Multiple payments/Usage greater than CL question

Anonymous · ‎05-27-2017

Is it bad to make multiple payment on a low CL card while I'm rebuilding?

For example, my Discover It Secured has a $500 CL.

I PIF immediatly once my balance approaches $140 (29%) then I stop using my Discover Card the rest of the billing cycle until my new statement cuts so my statement is $0 each month.

I have already reach that $140 threshold due to some minor car trouble and paid it in full. I want to keep using my card, but not if it is going to hurt my credit.

If it helps, I am in the 11th month of my Discover It Secured card and I'm hoping to graduate to an usecured card in July (my 13th month) and get a CLI (crosses fingers).

Is it alright to keep using it, or should I just tuck it away until next month?

DollyLama · ‎05-27-2017

Multiple payments are fine, I've made 3 payments this month on a card, several months I do the same. The only way I see your credit being hurt is IF this is your ONLY credit card. If it is the only one, you can charge and pay in full, but let at least $10 report to the bureaus when your statement cuts. FICO does not like all zero balance credit cards balances.

Anonymous · ‎05-27-2017

@DollyLama wrote:
Multiple payments are fine, I've made 3 payments this month on a card, several months I do the same. The only way I see your credit being hurt is IF this is your ONLY credit card. If it is the only one, you can charge and pay in full, but let at least $10 report to the bureaus when your statement cuts. FICO does not like all zero balance credit cards balances.

Cool; thanks for the response.

I also have

Cap1 QS with a $1,100 CL
Best Buy store card with a $3,000 CL (I only use about $2-$5 per month on cheap items)

I've been doing the PIF for all but 1 since January 2017 which has brought my TU up from 581 to 616 and my EX from 588 to 636 (and tomorrow I get my FICO 8 update for the EX).

I'm gunning for 700 and just want to maximize my credit score increase each month...but I also want my Discover It first year cash back match points too. So, unless someone else comes in and says it's risky, I will probably just keep using the Discover It and just PIF for the second time in one billing cycle.

Anonymous · ‎05-27-2017

Glad you asked this question, I've been wondering the same. I remember reading somewhere that you could use up to 99% of your CL during that billing cycle, so long as you pay it all down before the statement. So as long as your balance is <10% on the day the statement cuts, it doesn't matter what you'd run it up to before then. That's what I remember reading but I might have read that wrong or it might have been bad info so I was searching on here for more clarity.

rmduhon · ‎05-28-2017

Usage is different from utilization. You can run your card up to the limit multiple times every month and paying it down each time. That's usage. Having a balance report to the bureaus is utilization. Thanks is what affects your scores.

DollyLama · ‎05-28-2017

You are on the right path since doing this since January. Do you have an installment loan in the mix, student loan, auto loan, etc. If not there is a way to boost your points about 30-40pts that we can link you to on here- albeit you invest about $520 for a little over a month, but get it all back with the except of about $49 (keeping the utilization under 9%).

Do you have some collections, lates or chargeoffs on your reports that are keeping your scores down?

Anonymous · ‎05-28-2017

@DollyLama wrote:
You are on the right path since doing this since January. Do you have an installment loan in the mix, student loan, auto loan, etc. If not there is a way to boost your points about 30-40pts that we can link you to on here- albeit you invest about $520 for a little over a month, but get it all back with the except of about $49 (keeping the utilization under 9%).

Do you have some collections, lates or chargeoffs on your reports that are keeping your scores down?

Thanks; I feel pretty good about my results so far.

I do have 7 installment loans (all student loans). They range from $850 to $12,000; total of $44k

And I do have a collection, that I just paid and now it's all about the GW campaign, and fighting it. My student loans also have 23 late payments, but I was supposed to be in forbearance at the time; I was awarded a retroactive forbearance and I found some laws, FCC opinion letters, and some court cases that are in my favor. So, I will dispute these even if it means hiring a lawyer.

When I go to apply for a mortgage in 2 years, the cost of the lawyer will pay for itself in saved interest (assuming I win, of course).

RobertEG · ‎05-28-2017

The primary reason for multiple payments is when you dont expect to pay the entire debt balance, and thus interest will be assessed.

Most credit cards calculate interest based on the average daily balance, and not simply the balance at time of statement.

Splitting a given payment amount into two, and making one earlier in the month, reduces your average daily balance, and thus the actual interest assessed if you retain a balance.

If, in a given month, your balance, and thus resulting % util, is high, that will affect your % util scoring that month.

However, scoring of % util is based only on current monthly %, and not prior, historical utilization, so it will be a wash when you return to your "normal" util.

The secondary issue with high % utils is that if you maintain a high util over an extended period, it can trigger a credit limit decrease.

Thus, while scoring of % util has no historical memory, it is best not to let % util remain at a high level for any extended period.