Credit Card Billing Cycles are critical


Credit Card Billing Cycles are critical

You understand that paying your credit card bill before it is reported as late to the credit bureaus is absolutely critical to a good credit score.  All those timely payments month after month look very good to the credit scoring computer.  You also have eliminated the waste of money represented by late payment fees.  There is another technique to ensure that your credit score is at its highest when you apply for credit at any given time.  Take advantage of your knowledge of credit card billing cycles.

Statement Closing Date is Amount Reported to Credit Bureaus

Each credit card billing cycle is determined by a calendar month.  The due date is not the same as the statement closing date.  The statement closing date is usually a week or less after the due date.  Each month the creditor reports to the credit bureau the amount of the balance on their most recent statement.   When the creditor “cuts” the statement, closing it out for that month,  he reports that amount to the credit bureaus.  The proportion of that amount to your available credit is called your “debt to available credit” ratio.  If you have a $5,000.00 credit limit and your most recent statement shows you owing $1,000.00 you have a very good 20 percent debt to available credit ratio.  If you owe $500.00 you have an even better 10 percent debt to available credit ratio for that card.

Before the Statement Closing Date Will be Your Due Date

If you pay your card down to 10 Percent debt to available credit just before the closing date that will be what is used by the credit scoring computer for that whole month.  After that it will be replaced by the next month’s statement…even if you ran it up much higher for the rest of the reported month.  On the other hand if you are near your maximum credit limit on the last statement reported, pay it down and then apply for credit you will not get the scoring benefit of the better debt to available credit ratio you now have.  The new lower balance hasn’t been reported yet.  If you run it back up before the new statement is cut the credit scoring computer will never know that it had been lower for part of the month.

If Your Bill Paying Timing is Consistent you are Always Ready

By consistently paying as much as you can just before the cut date you will never have to wait for this aspect of your credit score to catch up when you want to apply for any credit.  If you are unable to do it in a particular month pay at least the minimum by the due date.  Try to make just before the statement cut date the time to make a real effort to cut your balance down. The statement balance is usually sent to the credit bureaus on or just after the date it is closed out.  If you could only make a minimum payment on the due date and get some money the next day there will still be time to make a reduction before the monthly statement closes.  This time will only be 2-3 days.

English: mock credit card statement

English: mock credit card statement (Photo credit: Wikipedia)

You may pay your bill in full every month but lenders don’t report the real time balance that you see on line.  They report the amount you owe at the end of the credit card billing cycle. Your credit statement’s closing date determines what they report. If they report your balance from the 16th and you pay on the 17th an application for credit in the following month will show a big balance.  This affects your all important debt to credit ratio. Don’t fall into this trap. Be one of the enlightened few on this critical point. You have control of this since you are now aware of how it works.  Debt to available credit on credit cards is 30 percent of your credit score.  This is the aspect of your credit score that you have the most immediate control over.

Timing credit card billing cycles gives you a lot of control




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After practicing law for 37 years Edward F. St. Onge, Sr. now devotes all his time to helping consumers achieve a high credit score with amazing speed. Learn the counter-intuitive secrets to credit scoring through his down to earth instructions backed by extensive knowledge of the laws and trends. All of the latest tricks and techniques that they don't want you to know now at your disposal. At last a level playing field for the consumer!

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