Credit Card Balances

[jmonye21]

Great. Thanks! I had to Google AZEO. Never heard of it. Also, I thought statement date and due date were the same thing. I'm a bit confused. 

[jmonye21]

Actually just Googled the Statement date vs Due date, too. 

[Thomas_Thumb]

Just to give some background info;

1. Fico looks at aggregate utilization in scoring. Keep this below 9% based on reported balances. For a margin of added safety stay below 5%. Charge cards are excluded from this calculation.

2. Fico looks at individual card utilizations and scores based on the card with the highest UT%

3. Fico looks at the number card of accounts with balances- including charge cards. **Fewer is better**

4. Fico looks for recent revolvong account activity. If there is NO activity on any revolving account, typical penalty is 20-25 points but ranges from 15-30 depending on profile. An account is considered inactive if reported balance is $0 even if used during the month.

Given the OP has 5 cards, my recommendation is either AZE2 or AZE1. Avoid the AZ penalty. The AZE2 penalty is typically 0-5 points for a 5 card profile. Avoid 4 of 5 and 5 of 5 reporting.

It is important to use all cards periodically to avoid closure due to non use. What is periodically? Atleast once every 3-5 months. The card issuer obviously knows the card was used even if paid to $0 before statement cut date.

[jmonye21]

@Snook_on_the_Line @SouthJamaica @JoeRockhead @Thomas_Thumb 

Another question. With regard to paying down to 0 during statement dates rather than due dates, I think it would be easier for me to just leave those accounts at 0. Would that help hurt my score to leave the 0 accounts at 0 and not use them to keep from mixing up the dates?

I have 5 cards and the dates begin to run together at times. I can keep a little balance on the one with the highest limit. 

[Thomas_Thumb]

I would advise against carrying over a balance month to month. No need to incur interest charges. Better to make a progress payment before statement cuts and then pay the remainder by the due date.

It will hurt your score if those accounts are never used and then get closed due to inactivity. To avoid that possibility, each card should be used atleast once every 3-5 months.

I would recommend designating 1 card as your primary "daily driver". Then rotate use among the other cards one at a time.

The secondary card can be allowed to report a balance and paid before due date. This results in AZE2. Alternately, pay off the 2nd card before statement cuts which results in AZE1.

I have 5 cards and don't see a penalty reporting AZE2.

[SouthJamaica]

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@jmonye21 wrote:

@Snook_on_the_Line @SouthJamaica @JoeRockhead @Thomas_Thumb 

Another question. With regard to paying down to 0 during statement dates rather than due dates, I think it would be easier for me to just leave those accounts at 0. Would that help hurt my score to leave the 0 accounts at 0 and not use them to keep from mixing up the dates?

I have 5 cards and the dates begin to run together at times. I can keep a little balance on the one with the highest limit. 

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It doesn't affect your scores not to use the card during the cycle. It might, however, affect your relationship with the lender, as @Thomas_Thumb points out, if you go months without using it.

[CaneVariant]

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@Thomas_Thumb wrote:

Just to give some background info;

1. Fico looks at aggregate utilization in scoring. Keep this below 9% based on reported balances. For a margin of added safety stay below 5%. Charge cards are excluded from this calculation.

2. Fico looks at individual card utilizations and scores based on the card with the highest UT%

3. Fico looks at the number card of accounts with balances- including charge cards. **Fewer is better**

4. Fico looks for recent revolvong account activity. If there is NO activity on any revolving account, typical penalty is 20-25 points but ranges from 15-30 depending on profile. An account is considered inactive if reported balance is $0 even if used during the month.

Given the OP has 5 cards, my recommendation is either AZE2 or AZE1. Avoid the AZ penalty. The AZE2 penalty is typically 0-5 points for a 5 card profile. Avoid 4 of 5 and 5 of 5 reporting.

It is important to use all cards periodically to avoid closure due to non use. What is periodically? Atleast once every 3-5 months. The card issuer obviously knows the card was used even if paid to $0 before statement cut date.

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For a 2 card credit rebuild would it be embrace AZE1 or have both report as sub 5% utilization? With regards to Fico10T scoring (I believe this is considered trending) for a rebuild is it better to put every monthly expense (except rent) and then pay both down to sub 5% before the statement cuts? Organic spend is ~ $2k and would not put utilization at higher than 50% at any point ie $2k charges vs $4k limits. I ask because DP's seem to indicate both Ally and Mission Lane "reward" card "users" with better CLI's. Balances above 4% will not be carried. Thank you for your consideration. Cheers!

[TrapLine]

What the posters have offered works. Paid all accounts zero and then let a balance report and I gained 16 Fico 8 points on EX.

Now I will lose one to two inquiries from 2022 in June and anticipate this will further my snails pace climb back towards Fico 8 850.

[Thomas_Thumb]

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@CaneVariant wrote:

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For a 2 card credit rebuild would it be embrace AZE1 or have both report as sub 5% utilization? With regards to Fico10T scoring (I believe this is considered trending) for a rebuild is it better to put every monthly expense (except rent) and then pay both down to sub 5% before the statement cuts? Organic spend is ~ $2k and would not put utilization at higher than 50% at any point ie $2k charges vs $4k limits. I ask because DP's seem to indicate both Ally and Mission Lane "reward" card "users" with better CLI's. Balances above 4% will not be carried. Thank you for your consideration. Cheers!

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For rebuilding credit it does not matter if one or both cards report balances. Both should be used. The key is developing a history of on-time payments and allowing the accounts to age.

Significant utilization on both cards will help secure higher CLIs. However, the reported statement balance can be low on both cards or even $0 on one.

A big component of trending is looking at aggregate utilization and possibly aggregate balance changes over time. For a 2 card file, AZE1 might result in a 5-8 point higher score vs AZE2 but either one is better than AZ.

[CaneVariant]

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@Thomas_Thumb wrote:

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@CaneVariant wrote:

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For a 2 card credit rebuild would it be embrace AZE1 or have both report as sub 5% utilization? With regards to Fico10T scoring (I believe this is considered trending) for a rebuild is it better to put every monthly expense (except rent) and then pay both down to sub 5% before the statement cuts? Organic spend is ~ $2k and would not put utilization at higher than 50% at any point ie $2k charges vs $4k limits. I ask because DP's seem to indicate both Ally and Mission Lane "reward" card "users" with better CLI's. Balances above 4% will not be carried. Thank you for your consideration. Cheers!

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For re-building credit it does not matter if one or both cards report balances. Both should be used. The key is developing a history of on-time payments and allowing the accounts to age.

Significant utilization on both cards will help secure higher CLIs. However, the reported statement balance can be low on both cards or even $0 on one.

A big component of trending is looking at aggregate utilization and possibly aggregate balance changes over time. For a 2 card file, AZE1 might result in a 5-8 point higher score vs AZE2 but either one is better than AZ.

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Thank you very much for the prompt reply! I appreciate the knowledge bombs you frequently drop. I have been refraining from using my cards for the "basics" since I was unsure how to proceed with my rebuild with regards to utilization (that and my checking gives 2% cash back). Just going to keep farming and try to grow the limits with significant monthly utilization and sticking with sub 5% statement utilization. Cheers!