Credit report shows high balance but it is always paid in full

Keano24

I have two credit cards which I always pay in full each month but the credit report companies seem to report to CRA's before the payment in full is processed. Example of my latest bill is below:

Capital One Card:
Spending: £259 on 10th June
Payment:: £259 on 21st June
Statement: 26th June: Balance £0

CRA:
Experian: Balance: £259, Last Updated: 30/06
Equifax: Balance £259, Last Updated: 28/06
TransUnion: Balance: £259, Last Updated:30/06

I believed that paying in full before the statement date would stop any interest being calculated and also show that I am using the card more efficiently.

My score on Experian has dropped from 969 to 823 due to the utilisation on my two cards, showing as 48%, when in reality it is 0%. I know my score means nothing so I don't even care about that, it is more the reason why the score dropped as Experian think I am carrying a balance, so other lenders will think the same if I were to make any mortgage / HP / Loan applications.

Am I doing something wrong here in terms of the dates that I am paying my balance off?

[Deleted User]

Always wait for your statement before paying in full.  It shows you're using your card more efficiently than constantly trying to keep it at zero. You won't get charged interest if you pay in full.

However, lenders will see that you are paying in full.  Experian's opinion doesn't count.

Keano24

Cheers zx81, I thought that when the statement was produced, that's when the interest would start counting so I always paid in full before statement. I was obviously wrong. No big deal though as it's only small numbers, was just curious how it worked. Cheers

foxy-stoat

I do not think that a balance of £259 is high.  Just pay it after the statement comes in as already advised and you will be fine.

cymruchris

Wait for the statement - pay in full - why not pay by direct debit - you'll not a pay a penny of interest. You'll still likely find that the report to the CRA's shows your balance, but it will also show your equivalent payment of equal value. That'll show that you spend and pay back in full every month over a prolonged period - benefitting you in the eyes of most future lenders. Every lender uses different criteria to assess risk, but I can't see many seeing someone who uses a card and pays it off in full every month as being a higher risk customer than someone who has a zero balance constantly. If anything it would be the reverse. 

Grumpy_chap

cymruchris said:

I can't see many seeing someone who uses a card and pays it off in full every month as being a higher risk customer than someone who has a zero balance constantly. If anything it would be the reverse. 

If I was offering a credit card, then someone who uses the card and pays it off in full every month is a more desireable customer than someone who has a zero balance constantly. 
At least the person who uses the card generates me an income from the merchant fees.  Plus, they might slip up so I can charge late-payment fees, interest, over-limit fees etc when they do.
Someone who has a zero balance constantly still costs me the money to operate the facility, but won't generate me an income from merchant fees and won't offer me the chance to fleece them when they slip up.

That is how I think.  I cannot say that credit card companies think the same way.

uppercaseesteban

Are the cards with RBS or an RBS affiliate bank by any chance?
I have the same issue, used my card no problem for 2 years, every month I would load a minimal balance (under 10%) utilisation and then pay it off when the statement came in. Credit report then got updated after I paid the balance showing £0 balance, low utilisation and paid on time. Credit score slowly was chugging upwards, great stuff. Now this month however my balance on the card got reported to the CRAs before payment was due, I now have this new category called 'historical balance' across all 3 CRAs which has increased from 0 to £100 and now has a high priority alert attached to it and 'needs attention' according to Experian. My credit score also dropped by 23 points. I think this historical balance is what CRAs are using to consider risk, something changed for sure in the way my report is put together in regards to this account, either due to an algorithm change due to covid as lenders may be more risk adverse or because RBS have now integrated Transunion credit scores into their banking app and as a result the balances are being reported more frequently. 
It's hard to complain, for the CRAs it is a more accurate system it just means the way I used to build up my score, by putting a small charge on the card and paying it off at the end of the month is more likely to boomerang my score between two numbers over the course of a few months 'balance reported on card (drop in points), balance reported paid (increase in points), balance reported on card (drop in points) etc...' instead of slowly building it up.  

[Deleted User]

It's fine.  The score and advice that the CRAs are giving you is nonsense. That's why no one sees or cares about it. 

Lenders see that you are clearing in full, so all is well.

PRAISETHESUN

Keano24 said:

I have two credit cards which I always pay in full each month but the credit report companies seem to report to CRA's before the payment in full is processed. Example of my latest bill is below:

Capital One Card:
Spending: £259 on 10th June
Payment:: £259 on 21st June
Statement: 26th June: Balance £0

CRA:
Experian: Balance: £259, Last Updated: 30/06
Equifax: Balance £259, Last Updated: 28/06
TransUnion: Balance: £259, Last Updated:30/06

I believed that paying in full before the statement date would stop any interest being calculated and also show that I am using the card more efficiently.

My score on Experian has dropped from 969 to 823 due to the utilisation on my two cards, showing as 48%, when in reality it is 0%. I know my score means nothing so I don't even care about that, it is more the reason why the score dropped as Experian think I am carrying a balance, so other lenders will think the same if I were to make any mortgage / HP / Loan applications.

Am I doing something wrong here in terms of the dates that I am paying my balance off?

As above, pay off your balance in full after the statement has been generated but before the due date. This will avoid any interest charges. Set up a DD if you're likely to forget to pay it!

As for your credit reports, what you're seeing here is pretty standard. Your CC provider will report your balance to the CRAs on a certain day of the month, usually in the middle of your statement cycle before you pay off your balance. They will also report that you paid off the previous month in fill - that's the part other lenders really care about. There's nothing really to worry about here unless you're not paying off your balance, so just keep doing what you're doing.

phillw

Grumpy_chap said:
Someone who has a zero balance constantly still costs me the money to operate the facility, but won't generate me an income from merchant fees and won't offer me the chance to fleece them when they slip up.

I think he meant spend on the card and immediately clear it to prevent interest.
It's only worth doing that if you didn't pay the entire balance by the due date as in that situation you don't get any interest free days.