You're Paying Your Credit Card Bill Wrong & It's Costing Your Credit Score

"There's done, and there's done right, you decide the quality of done you deserve"

~ Ciara Peterson

When it comes to managing your credit card, timing is everything. Many people focus on the due date for their payments, but if you want to maximize your credit score do me a favor. Grab your statement, get comfortable where you are and RIP IT TO SHREDS! The date you're looking for is the lenders reporting date. In this blog post, we’ll explain the difference between statement closing dates and reporting dates, and why keeping your credit utilization below 29% at minimum is essential.

Understanding Statement Closing Dates vs. Reporting Dates

Statement Closing Date: This is the date when your credit card issuer finalizes your billing cycle. It marks the end of a billing period and the beginning of a new one. Your statement balance is calculated on this date, and you’ll receive your bill shortly after.

Reporting Date: This is the date when your credit card issuer reports your account information to the credit bureaus. This date can vary, but it often falls a few days after your statement closing date. The balance reported on this date is what the credit bureaus use to calculate your credit utilization ratio.

Why Pay by the Reporting Date?

Paying your credit card bill by the reporting date, rather than the due date, can have a significant impact on your credit score. Here’s why:

1. Lower Reported Balance: By paying off your balance before the reporting date, you ensure that a lower balance is reported to the credit bureaus. This can help reduce your credit utilization ratio, which is a key factor in your credit score.

2. Improved Credit Utilization: Credit utilization is the percentage of your available credit that you’re using. Keeping this ratio below 29% is crucial for maintaining a healthy credit score. For example, if you have a credit limit of $1,000, you should aim to keep your balance below $290.

3. Avoiding High Balances: Even if you pay your bill in full by the due date, a high balance reported on the reporting date can negatively impact your credit score. Paying by the reporting date helps you avoid this issue.

The Importance of Keeping Utilization Below 29%

Credit utilization is one of the most important factors in your credit score. Here’s why keeping it below 29% is essential:

• Credit Score Impact: High credit utilization can signal to lenders that you’re over-reliant on credit, which can lower your credit score. Keeping your utilization below 29% shows that you’re managing your credit responsibly.

• Financial Health: Low credit utilization not only boosts your credit score but also indicates good financial health. It shows that you’re not maxing out your credit cards and are living within your means.

• Better Loan Terms: A higher credit score can lead to better loan terms, such as lower interest rates and higher credit limits. Maintaining low credit utilization can help you achieve and maintain a high credit score.

Calculate Your Utilization

To help you manage your credit utilization, we’ve provided a Credit Utilization Calculator that you can use to determine your current utilization ratio and make informed decisions about your credit card payments.

By understanding the difference between statement closing dates and reporting dates, and by keeping your credit utilization below 29%, you can take control of your credit score and improve your financial health.

Start paying your credit card bill by the reporting date and see the positive impact on your credit score!

Ready to get your credit & finances on track? Book your complimentary consultation today!