Maximizing credit score/cash back

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6 posts
joshdebeaumarchais
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Maximizing credit score/cash back

Postby joshdebeaumarchais » Sun Jan 19, 2014 8:06 am

Hey everyone,

New user here. Sorry if this is a stupid question.

After some time rebuilding my credit with a secured card, I just got a Discover IT card with 1% cash back. When I got my secured card, a guy at the issuer told me that they reported to the credit bureaus once per month a few days before my due date and that it would be best for my credit score to shoot to have some specified percentage of my credit limit as a balance on that date each month (something like 15%-20%) and then to pay off the balance totally on the day it was due.

My current question is as follows:

(1) Does anyone know what time of the month Discover most likely reports my balance to credit bureaus? Will it still most likely be a few days before my due date?

(2) With my new card (which has a credit limit 5 times higher than my old card), what percentage of my credit limit should ideally be my balance when they report? Still somewhere around 15%-20%, or does that percentage decrease as my credit limit increases?

(3) If there is a day that they report to credit bureaus, is there any harm from a credit (or other) perspective of running my balance up a bunch and paying it off multiple times in one month prior to the reporting date, to take advantage of the cash back program? So if Discover reports to the credit bureau each month on the 25th, can i run up my balance a bunch on the 3rd, pay it off on the 5th, run it up on the 12th, pay it off on the 15th, then get it to the target balance rate by the 25th, and then pay it all off time on the due date?

Thanks!


mathman314
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Postby mathman314 » Mon Jan 20, 2014 4:34 pm

(1) I'd imagine Discover would report a few days before, when the statement is calculated or a day or so after. I know that 1fbusa reports a day or two after my statement is calculated. It varies upon bank though.

(2) The recommended is <30%; ideally, if you can help it, go for <10%. The way that that percentage is calculated is the limits of all your cards are added up and the numbers that are reported, they add those numbers up and divide the two and then bam percent. For example, my available credit is 5650 (sum of CLs from all 3 card). If I wanted to keep below 10%: I would have to keep my total expendiature under 565. For under 5%, total expendiature: 282.5.

(3) Nah, I don't think there's any harm in doing that. I do that or do my best to and I've got above 720 scores so there's no harm in doing this.
Cards:
1FBUSA: 5.75k
Discover IT (for students): 4.6k
Chase Freedom (signature): 5k
Target REDcard: 1.5k
AmEx BlueCash Everyday: 5.5k

FICOs:
TU - 785 (December 2015)

samhradh
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Postby samhradh » Mon Jan 20, 2014 6:08 pm

joshdebeaumarchais wrote:(1) Does anyone know what time of the month Discover most likely reports my balance to credit bureaus? Will it still most likely be a few days before my due date?

AFAIK it is after the statement closes. You can ask Discover directly.
joshdebeaumarchais wrote:(2) With my new card (which has a credit limit 5 times higher than my old card), what percentage of my credit limit should ideally be my balance when they report?

If you are going to concern yourself with this, then I recommend 10% or less.
joshdebeaumarchais wrote:(3)Is there any harm from a credit (or other) perspective of running my balance up a bunch and paying it off multiple times in one month prior to the reporting date, to take advantage of the cash back program?

No harm from a credit score perspective. From a personal standpoint, it's a lot of work for very little gain. I have never, ever followed this strategy and my score is just fine. YMMV but I wouldn't allow yourself to stress over this. Doing this IN NO WAY affects your cash back earnings. Your post implies you think it does.

By the way, you mentioned your it gets 1% CB. Just want to make sure you are aware of the 5% rotating CB categories?
Citi Forward ($10.1K), AmEx Blue Cash Everyday ($30K), Chase Freedom ($12.4K), Discover it ($5.5K), Barclaycard Arrival ($12.5K), L.L. Bean Visa ($5K). FICO 806 (TU), 812 (EQ), 806 (EX).

takeshi
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Postby takeshi » Tue Jan 21, 2014 8:51 am

samhradh wrote:By the way, you mentioned your it gets 1% CB. Just want to make sure you are aware of the 5% rotating CB categories?

....and ShopDiscover.

joshdebeaumarchais
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Postby joshdebeaumarchais » Tue Jan 21, 2014 9:56 pm

hey guys, thank you for the information! Very useful.

While I'm at it, having just gotten this card, I was planning to cancel my only other card (a secured credit card from my bank). This would just leave me with one credit card, which, for my purposes, I'm fine with. Would it be a good idea, though, to have more than one credit card? (For what it's worth, my credit score is barely north of 720). If it would be a good idea, any thoughts as to how long I should wait to apply?

daniel2304
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Postby daniel2304 » Wed Jan 22, 2014 11:31 am

......and just do not merely redeem it by direct deposit/ statement credit/ check etc. Check partners' gift cards!
All my posts are my opinions. All my posts mentioned "you" are merely for discussion-purpose only. No advice is given in any post at any time. It is also impossible for me to put effort to verify every statement that anyone has given.



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