Charge Cards Effect on Credit Scores

[Anonymous]

Hello,

I wonder how AMEX charge cards affect the credit scores if they do not report utilization.

I just got my first charge card few weeks ago.

Is it more advantageous to pay the full balance by the stamement closing date or let the statement close and pay the outstanding balance?

I basically want to improve my credit score.

Thanks in advance.

[SouthJamaica]

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@Anonymous wrote:

Hello,

I wonder how AMEX charge cards affect the credit scores if they do not report utilization.

I just got my first charge card few weeks ago.

Is it more advantageous to pay the full balance by the stamement closing date or let the statement close and pay the outstanding balance?

I basically want to improve my credit score.

Thanks in advance.

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Althought it doesn't count for dollar utilization percentage, it does count as an "account with a balance", so if you're trying to keep your accounts with balances down, pay it before the statement cuts.

[Anonymous]

The only effect is the AAOA going down due to the new account.

They don't factor into UTIL for scoring.

Sine it has to be PIF unless you opt for POT just setup auto pay for the statement balance.

[Anonymous]

Does this mean that it will have no impact on my score?
The balance is only looked at if we are applying for credit or a loan by the underwriter

[SouthJamaica]

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@Anonymous wrote:
Does it mean it will have no impact on my score ever?
The balance is only looked at when applying for a loan

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No it does not mean that. If affects

1. number of accounts with balances

2. AoYA

3. AAoA

[Anonymous]

Thank you!

[Anonymous]

I don't see them as being beneficial in helping improve your score. If that was your intent, you'd have been better off with a revolver, which can still be PIF if you choose. IMO

[HeavenOhio]

Welcome, @Anonymous.

Charge cards do count toward utilization in the Experian '98 family of scores. The card's highest balance is used to impersonate a credit limit.

This score family includes the Experian score used for mortgages. During the mortgage process, it is probably a good idea to keep reported charge card balances at zero.

As mentioned, newer scores ignore charge card balances in the computation of utilization. But they would count toward total balances or number of accounts with balances.

[Anonymous]

Thanks for the heads up.
I just wanted to boost my score instead of hurting it by misusing the charge card or paying after the cycle closes .

[Anonymous]

Just use it like a normal person would, and let the statement cut with a balance. Then PIF before the due date, any score hit is only temporary.

Whenever you do need the boost in score for an app etc., pay everything off before the statemnt cut date. However, you will have to wait till they all to report for the increase to happen. Which can be tedious.