Paying Down, Keeping Util Low - Negatives?

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MR.SVT
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Paying Down, Keeping Util Low - Negatives?

Postby MR.SVT » Mon Mar 24, 2014 11:50 am

So I was recently approved for a DiscoverIT card and because of the 5% cash back at restaurants and movies this quarter, I've been using it....a lot :money: :D

A few weeks ago my balance was above where I'd like it to be so I quickly made a payment because Im trying to keep all my ratios under 10% for optimal scores. I am soon approaching that area again and have contemplated making another payment to drop the balance but wanted to get some insight here first. I should say the main reason I'm doing this is because I am afraid its going to hurt my score.

Basically, are there any drawbacks to doing this (does it look bad etc.)? Or should I just let the balance pile up and pay it off all at once? I do pay in full every month and never carry a balance.


[infomercial voice]
But wait, theres more!

Someone on here told me that the lenders may see this as a positive thing, recognizing that I am trying to keep my ratios low, and therefore be more inclined to raise my CL due to the fact I keep paying down my balance to avoid higher ratios. Is this true?


haikuginger
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Postby haikuginger » Mon Mar 24, 2014 12:53 pm

It shouldn't be an issue. Credit issuers don't see what your balance is between statements; they only see what it is when the statement cuts.

MemberSince99
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Postby MemberSince99 » Mon Mar 24, 2014 4:36 pm

I'm trying to think of a negative to low utilization, and as far as you or I go, there isn't one. Some lenders might prefer to see higher utilization that we pay interest on (but not too much or that freaks them out too) but that's not our problem.


So no I can't see a negative from it.

takeshi
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Postby takeshi » Tue Mar 25, 2014 8:48 am

The only drawbacks are if the creditor limits the number of payments that you can make and the associated hassle with micromanaging utilization.

Utilization is just balance(s)/available credit. Number of payments isn't factored in.

MR.SVT wrote:Or should I just let the balance pile up and pay it off all at once?

Your call. You just need to ensure that the payment hits in time to make it before your balance reports.

I don't bother with this at all but my spend and limits should put me at about 10% anyway with recent CLI's. I probably wouldn't bother with it unless not paying would put me at 30% or more and/or I was apping for something. Utilization isn't cumulative so you can optimize right before applying.

MR.SVT wrote:Someone on here told me that the lenders may see this as a positive thing, recognizing that I am trying to keep my ratios low, and therefore be more inclined to raise my CL due to the fact I keep paying down my balance to avoid higher ratios. Is this true?

It's really impossible to say. Usage certainly plays a role but whether or not there is a significant impact is hard to say given the number of other factors at play and how each person's credit varies.

MR.SVT
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Postby MR.SVT » Thu Mar 27, 2014 10:19 pm

Awesome, thanks for all the insight guys - much appreciated! Just checked my FICO and I'm at 752...not bad with only 8mo history. Next up, 800+ ;)



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