Question about Building Credit: USAA Credit Card, Monthly Balance Reporting

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Occasional Contributor

Less than a month ago I opened a CashRewards World MasterCard with USAA to help build my credit (I’m trying to get above 740 before I apply for a mortgage, and had a low variety of credit utilization on my report). I know that I need to keep my balances low and pay on time every month, but I am afraid that I may be going overboard in regards to these 2 strategies. I have detailed my strategy thus far below, and would really appreciate some insight (as far as whether or not it will boost my Credit Score), as well as any tips you may have.

  • The Credit Card is used for just about every purchase that my wife and I make, as well as for every bill that we pay. However, we only use the card when we have enough money in our checking account to pay it off IMMEDIATELY. So far, I have been paying the balance in full as soon as charges post to the account (usually within 1-2 days), and thus I consistently maintain a $0 (or very low) balance.
    • First question: Will paying off my balance so quickly that I consistently have a $0 balance (or close to it) do anything to boost my credit score each month?
      • Or will this lead to USAA reporting a $0 balance to the Credit Bureaus, making it look like I don’t use the card or make payments? (I assume that if this were the case, it would do nothing to boost my credit score)

 

      • Second question: Should I let these charges add up, so that I have a balance at the end of each billing period, and then pay the balance in full?
  • Or will the Credit Bureau be able to see that I have used the card dozens of times over the previous month, repaying the debt in full shortly thereafter? (If so, will this help my score?)

 

 

    • Third question: When does USAA typically report to the Credit Bureaus, which ones does it report to, and when do USAA Credit Card billing periods end (or does it vary by account)?

Thanks in advance for any feedback, I really appreciate you taking the time to read over and respond to my questions.

2 REPLIES

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Hi Zab,

 

I will try to answer your questions based on my own observations and experiences.  I should note there are various factors that go into determining a credit score and they can and do differ depending the entity doing the calculation.   You can find a good guide to how FICO scores are determined here.  If you haven't already done so, I suggest you request your free annual credit reports.  One thing to keep in mind, payment history and time are the biggest factors that will affect your overall credit score.  Don't expect your score to move up very fast (though it can go down really quickly).

 

  • First question: Will paying off my balance so quickly that I consistently have a $0 balance (or close to it) do anything to boost my credit score each month?
    • Or will this lead to USAA reporting a $0 balance to the Credit Bureaus, making it look like I don’t use the card or make payments? (I assume that if this were the case, it would do nothing to boost my credit score

Definately could not hurt it.  What your trying to do is manage your Debt to Credit Ratio.  While there is not an exact number, the general consensus is that the ratio should be below 25%.

 

  • Second question: Should I let these charges add up, so that I have a balance at the end of each billing period, and then pay the balance in full?
    • Or will the Credit Bureau be able to see that I have used the card dozens of times over the previous month, repaying the debt in full shortly thereafter? (If so, will this help my score?)

To maintain a lower debt to credit ratio, you should attempt to have your credit card show the lowest balance possible when reported.  Your credit report will reflect that payments were made (and the amount), but that may not used to develop the credit score.  It can though be used by lender when making the determination on a loan application.

 

  • Third question: When does USAA typically report to the Credit Bureaus, which ones does it report to, and when do USAA Credit Card billing periods end (or does it vary by account)?

I have both the MasterCard and American Express with USAA, both are on all three of my credit reports.  The report dates reflected the date my statement is issued.  Not sure if the billing periods are the same for everyone.  I pay my credit cards several times through the month, so normally my statements show payment due as 0.00.  But the balance due on the statement is what is reported to the credit bureau and appears to be what is used to determine your debt to credit ratio.

 

Good Luck.

 

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Thanks DSTexas, your reply is very helpful! It clears up a few points that I didn't understand as well as I thought I did. Based on what you have told me, I think I will continue to pay back my Credit Card purchases as soon as they post, so that I show a $0 balance when USAA reports to the bureau(s).