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Best way to pay on a credit card

Community Leader
Senior Contributor

Re: Best way to pay on a credit card

I seems to me that the posts suggesting that the OP just run with it are overlooking the fact that she has a single card with a $200 limit. Her score could vary wildly based on the difference of a small amount of money.

 

@Erika3o3, to do AZEO with this card, you'd want to report a balance of between $5 and $10 at statement time. Much more practical would be to aim for a balance of under 28.9% (between $5 and $57). That would put you in the second best tier.

 

Don't get bent out of shape if you report a balance that's higher than you'd like. Utilization has no memory, i.e. it updates every time the card reports and the old figure is forgotten.

 

The fact that this is a Discover card means that you can call in and ask them to report upon request. Few card issuers will do that.

 

If you feel the amount currently reported is unflattering, bring your balance down and request that the new amount be reported. Being able to do this will also give you the opportunity to test your card at various utilization levels without having to wait a month to see the result (provided you have credit monitoring that'll catch the updates).

 

Note too, that a balance of zero will result in the "all cards at zero" ding. It's noticeable, and it's probably similar to reporting approximately 48.9%. Again, this can be fixed if you'd like by calling in when your balance is at a more desirable amount.

 

In summary, I'd use the card and make payments to free available credit so you can use the card some more. Pay extra attention to the balance at statement time. And if the balance at statement time isn't where you want it, lower it and call in.

Message 21 of 33
Super Contributor

Re: Best way to pay on a credit card


@HeavenOhio wrote:

I seems to me that the posts suggesting that the OP just run with it are overlooking the fact that she has a single card with a $200 limit. Her score could vary wildly based on the difference of a small amount of money.



Very true above.  To quantify "wildly" I'd suggest that going from ideal (<8.9% utilization) to worst (maxed out utilization) could easily constitute a 70-90 point variance across FICO scores.  That's a ton of points for a reported balance change of say ~$165.

Message 22 of 33
Regular Contributor

Re: Best way to pay on a credit card


@UpperNwGuy wrote:

@Saeren wrote:

@Erika3o3 wrote:

Ok so I am working on rebuilding my credit. So I got approved for a Discover IT Secured card and put 200 on it. I havent received my first statement bill yet. However I spent $148 on it. Whats the best way to pay it?? Pay it in full? Leave a small balance? Pay it before I recieve the statement? Pay it after I receive the statement?  Just want to make sure I am going about it the right way to best help my credit score. Thank you all!


The best way to maximize that card would be to let your statement cut with no more than $17.80 (8.9%) but no less than $5 so you can stay in the optimal utilization range. I would let the statement cut with a different balance each month so like $15 one month, $10 the next, $12, etc, so it shows some pattern of usage and consistently keeping the utilization reported low if it was me. 


That sounds too much like a myFICO Forums gimmick.  Why not do it the way the bank expects you to do it?  That's how you build trust with the bank.


It's not a gimmick. People come here to learn about building credit and improving scores. There is a ton of useful info on here by people that know what they're talking about. Banks don't expect you to do anything a specific way. They want the money they are lending you back with some interest on time every time. That said, utilization is hugely important when rebuilding or starting to build. Now the OP's credit line is low because he or she is just starting out, but high utilization has a significant negative impact on your scores. 

Message 23 of 33
Super Contributor

Re: Best way to pay on a credit card

I wouldn't call something a gimmick that can impact your FICO scores 70-90 points and mean the difference between an approval and a denial for a product.
Message 24 of 33
Regular Contributor

Re: Best way to pay on a credit card

So if I am getting this right, at statement time it should not be a zero balance? I had no Idea that a zero balance wasnt a good thing. This is exactly why I came to you guys. Haha

Starting over. Current Score through Chase banking as of 10/31/18 is 564. 0 credit cards.

11/2018 - Got a Discover Secured Card 12/9/18 - Credit score 579
Message 25 of 33
Regular Contributor

Re: Best way to pay on a credit card

I was looking at your signature and I cannot wait to one day be in that postition. Your scores and cards and limits look amazing!

Starting over. Current Score through Chase banking as of 10/31/18 is 564. 0 credit cards.

11/2018 - Got a Discover Secured Card 12/9/18 - Credit score 579
Message 26 of 33
Community Leader
Senior Contributor

Re: Best way to pay on a credit card


@Erika3o3 wrote:

So if I am getting this right, at statement time it should not be a zero balance? I had no Idea that a zero balance wasnt a good thing. This is exactly why I came to you guys. Haha


If you had more than one card, the ideal scenario would have a small positive balance on one card with balances of zero on all the others. With only one card, a small balance is better than a zero balance.

Message 27 of 33
Super Contributor

Re: Best way to pay on a credit card


@BrutalBodyShots wrote:
I wouldn't call something a gimmick that can impact your FICO scores 70-90 points and mean the difference between an approval and a denial for a product.

No, this is not a range of score change the OP needs to be concerned about for utilization on one card. OP is already burdened with baddies, in the mid-500’s. Utilization on a single card is just not going to hurt or help by anything like 70 points.  

 

In the OP situation trying to ensure the card is only at $15 or less may gather 10 points. In the current range, that’s just not significant. 

 

OP’s best course of action is to pay the cards on time, let time work to age any baddies, then they ultimately fall off. After a couple years, when scores get up in upper 600’s, a bit of AZEO management might help for some few extra points, but only for specific apps. 

High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812

Delta Reserve and CSP Jan 2018, no more 5/24 worries... unless new Chase Marriott/SPG replacement is enticing...meh, turns out not. [unless a 100k points SPG Luxury Upgrade appears... well lookie here...]
Message 28 of 33
Super Contributor

Re: Best way to pay on a credit card


@NRB525 wrote:



No, this is not a range of score change the OP needs to be concerned about for utilization on one card. 


Read the first sentence of HO's Post Number 21.  The OP has only 1 card, meaning that their individual card utilization is also their aggregate utilization.  In going from ideal to worst (or vice versa) utilization they'd be swinging their card based on both factors, both aggregate utilization (which is King to individual card utilization) and highest individual card utilization.  I actually think the the score change would be closer to the 90 points on the upper end of my 70-90 point guess since 70-80 is pretty common from aggregate utilization alone, not counting individual card utilization.

Message 29 of 33
Super Contributor

Re: Best way to pay on a credit card

The king of impact to FICO score is paying on time. Everything else is a choice how to use credit.
High Bal Jan 2009 $116k on $146k limits 80% Util.
Oct 2014 $46k on $127k 36% util EQ 722 TU 727 EX 727
April 2018 $18k on $344k 5% util EQ 806 TU 810 EX 812

Delta Reserve and CSP Jan 2018, no more 5/24 worries... unless new Chase Marriott/SPG replacement is enticing...meh, turns out not. [unless a 100k points SPG Luxury Upgrade appears... well lookie here...]
Message 30 of 33