Is this a sound Util strategy?

Anonymous · ‎03-11-2012

I have around 65K in CL and my wife around 37K(part of the CL is from being an AU on my 20K credit card). All the cards are PIF except for one on my account which has a 10K balance from paying off a higher interest installment loan. Balance transfer offered 0% rate for a year.

I don't want the complication of having to pay before statement date to lower the util rate.

We had been using our Amex Gold card for all our expensive (at least where Amex is accepted). It typically is around 3K to 6K a month depending on what we purchase. I didni't worry about Util much since Amex charge card is typically not included in the util calculations. (excpet in TU98 score sold here in myFICO).

We now have Chase Freedom casd (I'm primary and wife AU) and We plan on using itexclusively for all our exclusive since it has great cash reward programs.

In short, we plan to run up chase freedom cards to 3k-6k each month and pay in full when we get our statements. We will pay off all other cards off to have 0 balance and pretty much lot use them except once a year or so to keep them active.

This will give me around 4-9% util and my wife (AU Chase and primary of Costco) 10%-20% util.

Is this a sound and simple stratety? Questions are:

1. is it OK to not charge anything other cards except once a year or so?

2. is it OK to use Chase heavily exclusively? It has 7k limit for it will be heavily utilitzed in terms of its onw util %.

3. Are we better off paying some off prior to statement date so her util is not @ 10-20% range? How much does this hurt her score?

Thanks.

bichonmom · ‎03-11-2012

@Anonymous wrote:
I have around 65K in CL and my wife around 37K(part of the CL is from being an AU on my 20K credit card). All the cards are PIF except for one on my account which has a 10K balance from paying off a higher interest installment loan. Balance transfer offered 0% rate for a year.

I don't want the complication of having to pay before statement date to lower the util rate.

We had been using our Amex Gold card for all our expensive (at least where Amex is accepted). It typically is around 3K to 6K a month depending on what we purchase. I didni't worry about Util much since Amex charge card is typically not included in the util calculations. (excpet in TU98 score sold here in myFICO).

We now have Chase Freedom casd (I'm primary and wife AU) and We plan on using itexclusively for all our exclusive since it has great cash reward programs.

In short, we plan to run up chase freedom cards to 3k-6k each month and pay in full when we get our statements. We will pay off all other cards off to have 0 balance and pretty much lot use them except once a year or so to keep them active.

This will give me around 4-9% util and my wife (AU Chase and primary of Costco) 10%-20% util.

Is this a sound and simple stratety? Questions are:

1. is it OK to not charge anything other cards except once a year or so?
2. is it OK to use Chase heavily exclusively? It has 7k limit for it will be heavily utilitzed in terms of its onw util %.
@3. Are we better off paying some off prior to statement date so her util is not @ 10-20% range? How much does this hurt her score?

Thanks.

#1, It's probably better to use the cards more than once a year. Maybe use them quarterly, or set up a small recurring billing that's paid monthly.

#2, It's fine to use Chase exclusively. However, if your balance reporting is $3 to 6k on a $7k limit card, the util on that card is going to be over 50%, and close to 90% if you reach $6k. It's not just your overall util that you need to look at, but the util on any one card. When balances report that high (or high util, I should say), you score is going to drop. (It would be the same for a $400 balance on a $500 CL card.)

This month, I missed a payment on my Navy, since the statement cut off date was on the weekend, so the statement reported a balance of $1200 on a $2000 CL card, and both my EQ and TU FICOs dropped over 20 pts each. So that might give you some idea of the drop you'll see if you let the statement report.

On the one hand, it probably won't matter unless you're going to app for a new CC or ask for a CLI. On the other hand, we do know that our CCs SP us. So, my concern would be another CC seeing close to a 90% util on your CC. Even though it's paid monthly, other CCs can't see that when they see your CC. The way it shows on your CR, they can't tell if it's the same balance that's being slowly paid off monthly, or if the whole bal is PIF each month (since all they see is the ending balance each month).

If it were me, I would probably either PIF before the stmt cut, or pay most of it, so <10% of THAT ONE CC CL reports (which would be $700).

EQ FICO 750 | TU FICO 761 (Walmart) | EX FAKO 767 | Goal: 800+

Edits, funky spacing and spelling due to my iPad not getting along with the forum editor!

Anonymous · ‎03-11-2012

Thank you for the thoughtful reply. So I guess the strategy will work once i get a CLI on Chase upto $80,000. lol

Anonymous · ‎03-11-2012

Have you confirmed when Chase reports into the credit bureaus?

Anonymous · ‎03-12-2012

I guess the obvious question is... what exactly are you doing all of this for?

Is it just to get a better monthly score or because you guys have an upcoming purchase in mind?

Anonymous · ‎03-12-2012

@Anonymous wrote:
I guess the obvious question is... what exactly are you doing all of this for?
Is it just to get a better monthly score or because you guys have an upcoming purchase in mind?

No good reason. This has become a game to me

Anonymous · ‎03-12-2012

@Anonymous wrote:
@Anonymous wrote:
I guess the obvious question is... what exactly are you doing all of this for?
Is it just to get a better monthly score or because you guys have an upcoming purchase in mind?
No good reason. This has become a game to me

Gotcha.

The 10 - 20 might give your wife a lower CS.

You'd be just fine.

RobertEG · ‎03-12-2012

My personal util strategy goes like this.

I dont "fine tweak" each month, and thus dont worry about achieving max util pts each month. If I dont plan to app for new credit within a few months, I dont go to that level of monthly aggravation.

But I keep two things in mind when letting util creep up on a card. One, keep it low enough so that if and when I do have a need to app for credit and need my max score, my util is in the ballpark so that I can get it under 10%. And, two, I have concern that keeping a regular balance on a card that gets above, say 30% or so, may trigger an internal review by the creditor, and a possible credit limit decrease. So, I look at it both from the point of view of what I may have to do, and what the credtior could possibly do.

The "overall below 10%, none over 9%, half not reporting a balance" mantra is sound, but not my monthly mantra.

MarineVietVet · ‎03-12-2012

@RobertEG wrote:
My personal util strategy goes like this.
I dont "fine tweak" each month, and thus dont worry about achieving max util pts each month. If I dont plan to app for new credit within a few months, I dont go to that level of monthly aggravation.
But I keep two things in mind when letting util creep up on a card. One, keep it low enough so that if and when I do have a need to app for credit and need my max score, my util is in the ballpark so that I can get it under 10%. And, two, I have concern that keeping a regular balance on a card that gets above, say 30% or so, may trigger an internal review by the creditor, and a possible credit limit decrease. So, I look at it both from the point of view of what I may have to do, and what the credtior could possibly do.

The "overall below 10%, none over 9%, half not reporting a balance" mantra is sound, but not my monthly mantra.

This is also my view on it but some folks do this as a hobby just to see how high they can get their score and there's nothing wrong with that.

At a certain point in our journey it's no longer necessary to tweak our scores but I continue to give advice on what seems to work for most people because new members are constantly registering and they've never been told anything about proper credit management.

jdogi · ‎03-13-2012

As others have stated, you definitely don't want that CC to report a 75% utilization every month if you care about your score on a day to day basis. If it were me, I'd schedule a monthly payment a week before statement data that will keep your balance lower. It's not usually an issue if you overpay the balance at that time. Anyway, then when the statement comes, it will either be a negative balance (they owe you) or it will be pretty low and you can just send that amount.

As for the game, I've really enjoyed the whole thing. I'm an analyst by trade and at heart as well, the FICO score is just another number that I can control and tinker with. Compared to some of the other numbers that I'll play with for entertainment, the FICO score actually has some benefit. You should see some of the analyses I've been known to perform before a fantasy football draft!

Sadly, the days of benefit are coming to a close. My scores are at a point where it really just doesn't matter that much. The good news is, with everything I've learned, I can help friends, family, colleagues, and people on this forum. That keeps some of the challenge and fun alive.