proposed solution from the posters seems to be to pay the CCs down even before receiving the statement each month.  I suppose this will work, but seems quite onerous.

Debit cards seem to be another alternative, since there's never a balance to begin with.  Losing the miles is definitely a bummer though.

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The best way to solve this problem is to ignore what MyFico says, and do what you are doing most of the time. 

Then if you are applying for credit and you need a score boost, pay everything a month early before the application.  This will lower your utilization and boost your score while you are applying.  The rest of the time pay your bills on time by the due date.

[AndySoCal]

The protection offered by a credit card  and a debit card are very different. . A credit card with most  credit card company iis zero percent fraud liability. Most of the time the charge is removed right away. If the same thing happens with a dibt card it will take weeks beofre the money is put back into the account.  I have a friend that has just been through this. The funds were restore but it was several weeks.  You should not lose the reward points if you balance before the statement custs. Confrim with the credit card company.  You also may want to consider a credit limit increase on the card or cards. If you have the account for at least 6 months or more you may want to consider asking.  Who is the credit card company the account(s) with?

[injustifiiable]

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@-Cain- wrote:
Welcome to the forums. Paying before the due date may seem onerous, but it is the best way to maximize your score. You probably do not need to do this every month if you will not be applying for any new credit.

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+100

I wouldn't go too crazy over it unless you were planning on applying for something.

[Anonymous]

Continue to PIF each month and yes I know it seems frivilious but as much as possible try to PIF two days before the statement date cuts to try and  hit a zero balance the other thing that could help you is ask for a CLI so that your utilization percentage isn't affected quite as much.  Other than that keep doing what your doing!!

[Revelate]

Using a debit card won't impact your FICO at all, negithavely or positively.

What it will hamper is underwriting.  Lenders like seeing everything run through credit cards because it gets reported to the bureaus which does two things:

- You look like a more profitable customer

- Having more data to produce a complete picture makes them more comfortable.

Using a debit card for everything wrecks that for every lending institution except hte one you have your checking account / debit card through.  Also there's the common rewards maximization issue that someone posted too.

Just do what Cain suggested, worry about it when it actually matters.  If you're not applying for anything, it really doesn't matter.  Just clean it up before you're ready to pull the trigger on anything the prior month (or two months in Amex's case, go figure).  Unfortunately It's FICO: much of it is onerous but it's what we're stuck with.