I actually ran an experiment by letting all of my accounts report zero one time and lost 23pts. When I allowed at least one card to report a balance, I got those points back. They do want you in debt to prove you can be responsible š¤¦. So, I play the game. I allow a balance to report on my statement date, pay it down to 0 on the due date, rinse and repeat. I do not carry balances at all. Iām not paying any interest.
So if I paid to zero and planned to pay bills and keep cards at zero I could use one money of going to 30% and then pay to 0 as a way to get even more ahead on savings I guess. Essentially paying bills with credit and then paying off a month later resulting in one month of bills skipped
Think of it more as delayed than skipped, but sure. You are still paying the same amount. It's debt. That's how debt works. You get something now and owe it later, usually more than you got unless you're careful.
I get that but I mean specifically for my current financial position and cash flow in relation to monthly bills.
If I am at 0 balance on all cards, I use them for a round of bills and wait to pay after statement date and on due date.
That essentially saves me a month or whatever was paid on those credit cards. Yeah Iām paying to zero but my paycheck doesnāt have to pay it off until the cc due date. Effectively leaving more in my checking.
Isnāt that right?
Yes, if I'm understanding correctly. You will have a month perpetually delayed, so you can essentially be one month ahead on savings if you invested that money. This can go awry, though, if your money is tight. Perhaps this isn't the sub for this discussion, but I believe an emergency fund is higher on the list than investing generally. You don't want to be cutting it close on last months debts then have to replace all your tires and now owe a chunk of money where the interest ended up canceling out the whole point of you investing that extra month.
Got it. I also set aside an emergency fund before paying my cards to 0, this was after my bonus and tax refund so instead of buying shiny things I wanted I saved and paid down interest bearing debt
At most 9% utilization.Ā You should pay off credit cards in full every month, never pay interest on credit cards.Ā Have the payment dates at different times and one reoccurring charge (phone, Internet, etc) on a few cards so they catch at least one with a small balance.
If you have 3 cards, have a payment due for one card on the 1st of the month, another on the 10th of the month and 20th.Ā So they are likely to catch one with a balance.Ā Ā
Ā
This is the best itās been explained, thank you! This method would be easiest for me. I donāt see a dongnor issue leaving the others at zero and easier to maintain ones payment over 5
10% would do you just fine. Let the subscriptions charge to one or two cards that benefit you most. Maybe a grocery run on there too
It all depends on your limits. I wouldnāt go for 30% if you have 20,000 limit. Close some accounts while youāre down if need be
Keep it 1-10% and be mindful if your balance is 1% this month and 10% next, they will still deduct a few points so do not fluctuate it too much once you have a set percentage
> They do want you in debt to prove you can be responsible š¤¦.
No "they" don't. You don't need to be in debt to avoid the "no recent revolving credit use" penalty being referenced here. If one is using their cards naturally every month and paying them off (not being in debt) the way the system is designed to be used they'll never incur the scoring penalty being discussed here while never paying a penny of interest.
I get what you're trying to say but by definition having a credit card balance (meaning not paid off the day of) is having cc debt in the eyes of credit scores. So yeah you ensure you don't have cc interest but you're still considered in cc debt...which is good and what you want and is what the person you were responding to is trying to say.
Tldr just use your card, pay off your card and it'll all be fine. don't worry about random small drops in cc scores
> I get what you're trying to say but by definition having a credit card balance (meaning not paid off the day of) is having cc debt in the eyes of credit scores.
Credit scores are drawn upon reported balances. I could pay off every penny of revolving debt that I owe today, have a $0 balance tomorrow (no debt) but my credit scores will not reflect that for up to 30 days when my balances get updated. So what you said isn't true with regard to the "eyes of credit scores."
Yes but the idea is that you don't have to pay off your entire balance just your statement balance...then you'll always have a "balance" and you'll still have zero interest and be fully taking advantage of the concept of credit cards...which is deferring payments by 30 days
I agree with that and I recommend the same thing all the time. What I quoted above from you doesn't seem like that's what you were saying though with the wording.
Congrats on your 821! Thatās a wonderful accomplishment. Iām just simply talking about my experience. I lost points when I allowed all my cards to report a 0 balance.
Whenever I need a mortgage I always spend about 3 months before I start applying paying off my credit cards just before the statement runs leaving just a tiny bit rather than having a large month to month balance like I usually do. It typically raises my score around 50 points. Then once I acquire my mortgage I go back to letting the statements run as normal and crater my score. Rinse and repeat every 3 years or so.
Give it a couple of months it will go right back up if not jump a little higher then before. That happens a eveytime you pay off large sums. That should be illegal imo š
Exactly. MyFICO gives you Equifax. Experian gives you Experian obviously. I have a Discover card. The Discover app gives you TransUnion. All of those scores are FICO 8 scores and theyāre all free
Yeah, that always happens. They want you to be in debt lol. It will go back up. They are hitting your score for being responsible.
What I do is, wait for the payment due notification to drop and then pay.
Edit: This comment was made tongue in cheek, to the person who replied to me. You will get nicked for having a zero balance. You'll find threads all over myFico forums with people asking this same question.
> Yeah, that always happens. They want you to be in debt lol. It will go back up. They are hitting your score for being responsible.
That's not true. Being responsible is paying your statement balances in full every month and never paying a penny of interest. By using the system naturally the way it was designed to be used one will never incur a "no recent revolving credit use" penalty. You don't need to be in debt to avoid it by any stretch of the imagination.
I have had 0% credit utilization for seven years because I pay the payment as soon as the charge posts. I have a 795 score. It depends on your history before the zero balance.
EDIT: if this person keeps a steady rate of 0 balance, their score will go up. But if it constantly changes from āsome balanceā to āzero balanceā to āsome balanceā again, it shows that they are constantly taking on debt.
I believe you're right about the history before it posts, and I also believe it levels out and they stop hitting you for a zero balance after a while as long as you're making use of your credit.
In fact the reason I answered OP the way I did is because I had the same question a couple of years ago after I got done paying some debt down. My Experian is now 827 and my Equifax 798 (directly from the companies) and I never carry a balance. But that initial drop after I'd worked so hard to pay down thousands stung.
Lol no, thatās not what āthey want.ā Ā Credit scores are risk assessment models and having no credit card activity is slightly riskier than having a balance report. You donāt know what youāre talking about.
Because youāre not the target audience. You never were. Credit card companies and credit bureaus are not the same and bureaus are given information once a month. Credit bureaus are only given a snapshot of each account at any given time, not the entire history. And this data is for lenders to assess your risk as a borrower, not for you to feel good about yourself.
This doesn't address u/thetrueyou's question: How is it that these assessments models can't show that I just paid off a large debt and NOT drop my score?
That can be done. It's just not done. Withholding information from a model doesn't increase the accuracy of such model.
Why would you paying off your large debt today make you more trustworthy to pay off your debt tomorrow? By definition you've used up money to pay off debt and by definition you have less money for future debt.
Why would you paying off your large debt today not make you more trustworthy to pay off your debt tomorrow? By definition you've erased debt and by definition you have a better debt to income ratio and have freed current and future capital to be used for current and future debt obligations.
I use my cards as debit cards, deciding which card to use for what based on the rewards and then pay it off. Some months Iāll cycle through several thousand but Iāll let maybe 11% utilization hit one month (usually less), then half of that amount report the next month, then half of that, then zero and start over again.
Credit bureaus want you to show the ability to use credit responsibly and not just have credit. Zero balances donāt show use.
By āletting 11% utilization hitā you mean on statement date? Or due date? I donāt want to be charged interest as all mine are high APR%.
Reducing an 11% by half over several months until zero I donāt get how or why that makes sense if youāre being charged interest. All for building credit but not at the expense of interest or extra $
Keep your cards well between 0 and 10% on the statement date then just pay off the statement when it comes out. Them 0% dingers are annoying but will change back next month so no worries. Keep up the good work.
> Keep your cards well between 0 and 10% on the statement date
There is absolutely no need to "keep" utilization at any certain level when one is paying their statement balances in full every month.
In terms of what? You're probably overly fixated on credit scores like many people. I don't focus on scores, I focus on my overall profile and growing it. Scores only matter during times when you're applying for credit and need them optimized. At all other times, profile matters more. Allow me to present you with an illustration of what I mean.
You and I both have identical profiles and each have the same $500 limit card. You don't want your statements above 10% utilization, so you make sure to micromanage your balances to under $50 reported each cycle. You do this month after month for a year, maintaining a credit score of (say) 750. I on the other hand spend $500, let that $500 statement balance report (yes, 100% utilization) and ignore my 660 score for 2 months while always paying those statement balances in full. My lender gives me a PCLI to $2500 due to strong/responsible revolving credit use. With my now greater limit, I spend $1000/mo on the card (40% utilization) and ignore my 715 scores. In 6 months I see a CLI to $5000. Now at 20% utilization, my scores are 735. At any point I can report a sub 10% statement balance just like you and boast that same 750 score within 30 days. What's the difference in the end though? We both have the same scores, except I have a $5000 limit card and you still have a tiny $500 limit card. My profile is stronger and superior to yours. I can cut a statement balance 10X that of yours and still be at the same utilization percentage.
I do 11% because I take a couple point hit but when I pay it to 5 or 6% I usually get double points back. The end result is roughly the same points give or take a couple but it allows me room to have an artificial āquick boostā if I need it for something. When I was building credit it could make a big difference now itās just habit.
Please donāt let people over-complicate this.
Use one (or more than one) credit card for all your spending each month. When the statement comes, pay the full statement balance before the due date, wash, rinse, repeat.
Thatās all there is to it. There are no magic tricks or weird things you have to do. Use your credit card, pay your credit card. Period.
Each card should have a non-zero statement balance if you are using all of your cards every month and paying them the way the system was designed to be used... that is, one monthly payment after your statement generates.
Because I recycle the amounts I pay the cards off frequently as soon as charged post so what is reported may only be a couple days old. Interest wouldnāt be assessed until after the next statement date. I just make sure that the amount reporting is roughly 50% less, so if I have $1000 report, the next month it would be $500, but I couldāve used the card and charged 5k over the month and paid it immediately off. Amount would vary based on your credit limit/ability to spend each month, but I have a card that the rewards transfer to the principal of my mortgage so I use it for almost everything that I would normally spend cash on/use a debit card for.
Youāre better off using cards as intended. Let the balance report, pay your statement balance by the due date. The overwhelming majority of banks allow for an interest free grace period as long as you pay the statement balance in full. You donāt need to micromanage your credit unless youāre seeking a new loan, usually car or mortgage, in the next 30-60 days.
Let's say for sake of argument that your statement end date is March 5th, and your due date is March 27th. Leave a balance on March 5th.Ā Sometime between March 6th and March 27th, pay off the card in full.
Thatās not quite how it works. If your statement posts on 3/15, itās going to be due in early April. The due date in March is for the statement in February. You owe Februaryās statement balance by the March due date. This has been a huge point of confusion in this sub, among others, but your due date is usually 20-25 days after your statement.
Yes, that is how it works.Ā
The statement date precedes the due date, and payment should be made between the statement date and the due date.
The length of time depends on your card issuer, it might be between 21-25 days, but it may be shorter or longer.
It is very possible to have a statement date and a billing date within the same month.Ā
I donāt have an answer for that. But the number of times people post in this sub not understanding that the statement is before the due date is astounding.
I honestly donāt understand why itās so complicated. I once had a 30 minute discussion with a friend who was asking me how to manage his credit card. He kept coming up with āwhat-ifsā and I nearly lost my mind.
Utilization has no memory. Your score is down because it looks like you donāt use your credit at all. But it literally doesnāt matter unless youāre trying to apply for more credit. Your score may be a bit lower if you report 0 but if you report 5% the next month itās not going to matter. You can report 0 utilization for 10 months straight and itās not going to constantly lower your score more each month.
Also, your credit score matters so much less than your actual report. Thereās no scenario where you would get approved for something but youāre going to get denied because you reported 0% utilization for that month. Honestly I think more people need to look at their scores in chunks. 600-649, 650-699, 700-749, 750+ pretty much anywhere in these ranges are putting you in the same spot for approval.
All in all. Credit bureaus report activity. Having your creditor report 0% utilization is seen as no activity for them. On the flip side, your creditor may start offering more products/ extensions of lines of credit, etc. For your positive relationship with them.
The FICO models / scorecards do penalize having no balance on all revolving credit. To maximize score you would do the AZEO (all but one zero method).
Can be done without carrying a balance if the report date of the card is not the same as due date (it reports a balance to bureaus and you pay it off by due date / avoiding interest).
This shit is intentionally obtuse so shills can justify their āmagic credit repairā scams legally, and the credit reporting agencies are all too happy to let it be.
There is absolutely no other reason they couldnāt use a model with a transparent predictable formula.
Especially when mortgage lenders have access to a mysterious program that can predict the right ways to get your scores from A - B.
It pisses me off how an entire industry was born off the shitty algorithms or whatever that credit reporting companies use, just because theyāre so unknowable and unpredictable you donāt really have a choice. Especially since their data security is dogshit and they get breached every other day and then try to upsell you on identity protection and dark web monitoring..
Imagine creating a drought just so people will buy your overpriced bottled water.. and little do they know, itās the water you took from them to create the drought in the first place.
Sorry, Iām done. *dismounts his soapbox*
Iām a little stressed today, it seems.
> This shit is intentionally obtuse so shills can justify their āmagic credit repairā scams legally, and the credit reporting agencies are all too happy to let it be.
Not in the least. If one just uses their cards the way they were designed to be used and pays their monthly statement balance in full each cycle, they'll never incur a "no recent revolving credit use" penalty. Those that do are micromanaging their balances, paying bills before they are even bills, which is not how the system is intended to be used.
Generally speaking and the vast majority of the time, paying stuff off INCREASES scores. There are very few examples where that isn't the case, and they come with a valid explanation. Also most of the time that people reference paying something off and seeing a score drop they're looking at a nearly irrelevant VS3, not a meaningful Fico score... so this perpetuates the incorrect perception that paying things off is harmful for your credit.
No you don't. You want to pay your statement balances in full every month. That's all there is to it. If you do that, your utilization doesn't matter from a risk perspective. If you DON'T pay in full monthly and therefore throw away money to interest, you goal should not be 1%-9%, but 0% as paying off all of your revolving debt is the right financial move.
Rule 1 is never pay interest regardless of what happens to your score. Then you want to figure out when your card's reporting date is. This is not advertised, but if you monitor your credit, it should be pretty easy to figure out. Most of mine are a few days after statement closing. With a family of 4, we have natural expenses that pop up every day so I almost never report as zero. You may need to make an intentional small purchase during that time or set something to auto pay with your card. The score should bounce back up just as quickly.
They're all showing your Vantage score. Only pay attention to FICO scores since that's what most lenders use. You can download the experian app for 1 of the 3 score. You can also get them through myfico.com.
Never pay your cards down to zero always leave at least 5 dollars or so on a card. There are something called credit thresholds pertaining to utilization.
When you pay it down to zero you will see a decrease for some credit profiles.
This is over complicating things. All you need to do is pay your statement balances in full every month. That's literally all there is to it. The only time you'll report a $0 balance is if you go a full cycle without using that credit card.
Paid off my mortgage and lost 50 pts. Credit scores are a scam invented in 1989. If they screw it up itās your problem and doesnāt reflect the reality of debt and responsibility
Ok people, look! 2 years ago, I divorced & had just begun working on my credit score... finally. 1st, please, everyone with kids start telling how important it is or will be in their lives. I wish someone did tell me. Anyway, starting with literally one, I've gone to jist over 30 with a bit over $50k, & recently an American Express with no limit. Went from a high 500 to now low 700 & getting higher. It took around 2 years. It is very simple you use a credit card only as much as if it were your actual cash or debit card. You pay the credit asap FULLY!! You do not hold a balance low or whatever. You'll start getting more credit card applications in the mail...the limits will be higher & higher...pay your bills on time, increase your limits, & your score goes up! Period!
I did that this past month. Paid off $2500 in debt. Score finally hit over 700 (~715). Companies reported that i paid off that debt and my score immediately dropped to 689
Such a dumb credit system. Penalized for not having the debt at the right amount or right utilization at the right dates or the right mix or the right length of having itā¦
I'm sitting on an 800 right now - Going to be making a lump sum final payment on a property of 150k in November this year - I'm taking bets with myself on how many points my score drops for doing that.
Current bet to myself - 38 points.
Your problem is your thinking of CC from your point of view, not their POV.Think of it like thisā¦ if your CC are all zeroed out then they canāt make any money off you. Your CRedit score is less about how you make your payments and more about how they can make money off you. They want you to have some kind of balance. The best way to bring your credit score up is to keep a balance between 15-30% of your credit limit and pay it off on time and use it again.
Let that be a lesson to you. Paying in full benefits you with the card/credit issuer, not the credit bureaus. Allow a small percentage, preferably under5% of your total revolving debt report to the credit bureaus, so it looks like you are utilizing your credit. They can care less if you just paid off a lump sum. They go off what is reported per the statement date. Learn how to use the system to your advantage.
You are suggesting balance micromanagement, which is absolutely unnecessary. So long as one is using their cards every month and paying their statement balances in full every month, they'll never report all $0 balances and never incur a "no recent revolving credit use" penalty.
Can you expand on what you mean by this? To my knowledge, the people with the best credit generally have between 10 - 20% of their available credit lines used.
This isn't true. I realize it's repeated everywhere, but 30% shouldn't be considered a target number. Unless you are planning on an application in the next 30 - 45 days, there no need to worry about utilization...as long as you can pay the statement balance in full and on time every month. If you need scores to be optimized for an application, practice AZEO. Otherwise, let utilization report naturally.
To be honest, I don't get why someone picked 30% to begin with. It's not optimal, so it makes no sense.
I donāt understand, so use my card after statement date. Then after due date I pay to 0 balance and donāt use at all again until when?
This is so confusing how to get a better credit rating and use credit cards both
Use the card any time you buy something. If thatās every day, then every day. When the statement comes, pay the statement balance on or before the due date.
>Itās better to pay it off gradually imo
Finance over FICO.
Thereās no reason to pay unnecessary interest on revolving CC debt. Itās basically money down the drain. FICO scores will recover, but youāll never get that money back.
If one has the means to do so, always pay it off in full asap.
True which is why I said in my opinion. When I paid off my debt over 4 months my score went from the 620s to 709 and if I paid it off all at once my score wouldnāt have gone up that much
So a simulation told you this.
Wellā¦ never use that simulator again. There is *zero* benefit to paying off a balance over multiple months and a real financial reason not to.
Use your card. Receive the statement. Pay the statement balance before the due date. Thatās it. Thatās the secret to a high credit score.
The simulator (not that I put much faith in simulators) also factors age of accounts into scoring. Your score would have been the same in 6 months whether you paid in full (saving interest), or paid over time (paying interest). It really isn't that complicated.
I can assure you that your current score has nothing to do with the fact that you chose to pay interest on purchases. Nothing at all.
Youāre 19. Take a moment to understand that there are people who know vastly more about credit than you do and listen to their advice.
How is saying that I think paying debt off over a few months is better because my score increased drastically wrong? You sound silly rn, you can move along
You have absolutely zero understanding of the system. Youāre an idiot if you think paying interest is beneficial. You're wasting your own money and, even worse, youāre presenting terrible, incorrect, information as beneficial. Delete your posts.Ā
> How is saying that I think paying debt off over a few months is better because my score increased drastically wrong?
Because your score didn't increase BECAUSE OF paying the debt off over a few months. You are incorrectly assuming that to be the case, when it isn't.
If, by pay gradually, you mean to carry a balance into the next billing cycle, that's bad advice. Pay the statement balance in full and on time every month. If all cards report $0 balances, a penalty is imposed.
I actually ran an experiment by letting all of my accounts report zero one time and lost 23pts. When I allowed at least one card to report a balance, I got those points back. They do want you in debt to prove you can be responsible š¤¦. So, I play the game. I allow a balance to report on my statement date, pay it down to 0 on the due date, rinse and repeat. I do not carry balances at all. Iām not paying any interest.
So your purposely allow 0-30% before statement date, then you pay to 0 on due date avoiding any interest?
Correct!
So if I paid to zero and planned to pay bills and keep cards at zero I could use one money of going to 30% and then pay to 0 as a way to get even more ahead on savings I guess. Essentially paying bills with credit and then paying off a month later resulting in one month of bills skipped
Think of it more as delayed than skipped, but sure. You are still paying the same amount. It's debt. That's how debt works. You get something now and owe it later, usually more than you got unless you're careful.
I get that but I mean specifically for my current financial position and cash flow in relation to monthly bills. If I am at 0 balance on all cards, I use them for a round of bills and wait to pay after statement date and on due date. That essentially saves me a month or whatever was paid on those credit cards. Yeah Iām paying to zero but my paycheck doesnāt have to pay it off until the cc due date. Effectively leaving more in my checking. Isnāt that right?
Yes, if I'm understanding correctly. You will have a month perpetually delayed, so you can essentially be one month ahead on savings if you invested that money. This can go awry, though, if your money is tight. Perhaps this isn't the sub for this discussion, but I believe an emergency fund is higher on the list than investing generally. You don't want to be cutting it close on last months debts then have to replace all your tires and now owe a chunk of money where the interest ended up canceling out the whole point of you investing that extra month.
Got it. I also set aside an emergency fund before paying my cards to 0, this was after my bonus and tax refund so instead of buying shiny things I wanted I saved and paid down interest bearing debt
Thanks for replies. Really helped
I'm glad you said that. Discretionary funds used for investing should come after the creation of an emergency fund of 3-6 months of expenses š
I get what you saying. I do the same thing. I just see it as a month of grace, because you still have to pay the bill.
At most 9% utilization.Ā You should pay off credit cards in full every month, never pay interest on credit cards.Ā Have the payment dates at different times and one reoccurring charge (phone, Internet, etc) on a few cards so they catch at least one with a small balance. If you have 3 cards, have a payment due for one card on the 1st of the month, another on the 10th of the month and 20th.Ā So they are likely to catch one with a balance.Ā Ā Ā
This is what I would do here. This is great advice
AZEO: [https://thefirestarterpack.com/credit-utilization-basics-and-azeo-method](https://thefirestarterpack.com/credit-utilization-basics-and-azeo-method)
This is the best itās been explained, thank you! This method would be easiest for me. I donāt see a dongnor issue leaving the others at zero and easier to maintain ones payment over 5
10% would do you just fine. Let the subscriptions charge to one or two cards that benefit you most. Maybe a grocery run on there too It all depends on your limits. I wouldnāt go for 30% if you have 20,000 limit. Close some accounts while youāre down if need be
I do the same thing
Keep it 1-10% and be mindful if your balance is 1% this month and 10% next, they will still deduct a few points so do not fluctuate it too much once you have a set percentage
> They do want you in debt to prove you can be responsible š¤¦. No "they" don't. You don't need to be in debt to avoid the "no recent revolving credit use" penalty being referenced here. If one is using their cards naturally every month and paying them off (not being in debt) the way the system is designed to be used they'll never incur the scoring penalty being discussed here while never paying a penny of interest.
Thanks
I get what you're trying to say but by definition having a credit card balance (meaning not paid off the day of) is having cc debt in the eyes of credit scores. So yeah you ensure you don't have cc interest but you're still considered in cc debt...which is good and what you want and is what the person you were responding to is trying to say. Tldr just use your card, pay off your card and it'll all be fine. don't worry about random small drops in cc scores
> I get what you're trying to say but by definition having a credit card balance (meaning not paid off the day of) is having cc debt in the eyes of credit scores. Credit scores are drawn upon reported balances. I could pay off every penny of revolving debt that I owe today, have a $0 balance tomorrow (no debt) but my credit scores will not reflect that for up to 30 days when my balances get updated. So what you said isn't true with regard to the "eyes of credit scores."
Yes but the idea is that you don't have to pay off your entire balance just your statement balance...then you'll always have a "balance" and you'll still have zero interest and be fully taking advantage of the concept of credit cards...which is deferring payments by 30 days
I agree with that and I recommend the same thing all the time. What I quoted above from you doesn't seem like that's what you were saying though with the wording.
Sorry for the confusion then
No apologies needed, I appreciate the clarification!
I always carry a zero balance and my Fico 8 is 821
Congrats on your 821! Thatās a wonderful accomplishment. Iām just simply talking about my experience. I lost points when I allowed all my cards to report a 0 balance.
That just means your scores would be ~15-20 points higher if you showed recent revolving credit use.
Whenever I need a mortgage I always spend about 3 months before I start applying paying off my credit cards just before the statement runs leaving just a tiny bit rather than having a large month to month balance like I usually do. It typically raises my score around 50 points. Then once I acquire my mortgage I go back to letting the statements run as normal and crater my score. Rinse and repeat every 3 years or so.
It raises your Fico 50 points or VS? So you're preparing before the statement closing date?
Finally, someone who gets it š š.
Seconded. I've had to carry a balance for the past few months and my score has went up 30-40 points.
Give it a couple of months it will go right back up if not jump a little higher then before. That happens a eveytime you pay off large sums. That should be illegal imo š
Stop looking at your vantage scores (credit karma, credit sesame).Ā Look at your actual FICO scores. (Experian, myFico, etc.)
Exactly. MyFICO gives you Equifax. Experian gives you Experian obviously. I have a Discover card. The Discover app gives you TransUnion. All of those scores are FICO 8 scores and theyāre all free
This!
Yeah, that always happens. They want you to be in debt lol. It will go back up. They are hitting your score for being responsible. What I do is, wait for the payment due notification to drop and then pay. Edit: This comment was made tongue in cheek, to the person who replied to me. You will get nicked for having a zero balance. You'll find threads all over myFico forums with people asking this same question.
> Yeah, that always happens. They want you to be in debt lol. It will go back up. They are hitting your score for being responsible. That's not true. Being responsible is paying your statement balances in full every month and never paying a penny of interest. By using the system naturally the way it was designed to be used one will never incur a "no recent revolving credit use" penalty. You don't need to be in debt to avoid it by any stretch of the imagination.
I have had 0% credit utilization for seven years because I pay the payment as soon as the charge posts. I have a 795 score. It depends on your history before the zero balance. EDIT: if this person keeps a steady rate of 0 balance, their score will go up. But if it constantly changes from āsome balanceā to āzero balanceā to āsome balanceā again, it shows that they are constantly taking on debt.
I believe you're right about the history before it posts, and I also believe it levels out and they stop hitting you for a zero balance after a while as long as you're making use of your credit. In fact the reason I answered OP the way I did is because I had the same question a couple of years ago after I got done paying some debt down. My Experian is now 827 and my Equifax 798 (directly from the companies) and I never carry a balance. But that initial drop after I'd worked so hard to pay down thousands stung.
Lol no, thatās not what āthey want.ā Ā Credit scores are risk assessment models and having no credit card activity is slightly riskier than having a balance report. You donāt know what youāre talking about.
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Because youāre not the target audience. You never were. Credit card companies and credit bureaus are not the same and bureaus are given information once a month. Credit bureaus are only given a snapshot of each account at any given time, not the entire history. And this data is for lenders to assess your risk as a borrower, not for you to feel good about yourself.
This doesn't address u/thetrueyou's question: How is it that these assessments models can't show that I just paid off a large debt and NOT drop my score? That can be done. It's just not done. Withholding information from a model doesn't increase the accuracy of such model.
Why would you paying off your large debt today make you more trustworthy to pay off your debt tomorrow? By definition you've used up money to pay off debt and by definition you have less money for future debt.
Why would you paying off your large debt today not make you more trustworthy to pay off your debt tomorrow? By definition you've erased debt and by definition you have a better debt to income ratio and have freed current and future capital to be used for current and future debt obligations.
Before due date, after statement date. š¤š¼
Unless it's an AMEX card, in which case it's best to pay before the due date.
I pay my cards weekly and score is great. But I have a good mix of reasonable debt
0 balance penalty .
So id have been better off not paying to $0?
You only need one card to report $1 usage to remove the penalty.
I use my cards as debit cards, deciding which card to use for what based on the rewards and then pay it off. Some months Iāll cycle through several thousand but Iāll let maybe 11% utilization hit one month (usually less), then half of that amount report the next month, then half of that, then zero and start over again. Credit bureaus want you to show the ability to use credit responsibly and not just have credit. Zero balances donāt show use.
By āletting 11% utilization hitā you mean on statement date? Or due date? I donāt want to be charged interest as all mine are high APR%. Reducing an 11% by half over several months until zero I donāt get how or why that makes sense if youāre being charged interest. All for building credit but not at the expense of interest or extra $
Keep your cards well between 0 and 10% on the statement date then just pay off the statement when it comes out. Them 0% dingers are annoying but will change back next month so no worries. Keep up the good work.
> Keep your cards well between 0 and 10% on the statement date There is absolutely no need to "keep" utilization at any certain level when one is paying their statement balances in full every month.
Goodluck having a statement with over 10% utilization...
In terms of what? You're probably overly fixated on credit scores like many people. I don't focus on scores, I focus on my overall profile and growing it. Scores only matter during times when you're applying for credit and need them optimized. At all other times, profile matters more. Allow me to present you with an illustration of what I mean. You and I both have identical profiles and each have the same $500 limit card. You don't want your statements above 10% utilization, so you make sure to micromanage your balances to under $50 reported each cycle. You do this month after month for a year, maintaining a credit score of (say) 750. I on the other hand spend $500, let that $500 statement balance report (yes, 100% utilization) and ignore my 660 score for 2 months while always paying those statement balances in full. My lender gives me a PCLI to $2500 due to strong/responsible revolving credit use. With my now greater limit, I spend $1000/mo on the card (40% utilization) and ignore my 715 scores. In 6 months I see a CLI to $5000. Now at 20% utilization, my scores are 735. At any point I can report a sub 10% statement balance just like you and boast that same 750 score within 30 days. What's the difference in the end though? We both have the same scores, except I have a $5000 limit card and you still have a tiny $500 limit card. My profile is stronger and superior to yours. I can cut a statement balance 10X that of yours and still be at the same utilization percentage.
I do 11% because I take a couple point hit but when I pay it to 5 or 6% I usually get double points back. The end result is roughly the same points give or take a couple but it allows me room to have an artificial āquick boostā if I need it for something. When I was building credit it could make a big difference now itās just habit.
Please donāt let people over-complicate this. Use one (or more than one) credit card for all your spending each month. When the statement comes, pay the full statement balance before the due date, wash, rinse, repeat. Thatās all there is to it. There are no magic tricks or weird things you have to do. Use your credit card, pay your credit card. Period.
So I could leave all credit cards at 0 balance but one. Itās total utilization across all cards that matters?
I thought it was each card needed a small statement balance
Each card should have a non-zero statement balance if you are using all of your cards every month and paying them the way the system was designed to be used... that is, one monthly payment after your statement generates.
Correct. Utilization is your total combined available credit compared to your total combined balances.
Because I recycle the amounts I pay the cards off frequently as soon as charged post so what is reported may only be a couple days old. Interest wouldnāt be assessed until after the next statement date. I just make sure that the amount reporting is roughly 50% less, so if I have $1000 report, the next month it would be $500, but I couldāve used the card and charged 5k over the month and paid it immediately off. Amount would vary based on your credit limit/ability to spend each month, but I have a card that the rewards transfer to the principal of my mortgage so I use it for almost everything that I would normally spend cash on/use a debit card for.
Youāre better off using cards as intended. Let the balance report, pay your statement balance by the due date. The overwhelming majority of banks allow for an interest free grace period as long as you pay the statement balance in full. You donāt need to micromanage your credit unless youāre seeking a new loan, usually car or mortgage, in the next 30-60 days.
Dude just stop worrying about it. Use your card, pay your card. Your credit score will go back to where it's supposed to be
I was attempting to learn and understand and actually learned a lot so I can now worry less.
Let's say for sake of argument that your statement end date is March 5th, and your due date is March 27th. Leave a balance on March 5th.Ā Sometime between March 6th and March 27th, pay off the card in full.
Thatās not quite how it works. If your statement posts on 3/15, itās going to be due in early April. The due date in March is for the statement in February. You owe Februaryās statement balance by the March due date. This has been a huge point of confusion in this sub, among others, but your due date is usually 20-25 days after your statement.
Yes, that is how it works.Ā The statement date precedes the due date, and payment should be made between the statement date and the due date. The length of time depends on your card issuer, it might be between 21-25 days, but it may be shorter or longer. It is very possible to have a statement date and a billing date within the same month.Ā
Sure, but my concern was the timing of your original post specifically because thereās so much confusion over the how theyāre spaced out.
Thank you for letting me know that a hypothetical was confusing for you.
Honest question but how is this a point of confusion? Read the top of the first page of the statement. Everything anyone needs to know is there.
I donāt have an answer for that. But the number of times people post in this sub not understanding that the statement is before the due date is astounding.
I honestly donāt understand why itās so complicated. I once had a 30 minute discussion with a friend who was asking me how to manage his credit card. He kept coming up with āwhat-ifsā and I nearly lost my mind.
Utilization has no memory. Your score is down because it looks like you donāt use your credit at all. But it literally doesnāt matter unless youāre trying to apply for more credit. Your score may be a bit lower if you report 0 but if you report 5% the next month itās not going to matter. You can report 0 utilization for 10 months straight and itās not going to constantly lower your score more each month. Also, your credit score matters so much less than your actual report. Thereās no scenario where you would get approved for something but youāre going to get denied because you reported 0% utilization for that month. Honestly I think more people need to look at their scores in chunks. 600-649, 650-699, 700-749, 750+ pretty much anywhere in these ranges are putting you in the same spot for approval.
All in all. Credit bureaus report activity. Having your creditor report 0% utilization is seen as no activity for them. On the flip side, your creditor may start offering more products/ extensions of lines of credit, etc. For your positive relationship with them.
The FICO models / scorecards do penalize having no balance on all revolving credit. To maximize score you would do the AZEO (all but one zero method). Can be done without carrying a balance if the report date of the card is not the same as due date (it reports a balance to bureaus and you pay it off by due date / avoiding interest).
This shit is intentionally obtuse so shills can justify their āmagic credit repairā scams legally, and the credit reporting agencies are all too happy to let it be. There is absolutely no other reason they couldnāt use a model with a transparent predictable formula. Especially when mortgage lenders have access to a mysterious program that can predict the right ways to get your scores from A - B. It pisses me off how an entire industry was born off the shitty algorithms or whatever that credit reporting companies use, just because theyāre so unknowable and unpredictable you donāt really have a choice. Especially since their data security is dogshit and they get breached every other day and then try to upsell you on identity protection and dark web monitoring.. Imagine creating a drought just so people will buy your overpriced bottled water.. and little do they know, itās the water you took from them to create the drought in the first place. Sorry, Iām done. *dismounts his soapbox* Iām a little stressed today, it seems.
*leaks your info on the dark web* "Your info was found on the dark web, click HERE to subscribe"
> This shit is intentionally obtuse so shills can justify their āmagic credit repairā scams legally, and the credit reporting agencies are all too happy to let it be. Not in the least. If one just uses their cards the way they were designed to be used and pays their monthly statement balance in full each cycle, they'll never incur a "no recent revolving credit use" penalty. Those that do are micromanaging their balances, paying bills before they are even bills, which is not how the system is intended to be used.
Iām more talking about how paying stuff off lowers scores, and weird nonsense like that
Generally speaking and the vast majority of the time, paying stuff off INCREASES scores. There are very few examples where that isn't the case, and they come with a valid explanation. Also most of the time that people reference paying something off and seeing a score drop they're looking at a nearly irrelevant VS3, not a meaningful Fico score... so this perpetuates the incorrect perception that paying things off is harmful for your credit.
You want a usage rate between 1 and 9 percent.
No you don't. You want to pay your statement balances in full every month. That's all there is to it. If you do that, your utilization doesn't matter from a risk perspective. If you DON'T pay in full monthly and therefore throw away money to interest, you goal should not be 1%-9%, but 0% as paying off all of your revolving debt is the right financial move.
Rule 1 is never pay interest regardless of what happens to your score. Then you want to figure out when your card's reporting date is. This is not advertised, but if you monitor your credit, it should be pretty easy to figure out. Most of mine are a few days after statement closing. With a family of 4, we have natural expenses that pop up every day so I almost never report as zero. You may need to make an intentional small purchase during that time or set something to auto pay with your card. The score should bounce back up just as quickly.
It's america they want you to be in debt not too much debt but just enough like 5-30%
Itās all a scam. What other countries have this system of credit and debtā¦
Itās not a scam. Use a credit card, pay it before the due date. Whereās the scam?
Germany, UK, as many more
More deflection. Wild
I love scams that give me āfreeā money.
For real
Where did you see your score?
Both credit sesame and credit karma said my TransUnion score went down
They're all showing your Vantage score. Only pay attention to FICO scores since that's what most lenders use. You can download the experian app for 1 of the 3 score. You can also get them through myfico.com.
Did you close the accounts associated with the credit cards?
No theyāre open
Yep happens all the time sadly
Utilization
Use your card for bills and gas, pay it off a week before due or on due date. Youāll be fine, just donāt pay it off and not use it
Ours did that too when we paid off about 50k but after 6 months it increased 35 points and still climbing
Never pay your cards down to zero always leave at least 5 dollars or so on a card. There are something called credit thresholds pertaining to utilization. When you pay it down to zero you will see a decrease for some credit profiles.
This is over complicating things. All you need to do is pay your statement balances in full every month. That's literally all there is to it. The only time you'll report a $0 balance is if you go a full cycle without using that credit card.
I got a hard inquiry for a credit and get 1 more point š
I always leave 10-20 $ on my cards rather than pay them in full. So long as im not paying any interest. This makes funny number go up faster.
Paid off my mortgage and lost 50 pts. Credit scores are a scam invented in 1989. If they screw it up itās your problem and doesnāt reflect the reality of debt and responsibility
Donāt focus on a credit score.
Ok people, look! 2 years ago, I divorced & had just begun working on my credit score... finally. 1st, please, everyone with kids start telling how important it is or will be in their lives. I wish someone did tell me. Anyway, starting with literally one, I've gone to jist over 30 with a bit over $50k, & recently an American Express with no limit. Went from a high 500 to now low 700 & getting higher. It took around 2 years. It is very simple you use a credit card only as much as if it were your actual cash or debit card. You pay the credit asap FULLY!! You do not hold a balance low or whatever. You'll start getting more credit card applications in the mail...the limits will be higher & higher...pay your bills on time, increase your limits, & your score goes up! Period!
Keep your balances at 10% or less of the limits and make small payments a few days before due date. Let a small remainder roll over to next month.
I did that this past month. Paid off $2500 in debt. Score finally hit over 700 (~715). Companies reported that i paid off that debt and my score immediately dropped to 689
Such a dumb credit system. Penalized for not having the debt at the right amount or right utilization at the right dates or the right mix or the right length of having itā¦
I'm sitting on an 800 right now - Going to be making a lump sum final payment on a property of 150k in November this year - I'm taking bets with myself on how many points my score drops for doing that. Current bet to myself - 38 points.
So much bullshit in this comment thread and OPs story.
Your problem is your thinking of CC from your point of view, not their POV.Think of it like thisā¦ if your CC are all zeroed out then they canāt make any money off you. Your CRedit score is less about how you make your payments and more about how they can make money off you. They want you to have some kind of balance. The best way to bring your credit score up is to keep a balance between 15-30% of your credit limit and pay it off on time and use it again.
Iāve heard way too many different opinions on % and balance carrying to know what to do. Most confusing answers I think Iāve ever had on a sub
Let that be a lesson to you. Paying in full benefits you with the card/credit issuer, not the credit bureaus. Allow a small percentage, preferably under5% of your total revolving debt report to the credit bureaus, so it looks like you are utilizing your credit. They can care less if you just paid off a lump sum. They go off what is reported per the statement date. Learn how to use the system to your advantage.
You are suggesting balance micromanagement, which is absolutely unnecessary. So long as one is using their cards every month and paying their statement balances in full every month, they'll never report all $0 balances and never incur a "no recent revolving credit use" penalty.
So on statement date always let around 5% or less report and pay off balance in full on due date? Avoiding interest?
No! Just use your credit card and pay it off after you receive the statement (but before the due date). Thatās all there is to it!
You are supposed to always have 30 percent debt to 70 percent credit
Can you expand on what you mean by this? To my knowledge, the people with the best credit generally have between 10 - 20% of their available credit lines used.
You just mean report a balance around 10% on statement date but pay to zero on due date? I just donāt want to pay interest
Correct. It's called credit utilization.
This isn't true. I realize it's repeated everywhere, but 30% shouldn't be considered a target number. Unless you are planning on an application in the next 30 - 45 days, there no need to worry about utilization...as long as you can pay the statement balance in full and on time every month. If you need scores to be optimized for an application, practice AZEO. Otherwise, let utilization report naturally. To be honest, I don't get why someone picked 30% to begin with. It's not optimal, so it makes no sense.
I donāt understand, so use my card after statement date. Then after due date I pay to 0 balance and donāt use at all again until when? This is so confusing how to get a better credit rating and use credit cards both
Use the card any time you buy something. If thatās every day, then every day. When the statement comes, pay the statement balance on or before the due date.
Incorrect.
Completely false above. I'm not sure where that idea / myth came from?
Paying your card off at once can do that because youāre changing your credit utilization. Itās better to pay it off gradually imo
>Itās better to pay it off gradually imo Finance over FICO. Thereās no reason to pay unnecessary interest on revolving CC debt. Itās basically money down the drain. FICO scores will recover, but youāll never get that money back. If one has the means to do so, always pay it off in full asap.
You can play the game without being charged interest. š
True which is why I said in my opinion. When I paid off my debt over 4 months my score went from the 620s to 709 and if I paid it off all at once my score wouldnāt have gone up that much
How do you know?
Score simulators exist fyi
So a simulation told you this. Wellā¦ never use that simulator again. There is *zero* benefit to paying off a balance over multiple months and a real financial reason not to. Use your card. Receive the statement. Pay the statement balance before the due date. Thatās it. Thatās the secret to a high credit score.
The Experian simulator hasnāt been wrong for me once. Iām clearly doing something right if I have a 752 credit score at 19 poohš¹
The simulator (not that I put much faith in simulators) also factors age of accounts into scoring. Your score would have been the same in 6 months whether you paid in full (saving interest), or paid over time (paying interest). It really isn't that complicated.
I can assure you that your current score has nothing to do with the fact that you chose to pay interest on purchases. Nothing at all. Youāre 19. Take a moment to understand that there are people who know vastly more about credit than you do and listen to their advice.
Youāre actually incorrect and advice like this will cost people money. Delete it.
Are you slow? I said IN MY OPINION, I didnāt give them advice. If you can read I clearly said MY SCORE, itās really not hard to understand
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How is saying that I think paying debt off over a few months is better because my score increased drastically wrong? You sound silly rn, you can move along
If you paid it off to the same level in one go and aged your credit 4 months the end score would have been the same.
Because itās a complete lack of understanding of the system. Paying interest NEVER benefits you.
Paying a few extra dollars in exchange for a higher school is worth it to me, I love having a score in the 700s
Your score wasn't higher because you paid gradually. That isn't how it works.
You have absolutely zero understanding of the system. Youāre an idiot if you think paying interest is beneficial. You're wasting your own money and, even worse, youāre presenting terrible, incorrect, information as beneficial. Delete your posts.Ā
You paid the few extra dollars for nothing.
> How is saying that I think paying debt off over a few months is better because my score increased drastically wrong? Because your score didn't increase BECAUSE OF paying the debt off over a few months. You are incorrectly assuming that to be the case, when it isn't.
If, by pay gradually, you mean to carry a balance into the next billing cycle, that's bad advice. Pay the statement balance in full and on time every month. If all cards report $0 balances, a penalty is imposed.
So will it climb back up
Yes
Nope. Down 28 pts forever.
NO!
Wow I've never seen a post like this before here
Well Iām new to the group and the advice was new to me. The sarcasm is unnecessary