Comments on: Using cards as an emergency fund can hurt your scores http://asklizweston.com/2009/11/10/using-cards-as-an-emergency-fund-can-hurt-your-scores/ Personal Finance Columnist Mon, 08 Mar 2010 11:40:55 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: lizweston http://asklizweston.com/2009/11/10/using-cards-as-an-emergency-fund-can-hurt-your-scores/comment-page-1/#comment-724 lizweston Wed, 11 Nov 2009 18:16:21 +0000 http://asklizweston.com/?p=1560#comment-724 In the old days, you often could talk your issuer into raising your limit, making the two-payment approach unnecessary. These days, though, it's a great way to dramatically reduce your credit utilization on most cards and preserve your scores. In the old days, you often could talk your issuer into raising your limit, making the two-payment approach unnecessary. These days, though, it’s a great way to dramatically reduce your credit utilization on most cards and preserve your scores.

]]> By: Andy http://asklizweston.com/2009/11/10/using-cards-as-an-emergency-fund-can-hurt-your-scores/comment-page-1/#comment-718 Andy Tue, 10 Nov 2009 21:15:54 +0000 http://asklizweston.com/?p=1560#comment-718 It's no substitute for an emergency fund, but one trick that often works well is to make two separate payments per month to your credit cards. I typically charge all the incidental and recurring monthly expenses I can to my credit cards (both for convenience and for the rewards), and then pay off the vast majority of the balance a few days before the end of the billing period. Then when the statement arrives, I pay off the remainder. Since the statement balance is what the card issuers typically report to the credit bureaus, it makes it look like I am using just a tiny amount of my credit when I am, in fact, using quite a lot of it. So my FICO scores stay high. I don't think all issuers necessarily work this way (some may report your highest balance during the month instead, I've heard), but it can work wonders if you're trying to qualify for a loan or an apartment and still need to use your credit cards during the application process. It’s no substitute for an emergency fund, but one trick that often works well is to make two separate payments per month to your credit cards. I typically charge all the incidental and recurring monthly expenses I can to my credit cards (both for convenience and for the rewards), and then pay off the vast majority of the balance a few days before the end of the billing period. Then when the statement arrives, I pay off the remainder. Since the statement balance is what the card issuers typically report to the credit bureaus, it makes it look like I am using just a tiny amount of my credit when I am, in fact, using quite a lot of it. So my FICO scores stay high.

I don’t think all issuers necessarily work this way (some may report your highest balance during the month instead, I’ve heard), but it can work wonders if you’re trying to qualify for a loan or an apartment and still need to use your credit cards during the application process.

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