CC utilization

[Lema]

So does the credit card issuer base utilization on how much of the credit line you are using regardless if it is paid off before the statement date? Or do they go by whats reported at the time of statement date? Thanks

[Sidewinder]

Issuers report the statement balance to the CRA's within a few days after the statement closes.

 

However, some issuers might also report mid-cycle; I have the experience of U.S. Bank doing that with my platinum Visa card shortly after I'd transferred a large balance to it.

[cv91915]

FICO will score whatever reports.  

 

For most cards, that's the statement balance.

 

There are some exceptions, like US Bank, which reports your month-end balance.

 

Chase will also do a mid-cycle update if you pay the balance to $0.

 

And there are others.

 

What prompted you to ask how a credit card issuer considers utilization? 

[Lema]

5 hours ago, cv91915 said:

 

 

What prompted you to ask how a credit card issuer considers utilization? 

I asked because i was looking to use my CC for my set expenses( which is higher than 30% of my limit), such as gas, phone, groceries etc. And paying it off every month/ before the statement date so that 1. I avoid interest 2. Avoid having a high credit utilization when it comes to being reported. 

 

So i guess my real question is. Is it a bad idea to use more than 30% of CL even though it will be paid off in full? 

 

Hope that cleared it up thanks again 

5 hours ago, cv91915 said:

 

 

[centex]

13 hours ago, Lema said:

So does the credit card issuer base utilization on how much of the credit line you are using regardless if it is paid off before the statement date? Or do they go by whats reported at the time of statement date? Thanks

In a given month, there is absolutely no problem with using all of a credit line and paying it down before the statement cycle closes.  When discussions of utilization come about, it is generally in terms of what has reported to the bureaus.  As others note, this is why you need to know the tendency of your particular card and card issuer. 

 

That said, even if you have a card that reports a sub-10% utilization on the reports, you would NOT want to seek a line increase while the in-cycle balance was near the cap.  THAT would likely be construed as potetial bust-out behavior.  And yes, there ARE score models used by some lenders that are intended specifically to look for such risks...

[centex]

4 hours ago, Lema said:

I asked because i was looking to use my CC for my set expenses( which is higher than 30% of my limit), such as gas, phone, groceries etc. And paying it off every month/ before the statement date so that 1. I avoid interest 2. Avoid having a high credit utilization when it comes to being reported. 

 

So i guess my real question is. Is it a bad idea to use more than 30% of CL even though it will be paid off in full? 

 

Hope that cleared it up thanks again 

 

As long as you pay all of a statement balance before the due date, you will generally have no interest.  There are sub-prime lenders where this is NOT the case. 

 

In other words, let's presume a $10K line and you typically funnel $4K through the card each month.  Even if the statement cycle closes and reports that you have an outstanding balance of $2389.43, then as long as you pay them AT LEAST the $2,389.43 by the statement due date, it does not matter if you ran another several thousand through the card.  The key is generally going to be paying the full statement closing balance by the due date in order to avoid trailing interest catching up with you...

[cv91915]

5 hours ago, Lema said:

I asked because i was looking to use my CC for my set expenses( which is higher than 30% of my limit), such as gas, phone, groceries etc. And paying it off every month/ before the statement date so that 1. I avoid interest 2. Avoid having a high credit utilization when it comes to being reported. 

 

So i guess my real question is. Is it a bad idea to use more than 30% of CL even though it will be paid off in full? 

 

Hope that cleared it up thanks again 

 

 

The only practical reason for paying mid-cycle is to keep a card with a low-ish limit from reporting maxed out when used normally.  

 

Aside from that, just use the card, wait for the statement, and pay the statement balance in full by the due date.  That's all that's necessary to avoid interest.

 

No issuer cares if you use 30% or more of your line in a given cycle.  They and other issuers get nervous when you start having cards report as maxed out, or if you have a high balance and only make minimum payments.