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% of utilazation?

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  • % of utilazation?

    Does % of utilization matter if you pay in full every month on a credit card? I think I read somewhere on this board that you should not have more then 20% of your credit card at any given time. But I didn't know if that was only if you carry a balance.

    Thanks for the help!

  • #2
    If you pay in full every month your percent utilization is zero on that account.

    Comment


    • #3
      Originally posted by df04527 View Post
      If you pay in full every month your percent utilization is zero on that account.
      Let me add, however, that it is crucial WHEN you pay in full. If you pay after the statement is generated, the reported utilization might be much higher. If you pay in full before the closing-date, you get the utilization (of 0%) you deserve.
      Filed CH7 9/24/2010, 341 on 10/28/2010, Disch.&Closed: 1/6/2011. FICO EX: 9/2: 672.
      FICO EQ: pre-filing: 573, After BK Public Record: 568, 10/3: 673.
      FICO TU: pre-filing: 589, After BK Public Record: 563, 9/2: 706.

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      • #4
        As stated, timing is the issue if you are on the bubble. So depending on where you are in the cycle, your score could fluctuate pretty wildly. I saw a great article on this the other day (but can't find it), but it pointed out that the credit score is always in flux, factors can change month to month, week to week, and day to day. Credit utilization is one of those factors. So, if you only have $5,000 available credit, and charge $4K per month (e.g. because you charge your living expenses to get miles), you could have very different credit scores depending on the day you pull your report even if you pay in full each month. Utilization is upwards of 30% of your credit scored. As such, you could see 50+ point swings in your credit score if your situation is similar to the one I described.

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        • #5
          I like to refer to credit scores as being very similar to pulling lottery numbers. Those numbers are what they are for that moment in time. They are always in a state of flux as there are many different criteria that goes in to producing a score. Best thing to do is pay what your going to pay at least a week before it's due date, every time, without fail. Your score will rise appropriately.

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          • #6
            One should also remember that the only day your credit score counts is the day it is pulled. After BK this should be very rare. Get your 1-3 credit cards. A car every 4+ years and a house 7+ years. If you know one of those events is coming up pay off your credit cards at least 30 days in advance and you should be good to go.
            Last edited by msm859; 03-08-2012, 04:43 PM.

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            • #7
              Originally posted by msm859 View Post
              One should also remember that the only day your credit score counts is the day it is pulled. After BK this should be very rate. Get your 1-3 credit cards. A car every 4+ years and a house 7+ years. If you know one of those events is coming up pay off your credit cards at least 30 days in advance and you should be good to go.
              that's exactly what i did and documented in my "car-loan"-thread. It works.
              Filed CH7 9/24/2010, 341 on 10/28/2010, Disch.&Closed: 1/6/2011. FICO EX: 9/2: 672.
              FICO EQ: pre-filing: 573, After BK Public Record: 568, 10/3: 673.
              FICO TU: pre-filing: 589, After BK Public Record: 563, 9/2: 706.

              Comment


              • #8
                Great advice everyone!

                Comment


                • #9
                  I know this sounds stupid but when I pay my balances to ZERO before the statement date on each card my credit score drops. For some reason keeping a $10-$15 balance on each card seems to result in a higher score. It also gives me a utilization of 1%

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                  • #10
                    Originally posted by Bell30656 View Post
                    I know this sounds stupid but when I pay my balances to ZERO before the statement date on each card my credit score drops. For some reason keeping a $10-$15 balance on each card seems to result in a higher score. It also gives me a utilization of 1%
                    That doesn't surprise me at all. I guess you would get the highest score if you had every card BUT ONE report a $0-balance and have the remaining card report a balance of less than 9% of its credit-line. That's what I tried.
                    Filed CH7 9/24/2010, 341 on 10/28/2010, Disch.&Closed: 1/6/2011. FICO EX: 9/2: 672.
                    FICO EQ: pre-filing: 573, After BK Public Record: 568, 10/3: 673.
                    FICO TU: pre-filing: 589, After BK Public Record: 563, 9/2: 706.

                    Comment


                    • #11
                      Great thread! I got a Household Bank Card in December for rebuilding my credit and am trying to get the hang of this. I was at 611 before I got it and now I'm at 635, so going in the right direction. I run some bills through the card each month and then pay off. I paid it off last week and pulled FICO today and it was showing the $283 that I had charged last month on the $1000 credit, so a 28% utilization of credit. Now realizing that needs to be under 7% for best score. So I guess the deal is to make sure the month before you apply for something like a car loan, to get that down to less than 7% for the whole month to assure that they don't report a higher balance to FICO during that month. I'm hoping my car can hang in there another 1 1/2 to 2 years, so just trying to rebuild as best I can before I need to make that purchase.

                      Comment


                      • #12
                        Originally posted by Bell30656 View Post
                        I know this sounds stupid but when I pay my balances to ZERO before the statement date on each card my credit score drops. For some reason keeping a $10-$15 balance on each card seems to result in a higher score. It also gives me a utilization of 1%
                        This is because some credit card companies do not always fully report to the agencies if the balance is $0, what this means is that it may not actually show that you are making regular payments. From what I have been told it is best to keep like you say $10-$20 on the card from month to month.. this keeps your utilization low, but assures that everything (all the good stuff) about your account is being reported on a regular basis.
                        Last edited by goon; 03-12-2012, 12:44 AM.

                        Comment


                        • #13
                          ... another note, for those of you trying to make sure the balance is low before going for a car loan or something, when your credit report is run, it is not the balance at that moment that is used. It is the balance at the last time that cc company reported. This may not (will not) correlate with your payment whatsoever.
                          So in general, to be safe you need at least a full month of the lower (but ideally not $0) balance prior to having your score run for a purchase.
                          Really 5-6 weeks because some banks only report once a month and there can be a significant lag from when they run the export and when the data actually gets imported into credit reporting agency, especially if they are only sending full exports once a month, because of this when you to to get your score run the balance used to calculate the score can be anywhere from earlier that day to 6 weeks ago.

                          Comment


                          • #14
                            Originally posted by IBroke View Post
                            Let me add, however, that it is crucial WHEN you pay in full. If you pay after the statement is generated, the reported utilization might be much higher. If you pay in full before the closing-date, you get the utilization (of 0%) you deserve.
                            I have seen this firsthand recently. I opened a Cap One card shortly after discharge, and pay in full each month. However, In February, the balance reported to the credit bureau was done BEFORE I made that payment. It showed me having 72 percent util, which caused my score to drop 36 points from prior month.
                            Its a easy fix, as I paid it and havent used it the last week. Waiting to see the update on the score in April to see the real difference
                            Ch 7 filed 8/15/11 341 9/22/11 Discharge 11/28/11
                            The rebuilding begins

                            Comment


                            • #15
                              On my budgeting spreadsheet, I've put the date that each of my four cards use for the amount reported. It is the statement date for each of them. It may not hit the report for a week or so but it is always the statement date's balance. I now pay all my cards down to $10 - $15 before statement date each month. I have reminders set in my iPhone so that I never miss.

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