Does utilization matter before statement?

[Anonymous]

Hello everyone,

I have a quick question regarding utilization. Aside from Chase, as I know they report mid-cycle if you pay to $0. Does my spending on my CC matter as long as I pay it down to a reasonable amount before the statement generates? I keep seeing mixed information about this. The reason I ask is because I’d prefer to use my Discover for everyday purchases and then just pay it down before my statement generates.

I’ve noticed some people saying that you should never use more than 9% of your available limit on you CC but I thought it didn’t matter as long as no more than 9% actually reports.

Can someone provide some clarity? Thanks!

[Anonymous]

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@Anonymouswrote:
Hello everyone,

I have a quick question regarding utilization. Aside from Chase, as I know they report mid-cycle if you pay to $0. Does my spending on my CC matter as long as I pay it down to a reasonable amount before the statement generates? I keep seeing mixed information about this. The reason I ask is because I’d prefer to use my Discover for everyday purchases and then just pay it down before my statement generates.

I’ve noticed some people saying that you should never use more than 9% of your available limit on you CC but I thought it didn’t matter as long as no more than 9% actually reports.

Can someone provide some clarity? Thanks!

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As for maximum utilization, it's not so much that you should never use more than 9% (or more precisely, 8.9%) of your available revolving credit as that it's the maximum amount that provides the very best/optimum result for your credit scores. Doing that isn't always easy for a lot of people, but keeping your utilization under 30% is doable for many such folks. Up to 8.9% is the "excellent" range for scoring revolving credit utilization according to the credit bureaus' models, and 9% - 30% is the "good" range for utilization. Put another way, your credit score won't suffer by keeping your utilization under 30% (ideally well under 30%; I've kept mine at a steady 15% to 19% for the past year), but trimming it down under 10% will definitely help the score.  Hope that made things a little less murky.

[Anonymous]

Thank you for the explanation. Can you clarify something for me? Do those utilization numbers apply to the balance all month long or just what the statement reports? Like if trying to achieve optimal results, should my balance be 8.9% or less all month and during the statement? Apologies for my confusion.

[Adkins]

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@Anonymouswrote:
Hello everyone,

I have a quick question regarding utilization. Aside from Chase, as I know they report mid-cycle if you pay to $0. Does my spending on my CC matter as long as I pay it down to a reasonable amount before the statement generates? Nope. The only people that will see that spend is your credit card conpany. What cuts on the statement is seen by everyone else. I keep seeing mixed information about this. The reason I ask is because I’d prefer to use my Discover for everyday purchases and then just pay it down before my statement generates. I do the same thing, since I'm in my first year. When it was a $200 secured card, I was paying it down two times a week. Now that it's at $500 unsecured, I pay it down once a week because I have more room. My current balance is $405/$500. I'll pay it to zero on Friday. I use my Discover a lot. 

I’ve noticed some people saying that you should never use more than 9% of your available limit on you CC but I thought it didn’t matter as long as no more than 9% actually reports. Correct. What matters is what reports to the CRAs. As long as your pif every month, credit card companies don't usually care. 

Can someone provide some clarity? Thanks!

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[Anonymous]

Ok awesome! Thanks for clarifying that! I’m at $200 with my Discover Secured and I read that Discover likes a lot of spend but I’m very careful as to not let my statement report anything close to my actual spend. The same goes for my Citi Secured. Did discover auto increase your CL with your spending?

[Adkins]

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@Anonymouswrote:
Ok awesome! Thanks for clarifying that! I’m at $200 with my Discover Secured and I read that Discover likes a lot of spend but I’m very careful as to not let my statement report anything close to my actual spend. I had two statements that accidentally cut at $195/$200. My card still unsecured. The same goes for my Citi Secured. Did discover auto increase your CL with your spending? I don't know if I got a $300 increase with spend or not. I did try and ask for cli after my auto increase at graduation, but I got the "not enough experience at current credit limit" no response. I highly suggest you add as much to your card as possible, since I could have gotten a higher limit after graduation (even if it was only what I'd have put into the secured card to begin with!) Discover is fickle - some people put massive amounts of spend through their regular cards and rarely get CLIs. Others hardly touch it, and get auto increases without asking. 

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[SouthJamaica]

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@Anonymouswrote:
Hello everyone,

I have a quick question regarding utilization. Aside from Chase, as I know they report mid-cycle if you pay to $0. Does my spending on my CC matter as long as I pay it down to a reasonable amount before the statement generates? I keep seeing mixed information about this. The reason I ask is because I’d prefer to use my Discover for everyday purchases and then just pay it down before my statement generates.

I’ve noticed some people saying that you should never use more than 9% of your available limit on you CC but I thought it didn’t matter as long as no more than 9% actually reports.

Can someone provide some clarity? Thanks!

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With few exceptions, the balance in the statement is the one that counts for FICO utilization. Discover is not one of the exceptions, so yes, for FICO scoring purposes, you just need to focus on your statement balance.

[Anonymous]

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@Anonymouswrote:
Hello everyone,

I have a quick question regarding utilization. Aside from Chase, as I know they report mid-cycle if you pay to $0. Does my spending on my CC matter as long as I pay it down to a reasonable amount before the statement generates? I keep seeing mixed information about this. The reason I ask is because I’d prefer to use my Discover for everyday purchases and then just pay it down before my statement generates.

I’ve noticed some people saying that you should never use more than 9% of your available limit on you CC but I thought it didn’t matter as long as no more than 9% actually reports.

Can someone provide some clarity? Thanks!

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For scoring purposes all that matters is what utilization gets posted. So charge to 95% if you want and pay it off or down before statement cut. Only thing it would ever affect is that section on a CRA where they state maximum you ever charged or high balance on the credit card. And I’d think that is for manual review only. So whatever statement cut says or reporting day says, that’s all that gets used in the utilization. That affects your score for the reporting month. 

[Anonymous]

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@Anonymouswrote:
Ok awesome! Thanks for clarifying that! I’m at $200 with my Discover Secured and I read that Discover likes a lot of spend but I’m very careful as to not let my statement report anything close to my actual spend. The same goes for my Citi Secured. Did discover auto increase your CL with your spending?

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Just remember, as a matter of financial planning and concern for your wallet, to always ask yourself the question: Would I buy this if I had to pull cash out of my wallet to do so?  Thus groceries, gas, cell phone bills, even Netflix if you really love it are good choices.  If, however, there's any chance that you could be spending more because you are trying to pursue some credit card related goal -- more rewards points, a hoped for CLI, etc. -- that's a red flag.  Not as far as your credit score, but because the card is in effect costing you a lot of money to use.

It sounds like you are now completely up to speed on how your CC balances and payments affect your score, which is great.

There's a rare corner case that should be mentioned, where a CC issuer can take a kind of adverse action against you for running up your card close to the limit even before the statement date.  That's if its own internal metrics suggest that you may be running up the card fast so that you can essentially drop off the map and never pay them again.  Such metrics are run daily and based on your current balance with that issuer as well as the last reported balance with other issuers on your credit reports.

Such "bust out" behavior is not associated with secured cards, so you are safe there: feel free to run your card up as often as you like as long as you keep paying it down.  With unsecured cards, a possible bust-out (and/or fraud) example is typically getting a new card with a big credit limit and then running up the balance fast in the first month or two.  Cards with low or fairly low credit limits almost never trigger a CC issuer's internal bust-out warning, since normal legitimate use necessarily involves a high individual utilization in the middle of the billing cycle. 

[Anonymous]

This is REALLY GOOD information! I never knew about “bust-out” behavior before but it’s great to add to my knowledge base. Thanks for that! I’ll be sure to keep that in mind when I go unsecured.

You’re correct, I’ll just be using the card for groceries and gas, as those are all 2% cash back categories and paying the card in full or within 8.9% with my Discover Cashback Checking each month to get another 1% back. I am trying to get in the habit of actually using my card a bit more and figured this would be the best route.

Thanks again for the AWESOME and detailed information.