managing credit limits--specific question re: usage.

[catlfuzzy]

Having built up from 500 fico to almost 800, I understood the value of keeping credit cards under a certain % of credit limit...and paying religiously and on time. But have a question.

If credit card is used close to maximum amount; but paid DOWN before statment closing date; will that still report to credit bureau as charging too close to maximum allowed. I would pay down the balance before bill due, and even pay a second time during the cycle.

So, if card utilized to its limit but paid down before due, will that still be a detriment to credit restoration?

Thank you!

[justbroke]

I use this same method. I have one card that I use for travel expenses (work) and charge as much as $6K a month. I pay it all on the due date and it consistently reports with the correct balance (with the $6K paid back). Your usage during the month has no impact on utilization unless you allow it to report the higher balance. Be aware that there are a few creditors that report on a different date than the billing date! There are some creditors that report on the last day of the month regardless of the billing date. I had this happen with one account and I can't remember which one it was, but I don't have that account anymore (for that reason).

So, no... there is no detriment in using the credit during the billing period and paying it back down before the card usage is reported.

[catlfuzzy]

Good to know for sure. Thank you.

I use this same method. I have one card that I use for travel expenses (work) and charge as much as $6K a month. I pay it all on the due date and it consistently reports with the correct balance (with the $6K paid back). Your usage during the month has no impact on utilization unless you allow it to report the higher balance. Be aware that there are a few creditors that report on a different date than the billing date! There are some creditors that report on the last day of the month regardless of the billing date. I had this happen with one account and I can't remember which one it was, but I don't have that account anymore (for that reason).

So, no... there is no detriment in using the credit during the billing period and paying it back down before the card usage is reported.

[Logan]

I wouldn't worry about credit utilization unless I was getting a mortgage if I were in your shoes. With an 800 FICO having a high utilization won't hurt enough to matter.

[justbroke]

Utilization hurts high FICO scorers more than the lower FICO scorers. The reason the poster's credit score is in the 800s, is probably because they do, in fact, keep the utilization low. There are some scoring models (and I'm not sure if FICO is one of them) that actually look back 6 months for utilization. I think it was a BEACON score that I received that had a comment that my 6 month utilization was "high" (and by high they meant over 30%).

[catlfuzzy]

I wouldn't worry about credit utilization unless I was getting a mortgage if I were in your shoes. With an 800 FICO having a high utilization won't hurt enough to matter.

Oh my gosh, I surely don't have 800 fico anymore..(actually was 780 at one point, not 800); I was saying I was able to get it up high by not maxing out cards; paying faithfully, etc. Now I just filed bankruptcy...........have no clue what it is yet. But it ain't good, trust.

[justbroke]

If you just filed, then the last thing you should be worried about is your credit score. To that extent, I agree with Logan. Just keep paying on time, keep your chin up, and don't rely heavily on credit over the next 2-4 years. If you do so, you will be rewarded with a good score.

[Logan]

Utilization hurts high FICO scorers more than the lower FICO scorers. The reason the poster's credit score is in the 800s, is probably because they do, in fact, keep the utilization low. There are some scoring models (and I'm not sure if FICO is one of them) that actually look back 6 months for utilization. I think it was a BEACON score that I received that had a comment that my 6 month utilization was "high" (and by high they meant over 30%).

But all you have to do is pay the cards off and your score rises rapidly. Who really cares if your FICO is 720 or 800? I know I don't.
Logan

[TBA]

I tried arguing that same point logan. That we cannot live by our credit score - that we must live our lives (i wont walk into a store a think, omg, can i charge this, will i be over 30% or will i be able to get my payment there by before the due date to make sure it reports on my credit report...). but it wasnt greeted the way i might think (it is why i stayed out of this conversation )

I think in the end we are all out for the same thing, people just have different ways of getting there.

Justbroke, you mentioned that 6 month check back in another thread as well, but i have not seen any models that do this. Can you provide examples? I know fico does not - at least not in your standard fico model (beacon5.0 or the newest one, Empirica etc etc (those "typically" used by lenders)). There may be a model built for a specific cu or cc company by the bureau to output something like this, but i cannot find any examples. You have my curiosity peeked.

[Logan]

Utilization hurts high FICO scorers more than the lower FICO scorers. The reason the poster's credit score is in the 800s, is probably because they do, in fact, keep the utilization low. There are some scoring models (and I'm not sure if FICO is one of them) that actually look back 6 months for utilization. I think it was a BEACON score that I received that had a comment that my 6 month utilization was "high" (and by high they meant over 30%).

Back when I was in the mortgage business if a client needed to get their score up and utilization was high I would get them to make a payment and we would send in proof to the company that pulled the report. I remember the scores improving immediately. It's very possible their scores were still harmed because of a 6 month look back but I remember 20 point improvements. Also, these clients had decent scores, we just wanted to get them a bit higher to save a bit on interest in the next tier.
Logan

[justbroke]

Justbroke, you mentioned that 6 month check back in another thread as well, but i have not seen any models that do this. Can you provide examples? I know fico does not - at least not in your standard fico model (beacon5.0 or the newest one, Empirica etc etc (those "typically" used by lenders)). There may be a model built for a specific cu or cc company by the bureau to output something like this, but i cannot find any examples. You have my curiosity peeked.

I think it was for a credit union. If I can find the paperwork, I'll try to see if the scoring system was noted. I have only seen this "reason" for my score listed once.

Like everyone else, I'm not advocating trying to chase a score at all. I think we are just all in agreement that paying on time and paying down balances, is the best thing to do regardless of any score goals.

[HHM]

Here the thing, credit score is a moving target. If you are attempting this level of micro management of your credit score, then you should probably step back and assess your life priorities.

If you let the utilization slip one month, it is easy to fix the next, as Logan points out. There really is very little an individual can do to "increase" their score on a day to day, week to week, and even month to month. Your score is not a static number, the score is only relative to the point in time in which it is run. However, you can certainly do things to wreck credit in that time frame. So, people buy into the fallacy that if you simply do the opposite of things that would harm your credit, you can pro-actively increase it...unfortunately, it doesn't work that way. If you live your life, your credit generally takes care of itself.

Finally, there are no bonus points for having a credit score over 800. Once you are 740 and above, you are tier one credit, there are no additional perks to being higher than 800. Having an 800+ score is more about credit longevity than any other factor. Everyone I have encountered and spoke with who is 800+ has had relatively unblemished credit for decades and a variety of credit (multiple credit cards, car loan, and mortgage). The irony is, those with 800+ scores are most at risk in an economic down turn, they have a mortage, they have car loans, they "use" credit cards, so when the music stops and they lose their job, these are the people filing bankruptcy.

[justbroke]

I resemble that remark HHM. Hence I just like to pay down my debts. I did buy a new vehicle, but intend to be debt free, once again, in February 2015. I have sufficient credit resources and aside from wanting to buy a home sometime in the future, I have no real need to chase a score. I will be happy just paying down my debts and paying on time.

[TBA]

I also resemble that remark! LOL Unfortunately we were "given" way too much credit during the boom, and somehow convinced a bank to give us almost $2mil for a business loan. When the economy took a nose dive, so did our disposable income industry business, we did what we could, but in the end, we were exactly what HHM is describing.

As for your rescore product logan, i have mentioned that i worked for two of the big three, and that is what i did - i sold into banks and brokers and cus - i had a lot of experience with "fixing scores" (borrowers who had good payment history but just didnt have the utilization right to provide a good score for the product they wanted...) and we would even see jumps of up to 100 points, depending on other parts of the file. Maybe that is why we have the same mentality about scores

And i am going to reach out to some of my old coworkers and see if they know about this lookback. I am seriously curious about it.

[justbroke]

And i am going to reach out to some of my old coworkers and see if they know about this lookback. I am seriously curious about it.

If you can, that would be cool. The scoring itself looks back generally when it comes to payment history and credit mix. I shredded a bunch of stuff but if I can find that scoring letter, I'll let you know. I was actually approved, for the car loan, but it was weird that it had a comment about utilization in the last 6 months. It may have been the Enhanced Auto Score model instead of Beacon, now that I think about it.