Still a newbie here. who is making very slow progress. I have a question hopefully would interest the gurus to answer. How does the fico Formula calculate the Utilization/credit ratio? is it the balance you carry to the next pay period/available credit? I have low limit credit cards which I pay in full every months. I always pay online within 7 days from using my card , so I may use the credit limit twice within the pay period. How would my usage pattern impact my Fico score. do I need to lower it? Thank you for the help guys.
FICO calculates utilization based upon the following formula: $ balance reported/total $ credit limit "reported". Utilization is calculated for each account or credit card, as well as the total utilization of all accounts. For instance, the reported balance will be the account balance as of the billing cycle close date. This is the "as of" date on your statement. The key here is to pay your credit card, AND make sure the payment POSTS to your account before the closing date; this is how you get a $0 balance reported. The reason for the "$ credit limited reported" wording in the above formula, is that some companies do not report your actual credit limit to the CRAs, they report the "highest balance" incurred on the credit card. If this is low, then this hurts your credit score by lowering the "total credit limit" on your utilization ratio(s). Hope this was clear enough, if not, post any additional questions.
If I request CL increase, would chase do a hard Pull on my report? Thank you very much for taking the time to answer that, I believe Chase bank platinum visa and mastercard report the highest balance during the month whether I carried it to the next pay period or not. this would generate another question, Then i have to increase my credit limit The question now :If I request to increase my credit limit online,would Chase do a hard pull before approval or my payment record would suffice?
I agree generally with BizWiz, but the billing cycle closing date is not always the date that CCCs report to the CRA. Some report later , on dates not necessarily pegged to statement closing dates. You you may think you have done a pay in full (PIF), only to find that a balance does report. Also, if any intterest has posted to your account since the last bill, then simply paying of the current balance may not ensure a $0 PIF.
The secret here is "real time management" of the account. You really need to manage the account via on-line information. i.e. waiting for your mailed statement is too late. Interest will post on the closing day of the billing cycle, (as well as any other account fees). The interest can be beat if you pay in full each month before the grace period ends. Again, this comes down to: 1) knowing the total balance before the billing cycle closing date, 2) knowing the fees to be charged, 3) Ensuring the payment is posted before the end of the billing cycle.
