Utilization questions... new to revolving debt

[spiritcraft1]

I have read and done some searches but wanted to ask about my best approach to my new credit lines.  I have a new Cabelas card with a $5,000 limit... 

what would be better for FICO scores?  And for future CLI's with Cabela's.

Charging $2,500 (50%) and paying in full

Charging say $500 (10%) and paying in full.

Or are those two paths the same?

Is utilization the amount carried over (balance) or is it the highest balance achieved in any given  month?

Would leaving a small balance of 5% or so help at all?

[Anonymous]

It's best for your FICO score if you PIF or pay down your balance before your statement date, regardless of how much you charge in a month. Most CCs report your balance on your statement date to the CRs, so that is the number used to figure your util. Example: if you charge 2500, and you don't make any payments until after your statement drops, then the CC will report 2500 balance and you'll be showing 50% util, causing  a dip in your score. It doesn't really matter how much you charge in a month, as long as you PIF or pay it down to a reasonable amount before the statement date. The good news is that if you pay that off before the next statement drop, you'll get those points back the next month.

As far as how much you should allow to report, it really depends on your FICO bucket - some people get the best score boost from letting 1 - 9% report; others are ok PIF-ing. Either way it's probably just a few points difference.

[spiritcraft1]

Interesting...  Thank you for that info!!  The statement date is the key then...  I take it those should be tracked just as much as due dates.

I just pulled TC and it actually reported to EX with a balance of $300...   I am going to pay that in full but I could gather some rewards dueinr the coming weeks and just make sure that I pay in full before the next statement date. The last thing I want after all of the hard work of repair and paying on time for years is to screw it up by lacking knowledge... (thinking I'm golden as long as I pay by the due date...)

I also have been issued a couple of GEMB store cards and an Alliant CU Visa..  should I just carry a small balance on a couple and PIF the others?  Maybe mix it up...  so it looks like I am using the cards and dole out a little interest to them...  ;-)

[Creditaddict]

You don't need to carry balances long enough to pay interest in order to reap the benefits of using the account.

I would use all your cards in rotation at least 1 every 3 months, but only let 1 card report a balance, pay all the other balances before statement.

I'm bad at this myself because it's a pain in my a$$, but if you have the discipline then you can really benefit.

[Anonymous]

For maximum score impact, allow no more than half of your cards report a balance of 1 - 9% util. So if you have 5 cards - let no more than 2 report a balance.

This month I goofed and let a card report a $156 balance on a 7k CL - that tipped me over to more than half cards my cards reporting a balance. I lost 11 points. I'll get them back next month, but that's just an example of the impact carrying a lot of balances can have.

[spiritcraft1]

Thanks...  Who would ever guess this stuff?   Great info though and I appreciate you both sharing your insight.    So far, I let just the one show a balance at statement time but will PIF.   I have noted that date and guess that it will always be near the 26th of the month for that card...

I guess it is a balancing act, paying in full by statement date (keeping the FICO score up) and carrying a slight balance from time to time on each card to keep the issuer happy.

[spiritcraft1]

Credit Addict...  Are you saying that the card issuers don't care if you never pay them a dime in interest?  I guess they make money elsewhere from fees paid by retailers...  So from the future CLI standpoint, using the card and paying in full gives you the best shot?  Or the best standing in thier eyes...

[Creditaddict]

using the account and on time payments should be enough.

[Anonymous]

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@Anonymous wrote:

For maximum score impact, allow no more than half of your cards report a balance of 1 - 9% util. So if you have 5 cards - let no more than 2 report a balance.

This month I goofed and let a card report a $156 balance on a 7k CL - that tipped me over to more than half cards my cards reporting a balance. I lost 11 points. I'll get them back next month, but that's just an example of the impact carrying a lot of balances can have.

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WOW, 11 points for a measly 2% on a card? That's really eye opening.

[spiritcraft1]

Thanks again for the help...  I was headed down the wrong track.

This month doesn't matter anyway as far as my score goes as my adding revolving debt to my credit picture gave me a 40-60 point boost despite a bunch of inquiries...