For credit-building purposes, which is better...

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xcanchaserchicx
 
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For credit-building purposes, which is better...

Postby xcanchaserchicx » Thu Dec 10, 2015 4:26 pm

Spending on a card and paying the charge right away or paying the total once the bill arrives?


kdm31091
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Re: For credit-building purposes, which is better...

Postby kdm31091 » Thu Dec 10, 2015 5:32 pm

There is no long term difference in terms of building credit. While paying before the statement comes helps to optimize your utilization, utilization is a short term factor, has no memory, and doesn't really "build" anything.

As long as you are paying on time and not missing payments etc, you will build a solid history. Paying before or after the statement is largely preference and has no long term impact.

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Re: For credit-building purposes, which is better...

Postby CardAttack » Thu Dec 10, 2015 9:15 pm

For all of my 30-year credit history, I have waited for the statement before paying. My credit score has been over 800 for quite a while, so waiting for the statement before paying didn't hurt it.

Other things helped me as well, but it's not a problem to wait for the statement.
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takeshi
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Re: For credit-building purposes, which is better...

Postby takeshi » Fri Dec 11, 2015 9:07 am

xcanchaserchicx wrote:Spending on a card and paying the charge right away or paying the total once the bill arrives?

As I said in your other thread it's not quite so straightforward or simple as that.

Either could work. It really depends on the specifics. Better is always highly subjective regardless of topic so never assume that "better" is a universal matter. People have differing credit profiles, situations, etc.

I pay after statements are generated. However, my spend and limits place me at about 8% revolving utilization and my FICO 8's are around 800 or just over. I could probably squeeze out more points by reducing my reported balances and number of reporting balances but I don't care for the hassle and I'm fine with my scores using my apporach.

However, someone who would have high reported revolving utilization using that approach could benefit by paying the balance down on a card before its report date so it reports a lower balance and, therefore, lower revolving utilization.

That said, revolving utilization is determined by whatever is currently indicated as your balances and limits on your reports. If you have high utilization one month you can drop it and see the benefit by the next time your accounts report. One does not have to constantly maintain low utilization for scoring though many seem to do this anyway. The only ongoing concern with utilization is that prolonged high utilization can lead to adverse action. However, short term high utilization generally isn't an issue.

Elijahmex
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Re: For credit-building purposes, which is better...

Postby Elijahmex » Sun Dec 13, 2015 11:35 am

I never wait for my statement. I send payments in every other week.
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CarefulBuilder14
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Re: For credit-building purposes, which is better...

Postby CarefulBuilder14 » Sun Dec 13, 2015 1:11 pm

I've made a few big purchases within the last month, and if I waited until the statements cut, I'd have one card at 35% utilization and another at 60%. I just paid the outstanding balance on both, perhaps motivated a little by various AA reports.

Maybe I was a little too cautious, but neither card is at 0%, so I'm only paying about 25 days before I'd pay otherwise.
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Re: For credit-building purposes, which is better...

Postby 4ktvs » Sun Dec 13, 2015 2:42 pm

This just my personal view and I have no idea how they really look at it but:

If I were a creditor viewing a report I would want to see past usage and on time payment of that usage. Even if it was %100 of the limit was used I wouldn't care so long as it ended up not resulting in any late's. In fact I would like to see high usage of the credit with on time payments as it would show I am not exposing my self for nothing or hardly nothing in return.

I think those getting AA max the card out and carry the balance for far to long. My personal view of it is they don't mind if you fully use your limit so long as they get there money in full by the due date. If any creditor ever does have an issue with that I likely won't be doing business with them for long.

I also think income matters, if your only making 15k a year and you run a 4k limit card all the way up VS someone making 50k a year I think the one making more is much more unlikely going to face AA over it if they both have clean reports.

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Re: For credit-building purposes, which is better...

Postby Elijahmex » Sun Dec 13, 2015 5:20 pm

4ktvs wrote:This just my personal view and I have no idea how they really look at it but:

If I were a creditor viewing a report I would want to see past usage and on time payment of that usage. Even if it was %100 of the limit was used I wouldn't care so long as it ended up not resulting in any late's. In fact I would like to see high usage of the credit with on time payments as it would show I am not exposing my self for nothing or hardly nothing in return.

I think those getting AA max the card out and carry the balance for far to long. My personal view of it is they don't mind if you fully use your limit so long as they get there money in full by the due date. If any creditor ever does have an issue with that I likely won't be doing business with them for long.

I also think income matters, if your only making 15k a year and you run a 4k limit card all the way up VS someone making 50k a year I think the one making more is much more unlikely going to face AA over it if they both have clean reports.


100% can't be good no matter how you look at it. If you are using 100% of your available credit it means your income is too low and you rely too much on credit.
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Re: For credit-building purposes, which is better...

Postby kdm31091 » Sun Dec 13, 2015 5:44 pm

4ktvs wrote:This just my personal view and I have no idea how they really look at it but:

If I were a creditor viewing a report I would want to see past usage and on time payment of that usage. Even if it was %100 of the limit was used I wouldn't care so long as it ended up not resulting in any late's. In fact I would like to see high usage of the credit with on time payments as it would show I am not exposing my self for nothing or hardly nothing in return.

I think those getting AA max the card out and carry the balance for far to long. My personal view of it is they don't mind if you fully use your limit so long as they get there money in full by the due date. If any creditor ever does have an issue with that I likely won't be doing business with them for long.

I also think income matters, if your only making 15k a year and you run a 4k limit card all the way up VS someone making 50k a year I think the one making more is much more unlikely going to face AA over it if they both have clean reports.


I think with a lot of the AA horror stories, the person telling it isn't giving the full picture. At the end of the day, only they and their creditor know the 100% truth. However, it leads to memes like "don't carry a balance on amex" which is just ridiculous -- amex wouldn't offer revolving products if they didn't want to. I have carried a balance on my BCP many times and lightning never struck me dead. Nothing happened. They didn't care.

Now if you are racking up a huge balance that your income wouldn't demonstrate paying off in a reasonable time, and you are maxing minimum payments, your account may get flagged. But as long as you're paying on time and in decent chunks, it's unlikely carrying a balance by itself will lead to AA. However, when you throw in many people doing weekly new card apps along with carrying big balances, the risk factor increases. If you are floating balances, it's better to "lay low", not seek out a bunch of new credit that makes it appear like this: "wow, they're floating a balance that they cannot pay off, yet they want MORE credit? Seems like desperation!". Remember, creditors don't know our intent or reasoning (i.e. carrying a balance for 0%) they only know what's in front of them: big balances. So big balances, low payments AND additional credit seeking I think is the part of the story many leave out, so it ends up sounding like "amex doesn't like balances" which is just absurd.

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Re: For credit-building purposes, which is better...

Postby 4ktvs » Mon Dec 14, 2015 12:10 pm

Elijahmex wrote:
4ktvs wrote:This just my personal view and I have no idea how they really look at it but:

If I were a creditor viewing a report I would want to see past usage and on time payment of that usage. Even if it was %100 of the limit was used I wouldn't care so long as it ended up not resulting in any late's. In fact I would like to see high usage of the credit with on time payments as it would show I am not exposing my self for nothing or hardly nothing in return.

I think those getting AA max the card out and carry the balance for far to long. My personal view of it is they don't mind if you fully use your limit so long as they get there money in full by the due date. If any creditor ever does have an issue with that I likely won't be doing business with them for long.

I also think income matters, if your only making 15k a year and you run a 4k limit card all the way up VS someone making 50k a year I think the one making more is much more unlikely going to face AA over it if they both have clean reports.


100% can't be good no matter how you look at it. If you are using 100% of your available credit it means your income is too low and you rely too much on credit.


I am sorry but that is a very broad statement to make. Is someone with a $300 limit that makes six figures relying too much on credit when they go shopping for a day and use up the limit?

Or you happen to have a $1k BestBuy card from when you first started building credit and buy a TV with it that happens to go over is also relying too much on credit when they could have pulled out cash to pay for it if they felt like it?



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