Does it not help credit history to PIF before statement cut date?

For just about anything you want to get off your chest about credit cards.
15 posts
Cre
Platinum Member
Platinum Member
 
Posts: 93
Joined: Thu Nov 06, 2014 11:53 am
Location: United States

Does it not help credit history to PIF before statement cut date?

Postby Cre » Sat Nov 22, 2014 2:48 am

Does it not help credit history to pay in full (PIF) before the statement cut date?

I doubt that paying early, prior to the statement being sent, would do anything that "hurts" one's credit score, but I wonder if doing so "does it not help" it either?

I've now amassed a big fat balance on my new credit card. I've maxed the credit limit, and still have a bit more spending to do before meeting the spend threshold for the reward I'm tying to get.

I'd like to PIF right now. However, I'm concerned that if I PIF, and the card shows zero balance due on the statement report date that gets sent to the credit reporting agencies (CRA), then the CRA's will not see any demonstration of my carrying a balance. They will only see that I didn't have a balance at all, and therefore haven't yet demonstrated any ability to pay off bills.

I'm wondering if it would be better to let the balance remain as high as possible until I actually receive the bill (which simultaneously gets sent to the CRA's. Then, PIF after my big balance posts on the CRS, but before the due date of my bill. my bill.

Does this strategy make sense? Or do I misunderstand how it works?
Current Cards:
AmEx Platinum Charge: NPSL, $450 AF
AmEx Reserve Credit: $30K limit, $450 AF
Chase Slate Visa Credit: $32K limit, No AF
Future Strategy:
Near Term: Need a good MasterCard for places that won't accept AmEx or Visa
Long Term: Will downsize out of one or both current AmEx cards to reduce AFs


User avatar
lobbythis
Centurion Member
Centurion Member
 
Posts: 637
Joined: Sun Sep 07, 2014 8:53 pm
Location: usa

Postby lobbythis » Sat Nov 22, 2014 3:51 am

No.

You want to show a small balance on just a few cards, if that. Keep utilization low and the number of balances being reported low.

I just spoke to Chase about a recon on my new Freedom and the first thing the rep said was too many cards were reporting balances.

Cre
Platinum Member
Platinum Member
 
Posts: 93
Joined: Thu Nov 06, 2014 11:53 am
Location: United States

Postby Cre » Sat Nov 22, 2014 12:37 pm

What is "recon"?

Reconditioning? Reconnaissance? What is being conditioned? What is being investigated?

_____________

I'm also very confused about this:

Everyone told me that to get excellent credit, one must borrow and pay it back. The more you borrow and pay back, the more history you have in demonstrating your likelihood to pay back.

OK then. So I get this card and charge a whole bunch on it. If I pay it off before the statement cuts, then the balance reported will be low or zero.

If that is the case, how does that prove to the CRA's that I have a history of borrowing and paying back?

I have no near term foreseeable need for a home loan. I'm just trying to get develop more credit history.

I don't get how "low utilization" builds credit history. How can the CRA's know that I will pay back what I owe, if I never owe anything?
Current Cards:
AmEx Platinum Charge: NPSL, $450 AF
AmEx Reserve Credit: $30K limit, $450 AF
Chase Slate Visa Credit: $32K limit, No AF
Future Strategy:
Near Term: Need a good MasterCard for places that won't accept AmEx or Visa
Long Term: Will downsize out of one or both current AmEx cards to reduce AFs

flan
Centurion Member
Centurion Member
 
Posts: 388
Joined: Tue Apr 09, 2013 10:16 pm
Location: chicago

Postby flan » Sat Nov 22, 2014 1:02 pm

Cre wrote:What is "recon"?

Reconditioning? Reconnaissance? What is being conditioned? What is being investigated?

_____________



"Reconsideration". He applied, they said no or maybe, he called and asked them to reconsider. That's works when the reason for denial is something that you can explain or fix, like they can't verify identity or income or some negative you can say "it's wrong!".

Cre wrote:
I'm also very confused about this:

Everyone told me that to get excellent credit, one must borrow and pay it back. The more you borrow and pay back, the more history you have in demonstrating your likelihood to pay back.

OK then. So I get this card and charge a whole bunch on it. If I pay it off before the statement cuts, then the balance reported will be low or zero.

If that is the case, how does that prove to the CRA's that I have a history of borrowing and paying back?

I have no near term foreseeable need for a home loan. I'm just trying to get develop more credit history.

I don't get how "low utilization" builds credit history. How can the CRA's know that I will pay back what I owe, if I never owe anything?


For credit cards and other revolving loans, what matters is the history that you pay what you've agreed to pay. The actual dollar figures are't terribly important. Utilization is important because it shows that you're not running up huge amounts of debt and seeking more credit (quite likely, because you want to borrow money to pay the original loans back...). Actual dollar numbers are important to lenders, which is why they ask for your income, your housing payment, etc, so they can figure out how much you can afford to spend.

It is important that accounts report balances once in a while (and at least one should always), so that account doesn't look dormant. But big balances look bad. Also, remember that FICO and most other scoring sytems do not have any memory. If you have a huge balance this month, your score will take hit, but when you pay it off, it recovers, with no lingering effect.

ingramjuan
Centurion Member
Centurion Member
 
Posts: 271
Joined: Thu Nov 20, 2014 5:32 pm
Location: EARTH

Postby ingramjuan » Sat Nov 22, 2014 11:07 pm

I pay my cc in full each month for the last two years and have not carried a balance and or paid any interest. My credit score is still high and have not hurt it. I don't think you need to carry a balance just to show you can pay bills on time.
CARDS:
Capital One Platinum (2001) |Capital One QuickSilver World (2002) | Amex Gold Delta (2013) | Best Buy Visa (2013) |Discover It (2015) | Amex Platinum (2015)

Gardening Since: June, 2015

Next Cards:
Personal: Chase Freedom Unlimited
Business: Amex Plum
Store Card: Lowes

takeshi
Centurion Member
Centurion Member
 
Posts: 1741
Joined: Wed Jun 05, 2013 3:12 pm
Location: US

Postby takeshi » Mon Nov 24, 2014 8:12 am

Cre wrote:Does it not help credit history to pay in full (PIF) before the statement cut date?

Do you mean "Payment History" when you say "Credit History"? Payment History only cares about whether you're on time or not. Paying early doesn't help (aside from being counted as on time) or hinder.

Cre wrote:I'd like to PIF right now. However, I'm concerned that if I PIF, and the card shows zero balance due on the statement report date that gets sent to the credit reporting agencies (CRA), then the CRA's will not see any demonstration of my carrying a balance.

It really doesn't matter what the CRA's see or don't see. They only manage your reports. It's the creditors that review your reports that make the credit decisions -- not the CRA's.

Cre wrote:Does this strategy make sense? Or do I misunderstand how it works?

It doesn't matter in the way you think it matters. If a creditor wants to manually review they can see your high balance on an account. For scoring purposes you want to keep your utilization in check and having high/maxed utilization is not of any benefit to you. That said, short term high utilization isn't an issue either.

Cre wrote:Everyone told me that to get excellent credit, one must borrow and pay it back. The more you borrow and pay back, the more history you have in demonstrating your likelihood to pay back.

Always consider your sources. That's an oversimplified take on how credit is assessed. Your credit isn't judged only on how much you've borrowed and paid. There are a number of factors that go into it:
http://www.myfico.com/crediteducation/whatsinyourscore.aspx

Cre wrote:I don't get how "low utilization" builds credit history.

It doesn't. Your Payment History is your track record and that's why it's the biggest factor at 35%. However, Utilization (Amounts Owed) is a major risk factor and is also very significant at 30%. Keep all the factors in mind and don't just obsess over the amounts borrowed versus paid.

Cre
Platinum Member
Platinum Member
 
Posts: 93
Joined: Thu Nov 06, 2014 11:53 am
Location: United States

Postby Cre » Mon Nov 24, 2014 1:25 pm

Oh, without a doubt, "obsess" is the operative word for me right now, as I'm trying to make up for lost time in participating in all these credit card, reward accumulation, and credit score strategies I'm learning about for the first time on this and other websites. I appreciate the time you've taken to break it down for me.

I decided to prepay 33% of the pending balance (which hadn't even posted yet) so that I could continue to shift more spending onto that card without exceeding the initial credit limit. I will let the remaining 66% balance post and get reported on the statement cut date, and then pay it off well before the due date.

My expectation is that my credit score will dip a bit on the reporting date due to the balance, and then it will raise back again in a month or so after the next reporting date shows the balance was paid, provided there is low or no utilization at the time the new score is queried.

Is that about right?
Current Cards:
AmEx Platinum Charge: NPSL, $450 AF
AmEx Reserve Credit: $30K limit, $450 AF
Chase Slate Visa Credit: $32K limit, No AF
Future Strategy:
Near Term: Need a good MasterCard for places that won't accept AmEx or Visa
Long Term: Will downsize out of one or both current AmEx cards to reduce AFs

User avatar
djrez4
Centurion Member
Centurion Member
 
Posts: 1468
Joined: Tue Jul 31, 2012 12:20 pm
Location: United States

Postby djrez4 » Mon Nov 24, 2014 2:25 pm

Letting a card report 66% utilization will drop your score. FICO likes to see 1-9% utilization reported on one account.

But here's the best advice you will ever received regarding credit -

Unless you are about to apply for something, your score does not matter!

If you let a card report a high balance but have no applications on the horizon, who cares if you lose 15 points? It's irrelevant. If you plan to buy a house or a car, then you should pay your cards before the statements cut to maximize your score. Otherwise, keep your cash as long as you can.
[RIGHT][size=100]- Sapphire Preferred - Freedom - Ink - Platinum - Everyday Preferred -[/size]
[/RIGHT]

Cre
Platinum Member
Platinum Member
 
Posts: 93
Joined: Thu Nov 06, 2014 11:53 am
Location: United States

Postby Cre » Mon Nov 24, 2014 11:43 pm

djrez4 wrote:Letting a card report 66% utilization will drop your score. FICO likes to see 1-9% utilization reported on one account.

But here's the best advice you will ever received regarding credit -

Unless you are about to apply for something, your score does not matter!

If you let a card report a high balance but have no applications on the horizon, who cares if you lose 15 points? It's irrelevant. If you plan to buy a house or a car, then you should pay your cards before the statements cut to maximize your score. Otherwise, keep your cash as long as you can.


I'll never borrow money to buy a car, and no home loan plans are in my future for at least two years.

Thus far, I've learned that low utilization increases credit score. Understood. However, I've had no utilization for most of my credit history, and I don't think my score is as good as my neighbors, who borrows money all the time (and pays it back).

So I'm trying to borrow more, so I can pay it back. My concern is that if I pay before the statement cuts, then there will be no evidence extant that I borrowed... only that I have zero balance. I'm worried that this showing of zero balance will NOT build up credible credit history like my neighbors, who report scores higher than 820.

Not that I'm trying to keep up with the Jones's or anything...
Current Cards:
AmEx Platinum Charge: NPSL, $450 AF
AmEx Reserve Credit: $30K limit, $450 AF
Chase Slate Visa Credit: $32K limit, No AF
Future Strategy:
Near Term: Need a good MasterCard for places that won't accept AmEx or Visa
Long Term: Will downsize out of one or both current AmEx cards to reduce AFs

User avatar
djrez4
Centurion Member
Centurion Member
 
Posts: 1468
Joined: Tue Jul 31, 2012 12:20 pm
Location: United States

Postby djrez4 » Tue Nov 25, 2014 10:35 am

Cre wrote:INot that I'm trying to keep up with the Jones's or anything...


Of course not.

If your goal is to raise your score for no other reason than to have a high score, pay down your balances before the statements cut, Leave a balance of about 7% of your limit on a single card and let that report before you pay it off.
[RIGHT][size=100]- Sapphire Preferred - Freedom - Ink - Platinum - Everyday Preferred -[/size]

[/RIGHT]



Return to “General Credit Card Talk”

Who is online

Users browsing this forum: No registered users and 2 guests