paypal

[Anonymous]

i know paypal doesnt report to the credit bureaus, so should i pay off all my cards and spend on paypal when possible? Also, CGID, do I benefit from a zero reporting? Or is like, $5 ok?

[Anonymous]

You should certainly pay off all your cards if you are paying any interest on them.  After that you can just pay them in full (PIF) each month which will prevent you from paying any interest.  It will also establish yourself as a "transactor."  As we move into the future of credit reporting and scoring, having a history of always paying in full (being a transactor) will be increasingly important.

BTW, to PIF simply means to pay whatever the amount owed is on the statement.  You typically have a little over three weeks to make that payment.

But if you additionally want your card to report $0 to the bureaus, then you need to Pay To Zero (PTZ).  That means to pay the card down to zero at least a day before the statement prints.  You can use the same technique to make your card report any amount.  For example if you are spending a lot on a card, and you want it to report $20 to the bureaus, then just pay it down to $20 before the statement.

In answer to your question, yes you will take a temporary scoring penalty if all of your cards report $0 on a given month.  You get the most points if most of your cards report $0 but one card reports a small amount ($5 is fine, should not be less).

I think your cards are there to be used.  No need to use Paypal instead. Just pay them in full and, if you ever need to squeeze some extra points out of your score, make sure All cards are Zero Except One (AZEO) with the remaining card reporting something small.

[Anonymous]

another question CGID, cards REPORTING $0. I have small recurring payments on most cards. Is it ok to let it report, like, $5 as long as I'm sure to PIF each month? I imagine that is acceptable as it kind of gives me a head start on the PIF habit that you mention.

[Anonymous]

I think that is real smart, Sprink, and absolutely no problem.  You can also set up all your cards with autpay (programmed to pay the last statement in full) and then you don't have to worry about making payments either.

There's only two caveats.

(1)  Make sure that the recurring charge you have set up is something you really do want/need.  In other words, don't have that charge set up just because you think you need to as part of improving your credit.  Because when a person does that, the recurring charge is basically no different than if that card had a monthly fee.  A simple rule to help rein in spending with credit cards is this: would I be buying this now if I had no credit cards and I had to pull out my wallet and pay cash for it?  If not, then do not do it. 

(2)  If you are getting close to a need for new credit, where you want your scores to be at their very highest (make sure that most of your cards are reporting a $0 balance.  No problem with the recurring charges going through as usual, just use the PTZ method to make sure that you have most of them (but not all) reporting $0 in the 45 days before that loan or new CC application.