High Utilization and Bad FICO Scores

[BronzeTrader]

I'm helping a minor to manage his account. This is an AmEx BCE card with a $500 CL.  It is a hack of work to get to the $2,000 spending  So far, about 20 days, spending is about $800. Of course 90 day is very reachable. The bonus is looking great.

Due to the low CL, we had to make some intra-month payments. Also due to the aggressive management, the utilization rate is very high. Sometimes, the utilization is 90%! We are still waiting for the first billing statement to close.

But some CBs do not want to wait until the statement closing. TU came out very quickly and stated:

  PROPORTION OF LOAN BALANCES TO LOAN AMOUNTS IS TOO HIGH

The balances of your mortgage and non-mortgage installment loans (such as auto or student loans) are high compared to your original loan amounts. As you pay down your loan your balance decreases, which reduces the proportion.

This confirms my thinking that, even if you make some intra-month payments before statement closing, it still counts toward utilization. I do not know which CB and how often they pull the balance. But all the other CCs have low balances. 

TU dropped FICO by 36, both EQ and EXP by at least 20 each. Still waiting for the current updates. 

Not worried about FICO. Bonus cash is more important! 

[vanillabean]

Amex won't let me pay twice in a month may be of interest to you.

[noobody]

Will they reject payment if you PUSH from your Bank?

[BronzeTrader]

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@noobody wrote:
Will they reject payment if you PUSH from your Bank?

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From AmEx side, we were able to make one payment. Not able to make the 2nd payment. It says no payment is required.

It is fine to pay from the bank side. But it takes longer to take from the bank and we do not want to over-load with the payment. 

But it is certain that 90% is high utilization and CB takes notice of it. It is going to be a couple of statement cycles to bring the utilization down. 

[909]

I pay AMEX from their app several times per month. As long as I have a balance they let me pay. I believe the limit is 110% of the balance (pending charges are not included).

Recent payment dates on my BCP are: 11/5, 12, 18, 24, 12/9, 26, 30, 1/3, 14.

This card has a $50K limit but I prefer to pay as I go (it's used frequently for groceries, gas and other daily expenses).

I don't think you should have a problem paying the balance to keep some credit available.

[909]

p.s. The app may say no payment required but just click on "make payment" and submit a payment.

I just made a payment of $50 even though my balance was -$70.35

I also just received the confirmation email from AMEX acknowledging the payment.

[Geordi]

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@909 wrote:
I pay AMEX from their app several times per month. As long as I have a balance they let me pay. I believe the limit is 110% of the balance (pending charges are not included).

Recent payment dates on my BCP are: 11/5, 12, 18, 24, 12/9, 26, 30, 1/3, 14.

This card has a $50K limit but I prefer to pay as I go (it's used frequently for groceries, gas and other daily expenses).

I don't think you should have a problem paying the balance to keep some credit available.

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@909 wrote:
I pay AMEX from their app several times per month. As long as I have a balance they let me pay. I believe the limit is 110% of the balance (pending charges are not included).

Recent payment dates on my BCP are: 11/5, 12, 18, 24, 12/9, 26, 30, 1/3, 14.

This card has a $50K limit but I prefer to pay as I go (it's used frequently for groceries, gas and other daily expenses).

I don't think you should have a problem paying the balance to keep some credit available.

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Same here.  I have been making multiple payments to Amex on both charge cards and credit cards for years.

They have never complained about getting repaid as soon as possible to me. 

[909]

Data point:

I just opened the Amex app this morning, my available credit was $375 below my CL ($46,625 available, $50,000 CL) but my balance was only $80, i.e. pending charges were reducing my available credit. I entered a payment of $375, the app responded with "please enter a payment less than $373.83" which I did, I entered $373.82, and it was accepted. I've now made 4 payments in January: 1/3, 14, 16, 16.

I correct my statement in my post above: 1) it looks like AMEX allows you to make payment to cover pending charges 2) they don't have a 10% over limit. Both of these assumptions apply to other cards I have (I believe BofA, CapOne and Elan, I've definitely gotten the "reduce payment amount to 110% of balance from CapOne).

[Geordi]

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@909 wrote:
Data point:

I just opened the Amex app this morning, my available credit was $375 below my CL ($46,325 available, $50,000 CL) but my balance was only $80, i.e. pending charges we're bringing no my available credit down. I entered a payment of $375, the app then told me to "please enter a payment less than $373.83" which I did - I entered $373.82 - and it was accepted. I've now made 4 payments in January: 1/3, 14, 16, 16.

I correct my statement in my post above: 1) it looks like AMEX allows you to make payment to cover pending charges 2) they don't have a 10% over limit. Both of these assumptions apply to othe cards I have (possibly BofA, CapOne and Elan).

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909,

In my experience with Amex, most of the time I can make payments for pending charges.

But there are times where Amex will not allow me to make payments to pending charges.

[Anonymous]

As the other folks have indicated, there's no reason you can't make many payments to keep a card that is being used a lot at a low balance.  Given that this is something you do want to do, you really should also have a backup payment approach, one that involves using Billpay from one of your checking accounts. 

You write:

But some CBs do not want to wait until the statement closing. TU came out very quickly and stated:

  PROPORTION OF LOAN BALANCES TO LOAN AMOUNTS IS TOO HIGH

The balances of your mortgage and non-mortgage installment loans (such as auto or student loans) are high compared to your original loan amounts. As you pay down your loan your balance decreases, which reduces the proportion.

This confirms my thinking that, even if you make some intra-month payments before statement closing, it still counts toward utilization. I do not know which CB and how often they pull the balance. But all the other CCs have low balances. 

That "reason code" is not refering to CC balances at all.  It is refering to your friend's installment loans.

Indeed, the TransUnion score could not take into account a high CC balance until it gets reported to them.  That's impossible.  But certainly that reason statement is not referring to CC balances.