To PIF or Revolve balances?

[TheFate]

I went to a seminar last week and the guy teaching the class was supposebly some millionaire. Could careless about that, but what he said about credit raised a few questions and I'd prefer to ask here where I know I'll get true life exp, not some guy trying to sell me something.

What he said was a lot of people make the mistake of PIF each month, he said its a common misconception. If you PIF each month its not showing you have the ability to pay something in a timely matter all it shows is you have extra cash lying around.

He also said not to worry about 10-20% UTI, all you gotta do is take whatever CL you have and divide by 3. Never go over that balance and always make payments on time even if they are the min. 

Now in my exp with credit and reading alot of threads majority of people here PIF and try to keep the UTI at 1-9%. Is there any evidence to what this guy claims or is he just talking just to talk? He never stated what his actual score was but claimed he got very rich and succesful from credit.

[Stralem]

Well... It makes sense in that not having any balances reporting actually hurts you. Not having any debt can be construed as not being able to handle it. Counter-intuitive, I know, but that's just the way the system works. Always paying in full means never having to pay interest, with obvious exception given to cards with 0% promo periods. So whether you follow this bit of advice comes down to whether or not you're comfortable paying interest. Some people couldn't care less, others turn slightly murderous at he mere thought. I personally don't mind paying up to a certain point, but if given the choice, I'd rather pay off a debt quickly than pay a lot of interest.

When he says to not go over a third of your available limit, he's not saying anything fundamentally different from the usual adage about keeping utility at or below 30%. A 3% difference is inconsequential.

EDIT: Also, it must be noted that keeping utility contained to one card at or below 9% is just an artificial way to boost your scores in preparation for an imminent credit application. It's pure OCD vanity in most cases.

[SomeGuyOnTheWeb]

Being a millionaire doesn't mean you know how to handle credit. Just wanted to throw that out there. From what I've seen, there isn't any tangible evidence I've seen that paying interest is somehow a "benefit" to you.

[TheFate]

He claimed he became a millionaire because of Credit. I'm assuming he started his business from loans and such.

He just seemed to sound sure in what he was talking about.. So I thought it would be interesting to hear peoples take on it

[takeshi74]

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@TheFate wrote:

What he said was a lot of people make the mistake of PIF each month, he said its a common misconception. If you PIF each month its not showing you have the ability to pay something in a timely matter all it shows is you have extra cash lying around.

He also said not to worry about 10-20% UTI, all you gotta do is take whatever CL you have and divide by 3. Never go over that balance and always make payments on time even if they are the min. 

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Something's getting lost along the way.  It boils down to this:

30% utilization max.

Ideal will be less -- typically 10% or less with only one balance reporting.

Avoid 0 utilization.

If you want evidence you can allow differing levels of utilization to report and see the impact to your FICO's.

PIF'ing does not necessarily mean that one has 0 reported utilization.  If one PIF's by due date (but after statement/reporting date) there is still reported utilization.  One would have to PIF prior to the statement/reporting date to have 0 reported.

[TheFate]

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@takeshi74 wrote:

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@TheFate wrote:

What he said was a lot of people make the mistake of PIF each month, he said its a common misconception. If you PIF each month its not showing you have the ability to pay something in a timely matter all it shows is you have extra cash lying around.

He also said not to worry about 10-20% UTI, all you gotta do is take whatever CL you have and divide by 3. Never go over that balance and always make payments on time even if they are the min. 

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Something's getting lost along the way.  It boils down to this:

30% utilization max.

Ideal will be less -- typically 10% or less with only one balance reporting.

Avoid 0 utilization.

If you want evidence you can allow differing levels of utilization to report and see the impact to your FICO's.

PIF'ing does not necessarily mean that one has 0 reported utilization.  If one PIF's by due date (but after statement/reporting date) there is still reported utilization.  One would have to PIF prior to the statement/reporting date to have 0 reported.

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What if your due date is before your Statement date? How do you avoid $0 reporting w/out gaining interest?

[bdhu2001]

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@TheFate wrote:

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@takeshi74 wrote:

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@TheFate wrote:

What he said was a lot of people make the mistake of PIF each month, he said its a common misconception. If you PIF each month its not showing you have the ability to pay something in a timely matter all it shows is you have extra cash lying around.

He also said not to worry about 10-20% UTI, all you gotta do is take whatever CL you have and divide by 3. Never go over that balance and always make payments on time even if they are the min. 

---

Something's getting lost along the way.  It boils down to this:

30% utilization max.

Ideal will be less -- typically 10% or less with only one balance reporting.

Avoid 0 utilization.

If you want evidence you can allow differing levels of utilization to report and see the impact to your FICO's.

PIF'ing does not necessarily mean that one has 0 reported utilization.  If one PIF's by due date (but after statement/reporting date) there is still reported utilization.  One would have to PIF prior to the statement/reporting date to have 0 reported.

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What if your due date is before your Statement date? How do you avoid $0 reporting w/out gaining interest?

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To avoid paying interest, you PIF the previous statement balance.  Thus, new charges will still be on your statement.  If you use the same card, instead of rotating, you'll probably always show a small balance even though you're PIF each month.

[takeshi74]

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@TheFate wrote:

What if your due date is before your Statement date? How do you avoid $0 reporting w/out gaining interest?

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The due date for a given cycle never falls before the statement date.  The due date for the prior cycle falls before the statement date of the following cycle.  The order of events is:

• Statement begin
• Statement end -- balance reports for cards that report on statement end
• Grace period
• Due date

There is usually some overlap with cycles.

As for the different dates, here's a rule of thumb:

• Pay by the due date to keep your account current
• Pay in full by the due date to avoid interest.  If you were carrying a balance subject to interest you may have to pay in full for two cycles to take care of the remaining interest.
• Pay prior to statement end (for cards that report at statement end) to adjust reported utilization

tl;dr answer to your question: Just in pay in full by the due date.