When's the best time to pay credit card bill? (for your score)

Discuss the Visa & MasterCard payment networks as well as cards that operate through them.
Crashem
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Postby Crashem » Thu Mar 22, 2012 11:19 pm

I see a lot of bad info in this thread.

Here is the deal:

1) Utilization makes up 30% of your FICO score. It is one of the few ways to move your credit score in the short term. Your score can move a lot from this. Remember, utilization is made up of both total utilization and utilization per card. Your ideal situation is basically 0 balance on all cards but 1 card. That one card should be under 10% and your total utilization below 10%. Funny thing is 0 balance across the board usually lowers your score a little compared with keeping a small balance on one card.

I see the biggest utilization jumps at below 10%, below 30%, below 50%, below 80%.

So how do you take advantage of this?

1) Yes getting your CL increased will obviously help your utilization. BUT, depending on your credit card company, it may mean a hard inquiry which would hurt your score temporarily. You should check with your credit card company what they will do, soft or hard inquiry before applying for CLI

2) As for the original question, here is my opinion on it. There is no reason to pay your balance earlier than needed to get the credit score bump UNLESS you are going to have a credit event. What I mean by credit event is that you are going to apply for credit somewhere. In that case, you should get your score as high as possible before applying for any credit. This takes good planning on your part. Your first job should be to find out on each card when they report to the bureaus and pay a couple of days before this. Then you have this info for the future so you can take advantage of the utilization score bump when necessary. Also it will require you to show some discipline and refuse to take the random credit offers.
Amex Centurion, Amex Platinum, Amex BCP 8k->24k (5/23/12), Amex TE 15k, Cap One 1.5% 15k->20k (8/7/13), CSP 25k, Chase Palladium 100k, Citibank AA 35k (AU), Firestone 1.8k->2.2k->2.4k (8/20/12), JFCU Jloc 30k, PenFed Plat Rewards 30k, SF Fire 30k, US Bank Cash+ 25k


Celestine
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Postby Celestine » Sat Mar 24, 2012 1:08 pm

I just hate it when people respond to posts without reading and understanding the whole response. Whenever they read statements on the response that they know incorrect, they stop reading the whole posted response.

Not intended for @Crashem but for the others :D
"Nearly all men can handle adversity, but if you really want to test a man's character - give him power." - Abraham Lincoln

BCF
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Postby BCF » Tue Apr 10, 2012 12:10 am

Just wanted to confirm Crashem.

I always pay my balance before closing date except on one of my cards. It is not only the utilization, but also the number of accounts with a balance that has a negative impact on your score!
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FutureBillionaire
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Postby FutureBillionaire » Wed Apr 11, 2012 4:06 pm

BCF is correct with his/her statements. Pay before the statement closes so the creditor reports 0 or little balance on your card to maintain a tip top score. Also, creditors will give you more credit if you use it in that manner.
Gas: Discover It, Penfed Platinum Rewards x2, Chase freedom, Citi TYP
Plane tickets: CSP
Groceries: AMEX BCP, Penfed Platinum Rewards,Citi TYP
Clothes: Express, Amex BCP, Discover IT
Amazon: Citi Forward, Cash +
Restaurants: Citi Forward, Chase Freedom, Discover IT, CSP
Hotels and other travel: Discover Escape, CSP
Movies: BofA travel rewards visa signature(fandango), Discover IT, Citi Forward, Freedom
Bars, clubs, tomfoolery: CSP, Citi Forward, Discover IT, Freedom
Balance transfers: Kroger 123 rewards
Bill Pay: Chase Ink Plus, Citi Forward
Everyday spending: Bofa Accelerated cash rewards amex, Discover Escape

FutureBillionaire
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Postby FutureBillionaire » Wed Apr 11, 2012 4:07 pm

This is an excellent post Crashem. You are definitely on point here.
Gas: Discover It, Penfed Platinum Rewards x2, Chase freedom, Citi TYP
Plane tickets: CSP
Groceries: AMEX BCP, Penfed Platinum Rewards,Citi TYP
Clothes: Express, Amex BCP, Discover IT
Amazon: Citi Forward, Cash +
Restaurants: Citi Forward, Chase Freedom, Discover IT, CSP
Hotels and other travel: Discover Escape, CSP
Movies: BofA travel rewards visa signature(fandango), Discover IT, Citi Forward, Freedom
Bars, clubs, tomfoolery: CSP, Citi Forward, Discover IT, Freedom
Balance transfers: Kroger 123 rewards
Bill Pay: Chase Ink Plus, Citi Forward
Everyday spending: Bofa Accelerated cash rewards amex, Discover Escape

Maximilian
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Postby Maximilian » Wed Apr 11, 2012 5:38 pm

Crashem wrote:I see a lot of bad info in this thread.
Funny thing is 0 balance across the board usually lowers your score a little compared with keeping a small balance on one card.


Very insightful information. I personally choose to pay off my entire balance before the closing of cycle. Reading the above statement, how certain are you that in fact 'I'd better off carrying a small balance'?

The reason I'm asking is that I've been maintaining a zero balance with the hopes that it would have a better reflection on my credit report/score. Reading this makes me wonder.

Is it based on your personal experience? I really would be interested to find out more.

Regards,
Maximilian

PS: While we are on the topic, can anyone shade a light on how American Express balance (charge card) would reflect on credit report? If I were to utilize say $40K and not pay the balance 'before' the closing of cycle, would it be considered as $40K utilization? Reason I'm asking is because combined I have a CL of $25K across my other three credit cards and I'm curious to find out more. Would it have a negative impact on credit score in this scenario?

Crashem
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Postby Crashem » Wed Apr 11, 2012 11:42 pm

Maxmillian,

It is confirmed that the highest FICO score if you have multiple credit cards that you report 0 balance on all cards but 1. That one card with balance should be between 1%-9% of both the card and total utilization. Depending your FICO scorecard and other factors, the percentage changes where you maximize your FICO score. You'll have to play around with it to see what it does for you. Remember this is just on what is reported to CRAs and that depends on the credit issuer (some report on certain day, some report at statement day, some on due date). You need to determine when your cards report to really control this and definitely pick a card to keep a small balance on that reports on statement date so you don't pay any interest to get that FICO bump (remember has to be at least 1%)

Also, while utilization is super important, there is really no reason to manage it unless you just like seeing a high score or expect a credit event. For things like CLI, sometimes overmanaging your utilization hurts you as banks also take into account your bank scorecard (sucker score), which measures how profitable you are to the bank (ie paying interest and spending) and look at your previous history in handling credit (which if you manage utilization will show you never charge anything).

As for your AMEX question, here is the deal. AMEX reports on statement date (which changes every month). So if you pay before statement date in time to register (2-3 days) and charge nothing, it will report $0 to credit bureau. Now here is the complicated part. Most modern FICO scoring models do not take charge cards (Terms show as 1 month. ie PIF required every month) into account with regards to your utilization. So you should be able to charge away on your AMEX plat,gold,green,black,etc. However some older FICO scores (TU98 comes to mind) do seem to take it into account. In that case, they compare the current reported balance and use the highest reported balance (forget if 12 or 18 or 24 months) as the credit limit. It is a good idea assuming no credit event that month, to charge everything that month to the AMEX charge card and let it report a high balance to help you in the future.

I can tell you when I was applying for a credit card and asked for high limit from credit union. The guy specifically quoted my AMEX 40k balance showing that I could handle high balances easily. Not sure how the automated CLI systems do it, but definitely under manual review, reported balances help. Go pull your raw credit report sometime. It shows details on your monthly payments such as amount owed/minimum payment due/amount paid. FICO doesn't take that stuff into account, but other scorecards might
Amex Centurion, Amex Platinum, Amex BCP 8k->24k (5/23/12), Amex TE 15k, Cap One 1.5% 15k->20k (8/7/13), CSP 25k, Chase Palladium 100k, Citibank AA 35k (AU), Firestone 1.8k->2.2k->2.4k (8/20/12), JFCU Jloc 30k, PenFed Plat Rewards 30k, SF Fire 30k, US Bank Cash+ 25k

FutureBillionaire
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Postby FutureBillionaire » Thu Apr 12, 2012 1:30 pm

Most of my creditors report the statement balance. However, my credit union balance that was reported was different than my statement balance. It seems I was wrong regarding the bureaus always reporting the statement balance.

One other helpful note: if you have a card like a Visa Signature that doesn't report a credit limit, your utilization can be negatively impacted if you carry a balance. I would recommend not carrying a balance on those types of cards.

Regarding the American Express Charge card, I haven't noticed if it impacts my utilization or not. I will carry a balance on it to see what happens to my score.
Gas: Discover It, Penfed Platinum Rewards x2, Chase freedom, Citi TYP
Plane tickets: CSP
Groceries: AMEX BCP, Penfed Platinum Rewards,Citi TYP
Clothes: Express, Amex BCP, Discover IT
Amazon: Citi Forward, Cash +
Restaurants: Citi Forward, Chase Freedom, Discover IT, CSP
Hotels and other travel: Discover Escape, CSP
Movies: BofA travel rewards visa signature(fandango), Discover IT, Citi Forward, Freedom
Bars, clubs, tomfoolery: CSP, Citi Forward, Discover IT, Freedom
Balance transfers: Kroger 123 rewards
Bill Pay: Chase Ink Plus, Citi Forward
Everyday spending: Bofa Accelerated cash rewards amex, Discover Escape

Crashem
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Postby Crashem » Thu Apr 12, 2012 4:18 pm

Future,

The AMEX charge card shouldn't affect your score unless it is an old one. For example, if you go to myfico and pull your TU score, it will take your AMEX charge card into account as it uses TU98. Basically you don't need to worry about AMEX charge card as hardly anyone uses FICO scores that old.
Amex Centurion, Amex Platinum, Amex BCP 8k->24k (5/23/12), Amex TE 15k, Cap One 1.5% 15k->20k (8/7/13), CSP 25k, Chase Palladium 100k, Citibank AA 35k (AU), Firestone 1.8k->2.2k->2.4k (8/20/12), JFCU Jloc 30k, PenFed Plat Rewards 30k, SF Fire 30k, US Bank Cash+ 25k

PopiLopi
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Postby PopiLopi » Sun Apr 15, 2012 6:35 pm

I've noticed that both Amex and Discover report on the statement closing date. My amex cycle closed about 3 days ago and it's already showing the balance on credit karma
Amex: Business Platinum (09/12) BCP $10,500 (03/13)
Visa: Capital One Journey $750 (04/11) Chase Freedom $1,800 (04/12)
MasterCard Citi AAdvantage Platinum Select $8,500 (05/13)
Discover: Discover It $2500 (07/11)
Store Cards: Amazon $3900 (12/11) Macy's $500 (04/11) Kohl's $500 (05/12) Victoria's Secret $750 (11/12)



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