Credit Usage

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stranger
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Credit Usage

Postby stranger » Sun Jun 22, 2014 12:40 pm

So I know that you're supposed to keep your credit usage below 20-30%, but I was wondering if that was per billing cycle, or per time you pay your card off?

For instance, suppose I have a single card with a $1,000 limit and a 1 month billing period. Should I only be spending <$300/month on that card? Or could I spend $250/week on the card, as long as I make payments every week?


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Postby benhollberg » Sun Jun 22, 2014 3:31 pm

Make payments before the statement posts, doesn't matter how you spend before that. So if your statement posts in June 22 then make the payment one or two days before. Usually you want to pay it down to less than 10% of your limit. Once the statement posts then pay the remaining balance to avoid paying interest.
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WilliamJefferson
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Postby WilliamJefferson » Sun Jun 22, 2014 3:57 pm

Curious on this too...

So, do I want a small charge (at least 5% of CL, less than 15% of CL) to carry over the statement date or do I want to have it actually at $0?

So, should I do something like pay off everything except 10% of CL the day before statement is posted, then pay off the rest the day after? Or should I just pay it all off on the day before?

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Postby Rory » Sun Jun 22, 2014 4:01 pm

WilliamJefferson wrote:Curious on this too...

So, do I want a small charge (at least 5% of CL, less than 15% of CL) to carry over the statement date or do I want to have it actually at $0?

So, should I do something like pay off everything except 10% of CL the day before statement is posted, then pay off the rest the day after? Or should I just pay it all off on the day before?


Pay off all but 10-20% of your credit limit, let it report at that level, then pay off the rest by that statement's due date. Best to not have all cards reporting a balance once you have 5+ i have found, but some of mine are only reporting a fraction of a percent of the CL usage per billing cycle. hope this helps
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WilliamJefferson
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Postby WilliamJefferson » Sun Jun 22, 2014 4:49 pm

I only have 1 but just got approved for 4 more yesterday and today, should have them by next week.

Why should I not carry a balance over the statement date for each of them? Like, if I just did 10% of CL on each why is that bad?

stranger
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Postby stranger » Sun Jun 22, 2014 7:38 pm

Very helpful, thank you all for your help.

takeshi
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Postby takeshi » Sun Jun 22, 2014 7:56 pm

stranger wrote:So I know that you're supposed to keep your credit usage below 20-30%, but I was wondering if that was per billing cycle, or per time you pay your card off?

It is whenever the card reports. Due date doesn't matter as most cards report on statement date. By the time the due date rolls around it's too late to reduce reported utilization for that statement period.

Rory wrote:Best to not have all cards reporting a balance once you have 5+ i have found

Best but impact can vary. I currently have 8/10 reporting a balance and my TU FICO is 808.

WilliamJefferson wrote:Why should I not carry a balance over the statement date for each of them? Like, if I just did 10% of CL on each why is that bad?

Scoring models favor those that carry fewer balances. Ideal is to only have one balance report at 10% or less (but more than 0). For example, my score above could be better if I had fewer balances reporting.

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Postby randeman » Sun Jun 22, 2014 8:05 pm

WilliamJefferson wrote:I only have 1 but just got approved for 4 more yesterday and today, should have them by next week.

Why should I not carry a balance over the statement date for each of them? Like, if I just did 10% of CL on each why is that bad?


If I understand you correctly, you're wanting to know about carrying a balance after the statement date and the bill's due date? Just means you're paying interest on the balance. If you're asking about your usage to credit availability ratio, you don't want to have reporting more than 30% usage of your available credit. Impacts on your score heavily.
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WilliamJefferson
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Postby WilliamJefferson » Sun Jun 22, 2014 8:22 pm

randeman wrote:If I understand you correctly, you're wanting to know about carrying a balance after the statement date and the bill's due date? Just means you're paying interest on the balance. If you're asking about your usage to credit availability ratio, you don't want to have reporting more than 30% usage of your available credit. Impacts on your score heavily.


My plan was:
Pay off everything except 10% of CL on each card on the day before statement.
Pay off everything on the 1st of the month.

Rory was saying that I should just pay off everything on some of the cards before the statement is issued, and do that 10% for the others. Why?

randeman
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Postby randeman » Sun Jun 22, 2014 8:44 pm

Well, you don't want to pay off all your cards before the statement date because, believe it or not, that negatively impacts on your score. I have never quite figured out why, but credit is all a game anyway.

Be sure that you understand that you're looking at two different dates, statement date and due date. You can carry balances past either of the dates if you want, it's just that you'll be paying interest if you don't pay off completely by the due date. Just keep your overall usage under 30%. Around 10% is better.

Rory mentioned not carrying a balance on five cards. I don't know what he meant by that; I have never heard of such a thing. Other than keeping one's total usage under 30%, I have never heard of there being any problems with carrying a balance on one card, five cards, or twenty. Although I have heard of some creditors considering individual card usage and balances as well as overall balances when deciding whether or not to approve a credit line. YMMV.
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