Balance before reporting and general reporting

[Anonymous]

Hello all,

 Had a few questions I hope I can get some help with. I recently obtained a credit card from my bank. My 1st cut off occurs on 2/27.

1. Im wanting to build credit and Im told the best way is to not use the card at all OR use a faster building method of using no more than 10-30% of the limit and to pay the card off completely each month when the statement is issued. This is confusing to me cause in my mind Im hearing, pay the card off before its reported. If the bank is always reporting a zero balance, is this not the same as not using the card? How would using the card build credit faster if my credit report looks as if I never use the card?
2. Does the method of spending 10-30% apply anytime or just in regards to the cutoff/reporting day? Meaning if I have a $500 limit and I use $400 but pay it down to $100 before the cutoff is that techinally staying within that 10-30% should that balance be reported?

[dynamicvb]

If this is your only card you want it to report less than 8.9% but more than around 5 dollars. For a 500 card no more than $25 when the statement cuts. you may have to let it go for a month or two to figure out exactly what your statement day will be. This is the only date you have to worry about, just keep your reported balance in this range and you will remove the not using revolving credit ding. If you don't have any cards reporting now, its good for a 40-50 point jump. At least that was my experience. 

Once you get more cards, then you can get a little boost by having only one of them report a balance and the rest zero. If you search AZEO then you will find a lot of topics on this strategy.

[Kforce]

Hello and welcome to the forum.  First as a new card user and new forum member I recommend you read a few popular threads from the forum.  This will allow you to understand the terms and make the answers members give understandable.

Where to start:

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Credit Scoring 101:

http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&thread.id=29793

The Son Of Credit Scoring 101

http://ficoforums.myfico.com/t5/Rebuilding-Your-Credit/The-Son-Of-Credit-Scoring-101/m-p/718550#U718...

Credit Reporting Time Periods:

http://ficoforums.myfico.com/fico/board/message?board.id=generalcredit&thread.id=2689

Guide to Common Abbreviations:

http://ficoforums.myfico.com/fico/board/message?board.id=Welcome&thread.id=23

Credit Line Reporting:

http://ficoforums.myfico.com/fico/board/message?board.id=ficoscoring&thread.id=2167

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First credit is built brick by brick over time. You can not build it in the first day, month, year or even 2 or 3, it takes time.  A credit profile includes loans other than just getting credit cards.  What you were told about was probably the "AZEO" method.  All zero except one. This is something you can search on the forum.  AZEO is kind of like putting on a nice suit for a date. It makes you look you best. If you are a pig you still look like a pig in a suit.

After a little home work, you will have a better understanding of time frames, scores, terms, etc.

Users here will make suggestions to help you.

Answers to your questions;

The CC issuer will see everything and they like you to use the card and always pay on time.  Fico scores are calculated by the reporting agencies.  Most issuers, (some exceptions), send the statement balance amount to the credit reporting agencies, a few days after the reporting date.  Those numbers are what "Fico" uses when calculating your scores.  This gives you some controle to look you best.  With a single card you want something to report every statement date. (You need to show use).   If wanting to see your best scores, you let 5 to 10 dollars report on the statement.  With a single card this requires paying everything you owe except a few dollars 4-5 days before your statement date and not using the card until the statement date has passed. This is only needed if trying to look your best. If wanting to just see where you high "Fico" number is or seeking a new loan or card. Most don't control utilization all the time. It has no history and changes every month. You can optimize only when you need too.

How much you put on the card and how many times you paid are not shared with the reporting agencies.  All they see is the balance at the time the statement cut.  ( Some issuers send in updates with mid cycle payments and some also report balance on a certain date but 97+% use statement balance)

[HeavenOhio]

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@Kforce wrote:

How much you put on the card and how many times you paid are not shared with the reporting agencies.  All they see is the balance at the time the statement cut.  ( Some issuers send in updates with mid cycle payments and some also report balance on a certain date but 97+% use statement balance)

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Actually, this information is shared… sometimes. It depends on whether or not a bank reports the "Recent Payment Amount." If that field is reported, lenders can tell exactly how you use the card, e.g. paying the statement balance in full, revolving a balance and paying it down quickly, revolving a balance and not paying it down quickly, paying before the statement cuts, etc.

As an example, let's say your January statement is for $1,500, and you pay in full by the due date. In February, your Recent Payment Amount would be $1,500. This information remains on one's report for 24 months (EQ and EX) or 30 months (TU), just like balances and limits. If you pay several times in a month, the sum of these amounts will be your Recent Payment Amount.

But we're not scored on any of this. That won't be possible until all banks report payment information.

AZEO won't directly help one build credit. All it does is control one's balances at a given point in time. This can be a useful tool, of course, if one is about to apply for credit. But utilization is just a snapshot in time, and it can be markedly different from month to month.

The way to build credit is to always pay on time. And give your accounts time to age. You can't accelerate that.