Paying CC in full & Balances reported to CRA 19 July 2022 at 9:12AM in Credit cards 8 replies 142 views

MrFrugalFever

Hi all,

So after several years of restrictions on credit facilities I have now been back in the financial market with a CC for 12 months this month.

I keep an eye on all 3 CRA’s like a hawk and whatever I spend on my 2 x CC’s gets paid in full by statement dates so I do not incur any interest, especially as they are like 29.9%APR!

After tracking and researching for the last year it appears that some brokers obtaining data from the CRA’s track you statement balance and what was paid off and some just track statement balance. Some balances are recorded the day after the statement pay due date and others several days after.

Some suggest using less than 50% of available credit, others suggest only 25%. MSE credit club has an Amber face on debt to income ratio for me as it thinks I don’t use enough?

The CC’s are fairly fluidly used each month so I rarely actually have a ‘zero’ balance, should I achieve a zero balance for each statement reporting so it reports zero to the CRA’s or does it not matter.
For example, my Cap1 statement for June must be paid no later than 21st July and was a relatively small amount as I had cleared the final bit of balance before 0% promo ended on 28th June. However, I occasionally put work expenses on there, which I then have to claim back in to my bank account and pay off the CC. My latest expenses (only £85) will not be paid until after 21st, so technically I’ve paid my June statement balance in full but now will be reported to CRA’s with a higher balance. 

I assume that this doesn’t really matter as long as the total balance on the statement is cleared by the due date?

Sorry if I sound like a bit of a novice but just getting back in to the game again and to be fair, my management and understanding of CC’s prior to this was pretty poor which exacerbated the issue I had anyway.

thanks in advance,

Sandtree

First of all... what are you trying to achieve?

For most the most important thing is not paying interest and so as long as you are clearing the balances in full each month on or before the due date you are all good there.

You then get to the second part which is credit history (ignore scores, no lender sees the ones the CRAs or intermediary websites produce). There is no straight answer to this as each lender will have their own algorithm to convert history into a decision and so what one bank likes another may not be so keen on hence why you can make two almost simultaneous applications and get declined for one but get a £10k credit limit on the second. 

Generally lenders like to see that you can use credit responsibly, that you aren't financially struggling and that other lenders trust you. Any commentators saying 25% utilisation is fantastic or way to low are just trying to guesstimate an industry average view which 1) they'll have little data to back up and 2) is a bit pointless as you never apply to the industry average but to specific lenders. 

TheLabFather

I’ve seen stories of high income, cleared card debt each month being rejected for a new card. Probably because the card company isn’t going to make any money from you in interest.  They don’t look at your credit rating. They are a business in it to make money. Someone on say £30k a year with a £10k card debt with no missed payments is seen as good business. Debt managed well is good 👍 to open up better rate cards than clearing  off in full each month. 

As long as you set a direct debit up to take the minimum payment so the CRAs are reported as zeros is the way to go.

Having worked for a card issuer once I will illustrate how they work. They have their own internal credit score system which only 2 people had access to. Each month there is a maximum lending limit so during the month if more people were being accepted they would raise the internal score to decline more people whereas in a quiet month they would lower the score to accept more.

Sandtree

TheLabFather said:

I’ve seen stories of high income, cleared card debt each month being rejected for a new card. Probably because the card company isn’t going to make any money from you in interest.  

Remember that interest isn't the only source of income for credit card companies... someone with a high income may be a big spender and so plenty of transaction fees to be had.

MrFrugalFever

TheLabFather said:

As long as you set a direct debit up to take the minimum payment so the CRAs are reported as zeros is the way to go.

This is the bit that I was querying, because a credit card can be spent on every day of the month my balance is rarely, if ever, reported as zero. If I paid my balance in full (including additional expenditure since last statement) on the day of the payment due (let’s say 21st in my example above) then I achieve a balance of zero by 22nd as it takes a day or two to clear, I then spend again on 23rd, the money I’ve spent on 23rd seems to be the reported balance to CRA’s from what I can see.

I think as Sandtree has said as long as balance of previous statement is paid in full and thus not paying any interest, it shouldn’t have a negative affect when applying for further credit (subject to own internal scoring system anyway).

born_again

MrFrugalFever said:

TheLabFather said:

As long as you set a direct debit up to take the minimum payment so the CRAs are reported as zeros is the way to go.

This is the bit that I was querying, because a credit card can be spent on every day of the month my balance is rarely, if ever, reported as zero. If I paid my balance in full (including additional expenditure since last statement) on the day of the payment due (let’s say 21st in my example above) then I achieve a balance of zero by 22nd as it takes a day or two to clear, I then spend again on 23rd, the money I’ve spent on 23rd seems to be the reported balance to CRA’s from what I can see.

I think as Sandtree has said as long as balance of previous statement is paid in full and thus not paying any interest, it shouldn’t have a negative affect when applying for further credit (subject to own internal scoring system anyway).

Paying the statement balance in full on time will show it as a zero balance. What you spend after that date is cauclated to the next statement.

Please stop worrying & studying the CRA in such detail. They mean nothing to lenders. They are only interested in your history (missed payments) & your income to available debt %

Best bet jut use card, pay in full forget about the CRA 👍

[Deleted User]

TheLabFather said:

I’ve seen stories of high income, cleared card debt each month being rejected for a new card. Probably because the card company isn’t going to make any money from you in interest.  They don’t look at your credit rating. They are a business in it to make money. Someone on say £30k a year with a £10k card debt with no missed payments is seen as good business. Debt managed well is good 👍 to open up better rate cards than clearing  off in full each month. 

As long as you set a direct debit up to take the minimum payment so the CRAs are reported as zeros is the way to go.

Having worked for a card issuer once I will illustrate how they work. They have their own internal credit score system which only 2 people had access to. Each month there is a maximum lending limit so during the month if more people were being accepted they would raise the internal score to decline more people whereas in a quiet month they would lower the score to accept more.

Credit card issuers make anything from 25-40% of their income from merchant fees, a reliable big spender is great for them - loads of fees, no need to waste money debt chasing, no danger of default and responsible lending etc

jefaz07

born_again said:

MrFrugalFever said:

TheLabFather said:

As long as you set a direct debit up to take the minimum payment so the CRAs are reported as zeros is the way to go.

This is the bit that I was querying, because a credit card can be spent on every day of the month my balance is rarely, if ever, reported as zero. If I paid my balance in full (including additional expenditure since last statement) on the day of the payment due (let’s say 21st in my example above) then I achieve a balance of zero by 22nd as it takes a day or two to clear, I then spend again on 23rd, the money I’ve spent on 23rd seems to be the reported balance to CRA’s from what I can see.

I think as Sandtree has said as long as balance of previous statement is paid in full and thus not paying any interest, it shouldn’t have a negative affect when applying for further credit (subject to own internal scoring system anyway).

Paying the statement balance in full on time will show it as a zero balance. What you spend after that date is cauclated to the next statement.

Please stop worrying & studying the CRA in such detail. They mean nothing to lenders. They are only interested in your history (missed payments) & your income to available debt %

Best bet jut use card, pay in full forget about the CRA 👍

I have 2 credit cards I pay off monthly. Both report as having a balance every month on the CRA’s

[Deleted User]

born_again said:

MrFrugalFever said:

TheLabFather said:

As long as you set a direct debit up to take the minimum payment so the CRAs are reported as zeros is the way to go.

This is the bit that I was querying, because a credit card can be spent on every day of the month my balance is rarely, if ever, reported as zero. If I paid my balance in full (including additional expenditure since last statement) on the day of the payment due (let’s say 21st in my example above) then I achieve a balance of zero by 22nd as it takes a day or two to clear, I then spend again on 23rd, the money I’ve spent on 23rd seems to be the reported balance to CRA’s from what I can see.

I think as Sandtree has said as long as balance of previous statement is paid in full and thus not paying any interest, it shouldn’t have a negative affect when applying for further credit (subject to own internal scoring system anyway).

Paying the statement balance in full on time will show it as a zero balance. What you spend after that date is cauclated to the next statement.

Please stop worrying & studying the CRA in such detail. They mean nothing to lenders. They are only interested in your history (missed payments) & your income to available debt %

Best bet jut use card, pay in full forget about the CRA 👍

As above, my CRA (free) reports all show the previous month's balance on the card, but of course all show paid in full every month except the promotional BT rates