Last year, I wrote Your Credit Score, in which I discussed the factors that go into the Fico Score. One item, representing 30% of your score was credit utilization. In other words, using $1000 of a $2000 total credit line was far wore than using $2000 of a $10000 line. Since the amount reported is what’s shown on the bill, regardless of how much you pay or even if you pay in full each month, the bill amount still ripples to your score. So as part of some experimenting, I paid my cards in the last cycle before the bill was cut. Yes, just before.
(Note – you can click to enlarge the image) You see, this was just brilliant. By owing less than 1/2% of my available credit, I managed to go from a potential A to a C for this criteria. Owing zero is exactly as bad as owing 41-60% of your available credit, which in my case would mean $30K+. An A ranges from 1% to 20%, so unless the Janes and I plan to do some real damage, I think I’ll quit this experiment and let the bill come in before I pay it. Lesson learned.