New to Credit. Utilization Question.

[Anonymous]

Greetings everyone,

After many years I finally decided to start buiding credit since I always used cash and was never interested in any type of debts. That’s until I realized needed it for a few things i’m working on now.

Around a month ago I was approved a new Card Loan, A Credit Card and a Personal Loan. I’ve been researching the web for all the info I can get regarding how to build an excellent credit score and i’m still with some doubts. So I would really appreciate your help with this.

Regarding CC Utilization. On my first cycle I used my card while traveling overseas. The Card has a $1,000 Credit Limit. I was aware that I wasn't gonna spend more that 30% on it but ended up having some problems with my Debit Card while paying on a few places that for some reason did not accepted it. Unfortunately I ended up using 42% on my CC. I paid my balance in full around 2 weeks before my due date. My question is: when my CC issuer report to Credit Bureaus will it report 42% Utilization or 0% since I paid the balance in full before due date?

Thanks in advance for helping a newbie out.

[K-in-Boston]

Whatever reported on your statement balance is what will report to the credit bureaus. If your statement balance was $420 on a $1000 limit card, it would be 42%.  If you paid this full amount prior to your next due date and made no additional charges (statement balance $0), it will report a balance of $0 on a $1000 limit, or 0%.  Keep in mind that 0% utilization across all revolving credit accounts is worse for credit scoring than a small balance.

Reporting dates can vary in some cases by lender (i.e. US Bank is always on the last day of the month regardless of statement date), and in the case of Chase they will report $0 any time the account is paid to $0 during the statement cycle.

[ChessChik47]

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@Anonymous wrote:
Greetings everyone,

After many years I finally decided to start buiding credit since I always used cash and was never interested in any type of debts. That’s until I realized needed it for a few things i’m working on now.

Around a month ago I was approved a new Card Loan, A Credit Card and a Personal Loan. I’ve been researching the web for all the info I can get regarding how to build an excellent credit score and i’m still with some doubts. So I would really appreciate your help with this.

Regarding CC Utilization. On my first cycle I used my card while traveling overseas. The Card has a $1,000 Credit Limit. I was aware that I wasn't gonna spend more that 30% on it but ended up having some problems with my Debit Card while paying on a few places that for some reason did not accepted it. Unfortunately I ended up using 42% on my CC. I paid my balance in full around 2 weeks before my due date. My question is: when my CC issuer report to Credit Bureaus will it report 42% Utilization or 0% since I paid the balance in full before due date?

Thanks in advance for helping a newbie out.

Hi!  It will report whatever your balance is on date your statement closes...in this case, $0 if you don't put more charges on the card before your statement closing date.  

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[imaximous]

it'll show utilization at the time of reporting. In your case, 0% if you don't charge again. Most banks report at statement closing, but some may report at the end of the month, etc.
They also report your "highest balance," which basically shows the most you've charged on that card regardless of having a balance or not.

[Anonymous]

What bank or CU is your card issued by?

With most cards, the statement balance reports a few days after the statement cut date, which is usually a few days after the payment due date.  If you pay before the statement cut date, so the statement cuts with a lower balance, that's the balance that will report.

If it's a Chase card, they will report a zero balance anytime the card is paid down to a zero balance.

Utilization has no memory however--even if a high balance reports one month, if you pay it off and a low balance reports the following month, your scores will increase when the lower balance reports.

[Anonymous]

Thank you all for the promptly replies and input. I need to keep researching this forum.

K-in-Boston,

So it’s better if I don’t pay in full to 0% balance before due date?

[K-in-Boston]

If this is your only credit card, it would be best to leave a balance between $5 (depending on the lender, smaller amounts may be reported as $0) and 8.9% of the card's limit ($89 in this case).  That doesn't mean that you need to carry a balance and pay interest.  You should always try to pay the full statement balance prior to the due date to avoid interest.  But if you have used the card for purchases since the last statement closed and you pay more than the previous statement balance (by either choosing "total balance" instead of "statement balance" or by making payments as you charge during your statement cycle), it's best to not pay it completely down to $0 for the current balance.

The reason for this is that someone who does not use revolving credit ($0 balances all around) is a higher risk than someone who uses it responsibly (under 30% but ideally under 10%; we use 8.9% and 28.9% around here because 9.000001% will round up to 10% and 29.000001% will round up to 30%).

[Meanmchine]

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@Anonymous wrote:
Greetings everyone,

After many years I finally decided to start buiding credit since I always used cash and was never interested in any type of debts. That’s until I realized needed it for a few things i’m working on now.

Around a month ago I was approved a new Card Loan, A Credit Card and a Personal Loan. I’ve been researching the web for all the info I can get regarding how to build an excellent credit score and i’m still with some doubts. So I would really appreciate your help with this.

Regarding CC Utilization. On my first cycle I used my card while traveling overseas. The Card has a $1,000 Credit Limit. I was aware that I wasn't gonna spend more that 30% on it but ended up having some problems with my Debit Card while paying on a few places that for some reason did not accepted it. Unfortunately I ended up using 42% on my CC. I paid my balance in full around 2 weeks before my due date. My question is: when my CC issuer report to Credit Bureaus will it report 42% Utilization or 0% since I paid the balance in full before due date?

Thanks in advance for helping a newbie out.

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Half the people on these boards would literally have massive strokes if banks started report the 42%

[SouthJamaica]

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@Anonymous wrote:
Thank you all for the promptly replies and input. I need to keep researching this forum.

K-in-Boston,

So it’s better if I don’t pay in full to 0% balance before due date?

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1. It's always best to pay in full before the due date.

2. Utilization is usually based on the balance reported in the statement, so if you want low utilization you should pay off most of the bill before the statement cuts and not wait for the due date.

3. "Utilization" in the FICO scoring sense has nothing to do with how much you use the card; it has to do with the reported balance.

[Anonymous]

Thanks again everyone.

So i’m still a bit confused. I think it’s mostly because my the bank rep that helped me getting my CC gave me wrong info about the billing cycle and payment.

I activated the CC on June 22, around a week after I had $420.00 balance on it. On my account it says that the mínimum payment is due on July 22. The bank rep told that I should paid at least the minimum before that date or better off pay the full amount so I paid the full balance two weeks before.