What's the purpose?

[Ceewin]

Hello All, 

Quick question:

What's the purpose of reporting total $$ charged to a credit card throughout the month to the CRA's?

I've had my NFCU ($25k Limit) card since June.  In August, I charged a total of $1350 but paid it in full well before the Sept 7th statement date.  On all three reports, my "High Balance" is $1350 but "Statement Balance" is $0 and "Min Due" is $0.  Note: My utilization % did not change and I've not experienced this with any of my other accounts. 

Thoughts?

[MichaelMyer]

Credit bureaus encourage creditors to submit as much information on you as possible so they can make money off of your data. That's their business model, unfortunately. The only way to completely avoid it is to not have any credit at all, which isn't practical for most people. 

[Anonymalous]

Because potential lenders want to have some idea how much spend you might put on their card, so they want to know how much you're using the cards you already have. Reporting the statement balance once a month doesn't capture that. Though, to be fair, neither does the high balance. But it's a better indicator, because even if you pay your cards down to $0 before they report, at least it'll report the max.

If they redid the reporting system entirely, they'd probably want better metrics, like total spend per billing cycle. But it's a legacy system, and they have to make various contortions to infer want they really want to know from limited data points (cf. the "trending" versions of FICO and VS for another example).

[SouthJamaica]

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@Ceewin wrote:

Hello All, 

Quick question:

What's the purpose of reporting total $$ charged to a credit card throughout the month to the CRA's?

I've had my NFCU ($25k Limit) card since June.  In August, I charged a total of $1350 but paid it in full well before the Sept 7th statement date.  On all three reports, my "High Balance" is $1350 but "Statement Balance" is $0 and "Min Due" is $0.  Note: My utilization % did not change and I've not experienced this with any of my other accounts. 

Thoughts?

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I was under the impression that they all report the high balance.

And I would imagine the purpose is to get a picture of how much you use the credit you have.

[AndySoCal]

@Ceewin  The high balance is the highest balance the account has ever reached. All it means is at one time the account reached that balance.

With the trended credit data a lender can see how a consumer manages their revolving accounts.   Here is a link as to insights trended credit data gives the lender good or bad

https://selling-guide.fanniemae.com/Selling-Guide/Origination-thru-Closing/Subpart-B3-Underwriting-B... 

[sznthescore]

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@Anonymalous wrote:

Because potential lenders want to have some idea how much spend you might put on their card, so they want to know how much you're using the cards you already have. Reporting the statement balance once a month doesn't capture that. Though, to be fair, neither does the high balance. But it's a better indicator, because even if you pay your cards down to $0 before they report, at least it'll report the max.

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^^^^ This

That's why in my opinion, putting as much disposable income through the "payment history" of credit cards may help with SLs and/or CLIs. Since 35% of score is based on payment history.

I say disposable income because of course you want to keep utilization low and not carry a balance.

[Ceewin]

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@Ceewin wrote:

Hello All, 

Quick question:

What's the purpose of reporting total $$ charged to a credit card throughout the month to the CRA's?

@sznthescore @AndySoCal @SouthJamaica @Anonymalous @MichaelMyer 

Fair enough...I guess

Thanks All!

[Heatt99]

IMO, that little disclosure agreement sent explained all info will be sold or shared with other financial companies. 

It also helps lenders determine if one is the right consumer for their products.

Again, one would think they got approved based on "STATED INCOME"..use of credit assist with validating income.

This might be the beginning of Fico 10T scoring, as I don't see this on my report.

[Ceewin]

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@Heatt99 wrote:.

This might be the beginning of Fico 10T scoring...

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Thanks! This is what I'm wondering as well...

[Lou-natic]

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@Ceewin wrote:

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@Heatt99 wrote:.

This might be the beginning of Fico 10T scoring...

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Thanks! This is what I'm wondering as well...

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FICO 10/10T/auto/bankcard (there is more than one version of the FICO 10 score) is a new algorithm not a new report structure. It's just another way to look at the data that is already present. The 10T just looks at the past 24 months instead of just the current month. Nothing more, nothing less.