@Anonymous wrote:
I keep seeing so much contradictory info on this topic, I'm starting think know one really knows. In particular, "Nerd Wallet" says " exceeding a 30% credit utilization ratio at any point in a billing cycle on any one of your cards could do damage." And many previous posts here firmly state the advice that you should pay your balance the day before due date and then not use it again to afer the statement date, but that really doesn't make sense to me since cc is just going to report the statement balance that accumulated since the last payment anyway.
Are people just essentially guessing here?
To the best of my knowledge this is incorrect and it is only the amount that reports that will have an effect on your FICO score. However, they may have been using the word 'damage' in a looser way. I do think that exceeding 30% utilization at any time during your billing cycle could potentially spook the creditor - depending on who the creditor is and their risk algorithms, as well as other personal factors on the account and the person's overall credit profile. It could potentially cause a lender to CLD or even close the account, which in turn could also negatively affect FICO score. So not exceeding 30% utilization at any point is, IMO, generally good advice.
Also:
@MrsCHX wrote:
Is the balance reported the statement balance or whatever random number exists on whatever random date they report?
e.g., My Capital One payment is due on the 6th. (paid already) My statement is usually dated the 8th/9th.
Let's say my balance on the 9th will be, $180.
What in the heck will C.O. report?
MrsCHX is not alone in being unsure what amount will be reported. This is a common area of uncertainty. Thus it is safer and simpler to just say, 'don't exceed 30% at all' than to have someone get confused about reporting dates.
On that point, the amount that will be reported is the account balance on the report date. Generally the report date is a day or two after your due date, but not necessarily. US Bank for example has a report date of, I believe, the 25th of every month. If it's not the 25th then it's another date near the end of the month. This is very different than most lenders do it and it confuses a lot of people. The best course of action is to call your lender and specially ask what the report date is for your account. For my purposes since it doesn't matter to me very much, I just assume the report date will be the statement closing date on a given account, but that may not always be the case.
@Anonymous wrote:
The problem is that it seems odd that the rating agencies would treat revolving credit that's less than 45 days old the same as it does older credit that persists on a statement. So when people talk about utiltization, which are they talking about?
(Or in other words, I can't believe that the reporting agencies actually treat the two types of credit the same--the important one seems the money that you're paying interest on...)
That's certainly a good point. I believe fundamentally that's a big part of the reason revolving credit card accounts are scored differently from installment accounts. However, you're certainly correct that within the revolving category, some people revolve a lot longer than others.
A few years ago I heard talk about a FICO change that would distinguish between:
Revolvers - People who revolve a balance from month to month, gradually paying it down but not PIFing
&
Utilizers - People who use an account during a cycle, but PIF and don't carry a balance from month to month.
It's possible I'm misremembering the terms, but I think that's right. I remember I found those terms poor choices since the words 'revolve' and 'utilize' already have other uses and meanings in credit matters. Anyway, the rumor was that if that's to be believed it would start scoring revolvers and utilizers differently, but I haven't heard anything else about it since then. So I'm assuming either it was a baseless rumor to begin with, wasn't or hasn't yet been implement for other reasons, or....it is in place and people still don't really know about it?
Anyway, to my knowledge your credit score is calculated the same for a given reported balance you revolve and one you PIF - all else being equal. I agree, however, that it would make sense to differentiate between the two for scoring purposes.
