Debating whether to payoff some of my balance vs letting them report for better score.

[kudosalert]

From my understanding, a higher credit card utilization will lower your score each month if you let the balance report to the credit bureaus which happens after the monthly account closing date. Just starting out my US credit building even though I'm in my late 30s so I dont have any negatives. 2 cards open with my bank over the last year. I've been paying in full each month within 5 days of the due date. My question is: should I keep doing this or should I be paying off some of my balance before closing date to bring my score up?

I understand that another way my score can go up is if I got a CLI or open another account, hence lowering my utilization. 

1) CLI is not something I can control

2) Not a big fan of openning up new accounts just for the sake of lowering total utilization. I want to stay under 5/24 because of future Chase card applications.

[FireMedic1]

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@kudosalert wrote:

From my understanding, a higher credit card utilization will lower your score each month (not each month. It goes back to where it was before once your back to the same util before the util went up)  if you let the balance report to the credit bureaus which happens after the monthly account closing date. Just starting out my US credit building even though I'm in my late 30s so I dont have any negatives. 2 cards open with my bank over the last year. I've been paying in full each month within 5 days of the due date. My question is: should I keep doing this or should I be paying off some of my balance before closing date to bring my score up?

Pay 1 account to 0 before statement date. Let the other one report $10 at staement date then PIF.

I understand that another way my score can go up is if I got a CLI or open another account, hence lowering my utilization. 

1) CLI is not something I can control

2) Not a big fan of openning up new accounts just for the sake of lowering total utilization. I want to stay under 5/24 because of future Chase card applications.

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Who are the cards with and what is the CL and balance of of now? You dont want both cards reporting 0 balance. With 2 cards and 1 reports a balance your at the border of 50% of cards reporting. Once you get a 3rd card. Then AZEO kicks in and then your less than 50% reporting a balance.

[Anonymous]

Reported utilization is what matters when you're talking Fico score impact.  When considering utilization, thresholds are the points at which Fico score impact take place.  Typically you're looking at 8.9%, 28.9%, 48.9%, 68.9% and 88.9%. 

You didn't mention what your [before/after] balances/limits were.  Depending on the answer to that, utilization changes could cause anything from a 0 point Fico score impact to (say) 100 points.  Certainly anything in between.

For example, say you only have 2 CCs and their limits are $500 each.  You allow a $450 balance to report on both of them, meaning you're at 90% overall (and highest individual card) utilization.  If you paid both of those cards down to 8.9% utilization or less, you'd see a massive Fico score gain.  Conversely, if these same 2 CCs had limits of $10000 and you had the same $450 reported balances on both and paid those balances down the same amount (in dollars) you'd see a 0 point Fico score increase, as you were already at under 8.9% utilization on them and you wouldn't be crossing a threshold point.

Your Fico scores are only impacted by utilization changes one time.  In your post above you said "...lower your score each month..." which sounds suggestive that adverse utilization impact could get worse from month to month if your utilization remained at the same [high] point for an extended period of time.  That's not the case.  If you moved from (say) 5% reported utilization to (say) 60% reported utilization from one month to the next, the adverse scoring impact realized would happen all at once.  Perhaps your score dropped 40 points from this, just to assign a number.  The following month if your utilization remained the same at 60% reported, your score would not drop any further; you'd still be down those 40 points from the previous reported utilization change, but it wouldn't drop any further.  Hopefully that makes sense.

[SouthJamaica]

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@kudosalert wrote:

From my understanding, a higher credit card utilization will lower your score each month if you let the balance report to the credit bureaus which happens after the monthly account closing date. Just starting out my US credit building even though I'm in my late 30s so I dont have any negatives. 2 cards open with my bank over the last year. I've been paying in full each month within 5 days of the due date. My question is: should I keep doing this or should I be paying off some of my balance before closing date to bring my score up?

I understand that another way my score can go up is if I got a CLI or open another account, hence lowering my utilization. 

1) CLI is not something I can control

2) Not a big fan of openning up new accounts just for the sake of lowering total utilization. I want to stay under 5/24 because of future Chase card applications.

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1. The statement balance is usually, but not always, the balance that gets reported. We would need to know which institution(s) you have your cards with.

2. If you have 2 cards, you would have higher scores if one of them reported a zero balance while the other reported a small balance.

[kudosalert]

I didnt realize there are certain thresholds. Good to know.

Both of my cards are with BOA.

#1 $3200 CL (balance reported last month $285). PIF 5 days before due date (this is what I have setup my auto pay to do)

#2  $1000 CL (balance was $293, i paid off $138 before closing date). If not mistaken this means my utilization on this card is 15.5%. 

Is your Fico score based on individual card utilization or overall utilization?

Next month, if I cant get BOA to PC my #2 card to something I want then I'm going to cancel it. It will be 11mo by then and I dont want to pay the annual fee. I'll pick up 1 additional card (no AF, no FX fee) and pay that in full each month before closing date (most likely just a few subscriptions on the card). My #1 with the larger CL will be paid down to 8.5% utilization before closing date and then PIF before due date. 

Does that sound like a good plan to show that i'm using credit responsibily/help raise my score?

[Anonymous]

Your

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@kudosalert wrote:

I didnt realize there are certain thresholds. Good to know.

Both of my cards are with BOA.

#1 $3200 CL (balance reported last month $285). PIF 5 days before due date (this is what I have setup my auto pay to do)

#2  $1000 CL (balance was $293, i paid off $138 before closing date). If not mistaken this means my utilization on this card is 15.5%. 

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I should say that much advice here is intended for people trying to rebuild credit, rather than first timers. The tips and tricks are designed to maximize the potential of a low score.

You are using credit responsibly and as long as you continue doing so, your score will pretty much take care of itself.

You can try AZEO. You can try paying down your balance before the statement date to lower your utilization. But if your goal is just to have good, worry-free credit scores in the long term you can also just keep what you're doing.

[SouthJamaica]

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@kudosalert wrote:

I didnt realize there are certain thresholds. Good to know.

Both of my cards are with BOA.

OK. With BOA statement balance is the reported balance.

#1 $3200 CL (balance reported last month $285). PIF 5 days before due date (this is what I have setup my auto pay to do)

#2  $1000 CL (balance was $293, i paid off $138 before closing date). If not mistaken this means my utilization on this card is 15.5%. 

Correct

Is your Fico score based on individual card utilization or overall utilization?

Both. 2 separate factors.

Next month, if I cant get BOA to PC my #2 card to something I want then I'm going to cancel it.

Don't. Better to put it in your sock drawer. But leave the account open.

It will be 11mo by then and I dont want to pay the annual fee.

I didn't even know BOA has annual fees. I have 3 cards with them, none of which has an annual fee.

I'll pick up 1 additional card (no AF, no FX fee) and pay that in full each month before closing date (most likely just a few subscriptions on the card). My #1 with the larger CL will be paid down to 8.5% utilization before closing date and then PIF before due date. 

OK

Does that sound like a good plan to show that i'm using credit responsibily/help raise my score?

That plan would maximize your revolving utilization components.

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[kudosalert]

it's the secured (i graduated after 6 months) Americard Mastercard. it looks exactly like the non-secured one which has no AF. mixed stories of people being able to PC to the non AF version. i've tried 3 times without luck. i would keep it if it wasnt for the 39$ AF. fees start to add up if let's say i had to pay lets say 5 or more per year. i'll try one more time next month before the fee posts. if they dont offer me the non-af version i'm going to cancel. 

[SouthJamaica]

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@kudosalert wrote:

it's the secured (i graduated after 6 months) Americard Mastercard. it looks exactly like the non-secured one which has no AF. mixed stories of people being able to PC to the non AF version. i've tried 3 times without luck. i would keep it if it wasnt for the 39$ AF. fees start to add up if let's say i had to pay lets say 5 or more per year. i'll try one more time next month before the fee posts. if they dont offer me the non-af version i'm going to cancel. 

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OK. Here's a strategy then. Call them up by phone to close the account. From my experience BOA doesn't like people to close their account, and might try to get you to stay. If they do, tell them you would be willing to stay if they take off the annual fee or upgrade you to one of the non-annual fee cards.

[Anonymous]

If you're not planning an app anytime soon, then I'd just keep doing what you're doing. The only time to worry about utilization and the score bump is when someone plans to app for a product. High utilization one month means nothing the next month, as long as it's not consitant due to carring a balance every month. Since you're PIF, I wouldn't be concerned with this issue.