paying off a credit card questions

[Anonymous]

if you have a card that has a 1,000 balance that is due on 12/1, but you make a purchase today for 500 (so your total balance is now 1,500, even though your outstanding balance for your statement is 1,000), can you pay off just 1,000 and leave the 500 on the card at the time it is due (12/1) and not pay interest on that 500 outstanding balance?  and also will it report to a credit bureau that you paid your card off in full, even though there is still a 500 outstanding balance at the due date?

[Tazman81]

Sounds like your question is really 2 parts.

Part 1 - Interest

You are correct.  If your statment has already been cut showing your card has a balance of $1000 and you charge another $500 on it, then you will not be charged interest on that additional $500 until after the next time your statement cuts.

Part 2 - Pay in Full

In order for your card to show up with the credit bureaus as "paid in full" or a zero balance, you must actually have a zero balance on your card at the time the statement cuts.  So, if you charged $1000 on your card, prior to your statement cut date, you would need to pay off that $1000.  As an example, we will say that your statement cut (or end date) is November 20th and you have a $1000 balance.  Prior to november 20th, you would need to pay that $1000 so that when your statement cuts it will show your credit card as having a zero balance and will say "no payment due".  Then that will report to the CRAs that you have a zero balance.  Once the statement cuts, then you can go out and charge on your card again, but would then need to pay it off again prior to your statement "cut/end" date.  This date is different than the actual statement "due" date.  The "due" date is the day you must make a payment by if a payment is due.

Hope this makes sense.  And in essence, if you follow part 2, then you will also never pay interest on any money on your credit card.  So, its a win win type of deal.  (Although most will advise it's good to carry a 1%-9% balance on at least 1 credit line on your credit report to help your score the most).

[Anonymous]

The way I understand it:

Since you made the $500 purchase AFTER the statement cut, your report will show the $1000 balance, regardless of the fact that you are paying it in-full.  This is because they usually report the balance as of the statement date. If you had paid the $1000 balance BEFORE the statement cut, then they would report a $0 balance.  As long as you pay off the $1000 balance by the due date of 12/1, and pay the additional $500 by the next due date (presumably 1/1), then you should not owe interest on the $500.

eta: Looks like Taz beat me to it.

[Anonymous]

thanks guys.  yes, basically i have a 1k balance and need to make another purchase that probably will post before the payment of the 1k hits.  i was just worried that the extra money i am charging to the card would be tacked on to what is owed on the balance due date.  thanks for the tips!

[Anonymous]

also they say to have a balance of less than 10% for scoring purposes, but how does this compare over time if you instead utilize less than 30% instead?  i've always heard 30% is okay, but 10% is better.  i just wonder how they compare in terms of scoring, i.e. 10 points over the course of a year if you pay <10% instead of <30%, 20 points, etc.

[MarineVietVet]

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@Anonymous wrote:

also they say to have a balance of less than 10% for scoring purposes, but how does this compare over time if you instead utilize less than 30% instead?  i've always heard 30% is okay, but 10% is better.  i just wonder how they compare in terms of scoring, i.e. 10 points over the course of a year if you pay <10% instead of <30%, 20 points, etc.

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Scoring has no memory so past utilization doesn't mean anything. What matters is the utilization that happens to be reported at the very time someone pulls your score.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".

[Anonymous]

I was under the impression that every cc was different in when they reported. More specifically, they report on a certain day (like the last or first of the month for example) and not in any pattern associated with the actual billing statements you receive. Is this correct or do they all report to the cra's only when statements are cut?

[Anonymous]

i may not follow completely.  if i spend 100% of my credit and pay it off in full each month for 12 months, does that help or hurt my score?  assume no one pulls my score the entire 12 months, but the 12 months of credit history has to have some type of an effect on my score, doesn't it?  so utilization in that 12 months means squat, but 12 months of history and paying off in full will affect the score?

change it up and say in month 12 i spend 100% of my limit BUT i also pull my score (or someone else does).  how would this affect my score?

what if on month 13 i spend 9%, how would that affect my score if the previous 12 months were at 100% max

i guess putting numbers into this situation, say i have a 700 score on month 0.  months 1-12 i spend 100% of my limit, and a. i pull my score at the end of month 12, is it going to be 700 or lower/higher? or b. i spend 9% in month 13 and i pull my score, will it be 700 or higher?  how much?

effectively it sounds like i can spend as much as want as long as i pay in full and as long as i know that when i want to apply for credit again the next time, i just spend 9% of my credit limit the month before to have the absolute best score.  true statement?  thanks for the help.

[Wolf3]

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@Anonymous wrote:
..

effectively it sounds like i can spend as much as want as long as i pay in full and as long as i know that when i want to apply for credit again the next time, i just spend 9% of my credit limit the month before to have the absolute best score.  true statement?  thanks for the help.

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   True!

[MarineVietVet]

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@Anonymous wrote:

i may not follow completely.  if i spend 100% of my credit and pay it off in full each month for 12 months, does that help or hurt my score?  assume no one pulls my score the entire 12 months, but the 12 months of credit history has to have some type of an effect on my score, doesn't it?  so utilization in that 12 months means squat, but 12 months of history and paying off in full will affect the score?

change it up and say in month 12 i spend 100% of my limit BUT i also pull my score (or someone else does).  how would this affect my score?

what if on month 13 i spend 9%, how would that affect my score if the previous 12 months were at 100% max

i guess putting numbers into this situation, say i have a 700 score on month 0.  months 1-12 i spend 100% of my limit, and a. i pull my score at the end of month 12, is it going to be 700 or lower/higher? or b. i spend 9% in month 13 and i pull my score, will it be 700 or higher?  how much?

effectively it sounds like i can spend as much as want as long as i pay in full and as long as i know that when i want to apply for credit again the next time, i just spend 9% of my credit limit the month before to have the absolute best score.  true statement?  thanks for the help.

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Think of credit scoring as "potential" in that it really doesn't exist until you buy your score or a lender looks at it. Therefore your "potential" score can change everyday in theory.

Payment history (35%) and revolving utilization (30%) are the two biggest factors in your total score. In fact here is how scoring is broken down:

The following tactic seems to help most  people to get their best score and maintain it  but you may have to play around with the numbers some to see what works best for you. TU and EQ seem to work opposite ways sometimes.

Only let one of your cards report a small (<9% of credit limit) balance on it's monthly statement and then pay in full before the due date to avoid any finance charges. Charge as much as you like during the month but make sure you get that balance down before the statement posts because whatever amount is reported is what is used to calculate your utilization.

On any other cards always have them report a zero balance every month on their statements. Use them as much as you want but make sure you time your payments to ensure that zero balance.

This is for maximum score tweaking and really isn't necessary to do each and every month unless you just want something to do or you are within a few months of applying for new credit. If you make all payments on time and keep your overall and individual card utilization low every month your score will be fine.

From a BK years ago to:
EX - 9/09 pulled by lender 802, EQ - 10/10-813, TU - 10/10-774

"Some people spend an entire lifetime wondering if they've made a difference. The Marines don't have that problem".