cancel
Showing results for 
Search instead for 
Did you mean: 

Is there any advantage (credit score) in letting a balance post and then paying it off?

tag
Snoopy916
Valued Member

Is there any advantage (credit score) in letting a balance post and then paying it off?

I recently bought a car, and put the down payment ($15,000) on a credit card to get the 2% cashback.  I plan to pay it off right away, but am wondering if there are any short term/long term downsides/benefits to letting the statement post first and then paying it off.  I'm guessing it would hurt for maybe the first month as it brings my utilization up, but the next month it would go back down (currently overall at 4% before this transaction), would it end up going UP more afterwards since I paid it off, or is it not worth the games, and should I just pay it off now?

 

thank you, and sorry if this is the wrong forum.

Message 1 of 30
29 REPLIES 29
Horseshoez
Valued Contributor

Re: Is there any advantage (credit score) in letting a balance post and then paying it off?

Not only is there not a benefit, there is a significant drawback; letting that balance post, even if only for a day or two, will tank your scores for the next month.

I categorically refuse to do AZEO!
Message 2 of 30
Snoopy916
Valued Member

Re: Is there any advantage (credit score) in letting a balance post and then paying it off?

ok, im not concerned for one month, i guess i mean will it go up higher than it was , say a month or 2 after i pay it off?  

 

 

say I'm 723 now, it posts, I go to 690, pay it off then next statement will i be back up to 723 or higher, or will I remain lower?  

 

$15k is the limit for that particular card as well. Synchrony Paypal MC.

Message 3 of 30
K-in-Boston
Credit Mentor

Re: Is there any advantage (credit score) in letting a balance post and then paying it off?

The only possible advantage would be that a few lenders rely on statement balance to determine eligibility for future credit line increases, but those are fairly rare.  For scoring, it really depends on how much of a percentage the balance makes up of the credit line of the individual card and your total revolving credit lines.  Depending on those factors, introducing a temporary balance of $15k could result in no change whatsoever to your scores or a temporary loss.  Stating they will "tank" your scores as a blanket statement is not true in many instances.  Letting it report and paying it off as a single factor will not increase your scores beyond the baseline you started with.  "High balance" is a credit reporting item, but not a scoring factor (outside of very old FICO models and charge cards).

Message 4 of 30
Snoopy916
Valued Member

Re: Is there any advantage (credit score) in letting a balance post and then paying it off?

thanks I think this was the answer I was looking for.  Was just hoping there might be a slight long-term advantage in paying off a "loan", as opposed to not having the loan in the first place.

Message 5 of 30
NYC_Fella
Frequent Contributor

Re: Is there any advantage (credit score) in letting a balance post and then paying it off?


@Snoopy916 wrote:

thanks I think this was the answer I was looking for.  Was just hoping there might be a slight long-term advantage in paying off a "loan", as opposed to not having the loan in the first place.


Actually, paying off a loan has no advantage at all. In fact, it can hurt you. What can help is having a loan with a low unpaid percentage (under 20%).


Message 6 of 30
FireMedic1
Community Leader
Mega Contributor

Re: Is there any advantage (credit score) in letting a balance post and then paying it off?

Without knowing your file. Leaving that much for a month may spook other lenders and may lead to AA. If its out of your norm that is.


Message 7 of 30
mortimerwereback
Regular Contributor

Re: Is there any advantage (credit score) in letting a balance post and then paying it off?


@Snoopy916 wrote:

I recently bought a car, and put the down payment ($15,000) on a credit card to get the 2% cashback. 

 

I'm surprised they agreed to let you run 15k on your CC. I've always had dealers tell me around 5k was their max.

 

Congratulations on the new car!


 

"Only those who dare to fail greatly can ever achieve greatly." -Robert F. Kennedy

Message 8 of 30
Taurus22
Valued Contributor

Re: Is there any advantage (credit score) in letting a balance post and then paying it off?


@FireMedic1 wrote:

Without knowing your file. Leaving that much for a month may spook other lenders and may lead to AA. If its out of your norm that is.


This was my thought, as well. It may only tank your scores for a month or two, but other lenders could see that increase and start balance chasing you. Not to mention that SyncB is an odd flower anyway....it could possibly spook them, as well. And most of us here know very well that it takes very little (and some may argue nothing at all) to trigger full SyncB AA.

 

Should be nice cashback though.....2% on $15k.....$300

My Wallet
Sock Drawered

On Deck: New Truck March 2024
Message 9 of 30
Beefy1212
Established Contributor

Re: Is there any advantage (credit score) in letting a balance post and then paying it off?


@Snoopy916 wrote:

thanks I think this was the answer I was looking for.  Was just hoping there might be a slight long-term advantage in paying off a "loan", as opposed to not having the loan in the first place.


I disagree with KiB there is a fairly strong anecdotal pool of data points having highest balance reported leads to higher new approvals.

While the card issuer may not depend on that information for limit increases new accounts tend to look at how much credit you have used for determining starting limits.

 

Conceptually think of it this way...

 

you have a 500 dollar card every you never report a higher balance than 50 bucks, you might spend 5k a month on the card but you never run the limit up the next lender sees a 500 dollar limit and only 50 bucks used and assumes you don't need more than 500 dollars.

 

Conversely you have a 10k limit and have posted a 9,500 dollar balance the new lender wants that spend and offers you the same or a higher limit. 

Now the issue here is not every lender reports your highest balance regardless of whether you let it report on statement close some lenders report highest balance but only reports the highest statement balance and some lenders don't report that field at all.

 

Then you have no idea if your new lender cares about historical balances at all.

 

What is clear reporting a one time high balance will have no long term effect on your report or score. 

TLDR; It might help you depending on a number of factors, but worst case it doesn't hurt your profile for more than a few weeks so might well let it report if you don't have anything major coming up, and having just bought a car my money is on you don't.



Message 10 of 30
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.