Credit Utilization Questions

[Nate!]

Hi everybody, I am kind of confused about credit utilization. My understanding is that the broad sugya of utilization is responsible for 30% of your credit score, and that this utilization is measured both as a function of individual credit cards, as well as your total credit limit. However, I have the following remaining questions:

1. I think the way it works is that whoever is deciding credit scores takes random snapshots of your account during random points of time, and it doesn't boil down to just paying off your bill in full by the time your statement is due. Is that correct?

2. Is it okay to max out a credit card multiple times a month and just pay it off ahead of time so you never have usage on the card lemaisa? The way this will really work is if I have a checking account affiliated with the credit card (same company) so the transfer would be instant, thus minimizing the chances of a snapshot getting me.

3. That being said, are pending charges part of utilization or does it have to clear first?

4. How important is the individual card ratio vs. the overall ratio? Does anybody have more detailed info into how the formula works?

I think that's it for now. Thanks!

[Mordyk]

Hi everybody, I am kind of confused about credit utilization. My understanding is that the broad sugya of utilization is responsible for 30% of your credit score, and that this utilization is measured both as a function of individual credit cards, as well as your total credit limit. However, I have the following remaining questions:

1. I think the way it works is that whoever is deciding credit scores takes random snapshots of your account during random points of time, and it doesn't boil down to just paying off your bill in full by the time your statement is due. Is that correct?

2. Is it okay to max out a credit card multiple times a month and just pay it off ahead of time so you never have usage on the card lemaisa? The way this will really work is if I have a checking account affiliated with the credit card (same company) so the transfer would be instant, thus minimizing the chances of a snapshot getting me.

3. That being said, are pending charges part of utilization or does it have to clear first?

4. How important is the individual card ratio vs. the overall ratio? Does anybody have more detailed info into how the formula works?

I think that's it for now. Thanks!

HI and welcome to the DDf. nice to have you on board. and on a side not, all of these questions have been answered.
heres to start:   http://www.dansdeals.com/index.php?s=credit+util

[Nate!]

HI and welcome to the DDf. nice to have you on board. and on a side not, all of these questions have been answered.
heres to start:   http://www.dansdeals.com/index.php?s=credit+util

I didn't see an answer to any of my questions in that link. My questions aren't noobie questions.

[dealfinder85]

I didn't see an answer to any of my questions in that link. My questions aren't noobie questions.

#2 i dont think is smart
#3 i think it would need to post
#4 is answered in that post

[Mordyk]

Hi everybody, I am kind of confused about credit utilization. My understanding is that the broad sugya of utilization is responsible for 30% of your credit score, and that this utilization is measured both as a function of individual credit cards, as well as your total credit limit. However, I have the following remaining questions:

1. I think the way it works is that whoever is deciding credit scores takes random snapshots of your account during random points of time, and it doesn't boil down to just paying off your bill in full by the time your statement is due. Is that correct?

it does matter. the credit report has a box for each month and each statement with the info about it,

2. Is it okay to max out a credit card multiple times a month and just pay it off ahead of time so you never have usage on the card lemaisa? The way this will really work is if I have a checking account affiliated with the credit card (same company) so the transfer would be instant, thus minimizing the chances of a snapshot getting me.

i remember reading that it is not ok to max out and pay off

3. That being said, are pending charges part of utilization or does it have to clear first?

4. How important is the individual card ratio vs. the overall ratio? Does anybody have more detailed info into how the formula works?

the answer to this was discussed in that post

I think that's it for now. Thanks!

will answer to the best opf my knowledge

[noturbizniss]

The snapshots are at random times, based on when they pull the report, however the numebrs on the report are only based on what the CC reports, i.e. the statement balance. If your balance closes at $1, even if it WAS 100K in the month, but you paid it off, the report will NOT reflect the 100k

[Nate!]

#2 i dont think is smart
#3 i think it would need to post
#4 is answered in that post

Thanks everyone. For the record 4 is not answered in the post. There is a vague comment about how they're both accounted for, but no breakdown of exactly what the algorithm is, which is what I was interested in.

Why isn't it okay to max out credit card and pay off right away? What's going to happen to your score as a result?

[etech0]

Why isn't it okay to max out credit card and pay off right away? What's going to happen to your score as a result?

I don't know personally, but I would think that it might make banks wonder what's going on, and take a closer look at your spending habits.

[noturbizniss]

I don't know personally, but I would think that it might make banks wonder what's going on, and take a closer look at your spending habits.

+1. Won't impact your score, but raises questions with the banks.

[Hershelsdeals]

Regarding credit utilization, if I want to keep my credit utilization under 20%, does that mean per card credit line or total bank credit line, for example, Citibank.

[TimT]

Regarding credit utilization, if I want to keep my credit utilization under 20%, does that mean per card credit line or total bank credit line, for example, Citibank.

Both

[Hershelsdeals]

Both

Both? If I have for example 30K CL with my AA card and 10k on another,  which brings my total credit line to 40k with Citi.

So if I spend 7K, I'll be over 20% with AA, but under 20 percent with my total Citi CL, how do the credit bureaus look at it?

It's either or, how could it be both?

[TimT]

Both? If I have for example 30K CL with my AA card and 10k on another,  which brings my total credit line to 40k with Citi.

So if I spend 7K, I'll be over 20% with AA, but under 20 percent with my total Citi CL, how do the credit bureaus look at it?

It's either or, how could it be both?

They look at each card individually & across all cards. Don't spend 20% on any 1 card.

[Zalc]

1. I think the way it works is that whoever is deciding credit scores takes random snapshots of your account during random points of time, and it doesn't boil down to just paying off your bill in full by the time your statement is due. Is that correct?

2. Is it okay to max out a credit card multiple times a month and just pay it off ahead of time so you never have usage on the card lemaisa? The way this will really work is if I have a checking account affiliated with the credit card (same company) so the transfer would be instant, thus minimizing the chances of a snapshot getting me.

On your credit report, even though CC companies will only send the  statement balance, they will also show the amount of your latest payment/s, regardless of if the payment was made before or after the statement printed.

For example in the pic, even though the statement balance every month has been $1, the report will still show the $90 payment and high balance that was made before the statement printed.

I don't know if that is calculated into Utilization by the bureau, maybe someone here knows?

[Aj3042]

On your credit report, even though CC companies will only send the  statement balance, they will also show the amount of your latest payment/s, regardless of if the payment was made before or after the statement printed.

For example in the pic, even though the statement balance every month has been $1, the report will still show the $90 payment and high balance that was made before the statement printed.

I don't know if that is calculated into Utilization by the bureau, maybe someone here knows?

Never saw that on my CR's before, maybe never noticed. But I'd think they wouldn't include it because it's not reported as "borrowed" only as paid.

[Buruch]

By me it shows the highest balance each month as well. I believe that was experian.

[D93]

http://www.doctorofcredit.com/can-you-really-hide-manufactured-spend-from-your-credit-report/