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Mystified by Credit...

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Mystified by Credit...

I fully admit I am a credit newb .


Please help me understand grace periods, and how I can use them to my advantage. Apparently 5% util is markedly better than 0% util. Although I use my cards, I always look online, check my balance, and make sure it is 0 by the due date and avoid using a card before the account rolls over, therefore my (e)statement always cuts with a big fat 0 balance and 0 min payment.


The issue is now I want to start reporting at least a 1% util but I don't want to pay any interest. I can't seem to understand how to do that and I suspect I am missing or misunderstanding a vital part of the equation. I have looked online over and over, but I think I just need someone to explain it to me in baby words, because all the articles I've read seem to assume I understand this already. English is not my native language, maybe that is the problem.

Wallet - Barclaycard Rewards MC (1k), Citi Dividend Platinum Select (3.3k), Discover It (5k), Bank of Americard (1k), AMEX Blue Cash Everyday (6k), Chase Slate (1k), Citi Simplicity (1.8k), Paypal Extras MC (2k), another several thousand in store cards
Message 1 of 4
Regular Contributor

Re: Mystified by Credit...

For most cards, intrest doesn't accrue until a certain point after the statement cuts, often 25 days. So, you actually want to make 2 monthly payments. Make the first payment before the statement cuts to bring the balance down to what ever UTI you want to report. Then PIF after the statement cuts but before the due date. This way you show a small UTI, and pay no interest.

USAA WMC $12,500, PenFed Promise $12000, Capital One Venture $5000, Capital One QS $6300, Cabelas Visa $5000, NuVision FCU $1000, Discover it $20500, Amex BCE $3300, Chase Freedom $2200, Lowes $12,000, WalMart MC $6000, Kays $2700, Macy's $1000, Care Credit $9000, Amazon Store $2000
Beginning score 590 (6/2014) Current: EQ 770 TA 767 EX 776
Message 2 of 4
Regular Contributor

Re: Mystified by Credit...

Yes the part you were missing is making an online payment before the statement cuts (to make it report a certain number) and then paying in full after the cut to avoid interest.


You can use the cards as much as you want and use this strategy to keep your scores optimal at all times.


For best results, pay all cards to $0 before the cut except one card. For that card keep it between 1% and 9%.

TU08 FICO: 735 (12/14)
Message 3 of 4
Established Contributor

Re: Mystified by Credit...

Most issuers have a specific report date to all bureaus (on rare occasions a different one for each bureau). These report dates can change by a day or two every month due to weekends or holidays. You want at least one card to show a balance on its report date. The good news is that you can always PIF before the due date and not pay interest and still show a balance on your cards. 


Before I go further, let's talk about good/optimal ranges of utility. Optimally, one card should show a low balance (1-9% or so) and all other cards should show a zero balance on each of their report dates (will all be different). However, as long as all your cards report under 10%, your score will not be hurt much by the utilization category. Simply put, unless you are trying to squeeze a few extra points for a major loan (e.g. home loan), optimal scoring rarely matters and is too much work for those of us who use multiple cards for rewards. 


Credit report often tell you the date when the issuer last reported the credit card info to the bureaus. Major credit card issuers (big banks) usually report to all three bureaus every month on the same date. I use credit karma for its easy access to report dates (but free reports from other sources can be enough too). Once you know the cards report date to one bureaus, most likely it has the same report date to the other bureaus if it is a big bank prime card. Now you know which date (give or take 2-3 days due to weekends and holidays) the card will report to the bureau. Make sure you have a balance for 2-3 days before and after the report date and PIF before the due date. Generally, I have found the report date is close to the statement date which is usually 21-26 days before the due date. However, this is not always true. 



Message 4 of 4
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