Basically they get mad if you don’t let them get any money off you by your credit utilization being 0% so they lower the score nearly forcing you to leave utilization at least at 1% knowing if you do this they get to charge you interest on top of your next statement balance correct? This is so sad but I heard some people credit score goes up for having 0% utilization I’m not sure
Credit card issuers do not determine credit scores. 1% utilization does not mean paying any interest on cards. You can read these pages to learn more about how credit scores work and how to have 1% utilization without paying interest: www.creditcardinsider.com/learn/whats-in-your-credit-score/ www.creditcardinsider.com/blog/how-does-the-credit-card-utilization-percentage-impact-my-credit-score/ www.creditcardinsider.com/blog/best-credit-utilization-ratio/ www.creditcardinsider.com/learn/how-paying-a-credit-card-works/ - John G
+Saffron Maverick Great question! For some reason I was unable to reply to your comment directly. Charge cards, whether they're from Amex or anywhere else, are actually a different animal than credit cards. They don't have a regular credit limit and don't let you transfer a balance from month to month, a process known as revolving. Charge cards are not calculated into your overall credit utilization. This category is also known as revolving utilization, because it only counts accounts that are designated "revolving." By the way, if you're aiming to reduce your statement balance, you'll need to pay down your balance before the statement is generated. Look for the "statement closing date" on a statement or online - that's the date at which your billing period ends, so you'll need to send in a payment before that closing date. Let us know if you have any more questions! - Brendan H.
My utilization right now with both my cards is 0.36% will that be reported as 0? Will they round it down? That basically means you have to spend a certain amount in a credit card
I have 7 cards and used to have them set to autopay on due date. I recently switched to pay in full the day before the statement close date and my score went up 39 points to 820.
Okay, my starting cycle is on the 15th and closes on the 14th , but I noticed that due it's on 11th , it's before the 14th which is the closing date and the credit card report's on the 14 th as well.
Thank you so much for this information. I am an international student and didn't know about banking here. My credit score went from 780 to 720 and I was worried that what wrong am I doing. But now I can manage my payments better. Thanks again.
I just recently paid off an account that is a Amex gold which must me paid in full and another card with a 165 balance before my statement dates and when it hit my report I’d went from 770 to 754 for essentially having 0 utilization which still doesn’t make sense my score was higher when I had a balance of 2300 on my Amex
This page explains more about utilization, and how 0% can result in lower scores: www.creditcardinsider.com/blog/best-credit-utilization-ratio/ - John G
It’s amazing that he said this because other people are saying you should keep it below 10% and if you pay it off your score will not go up as high. Someone is right and someone is wrong
I am trying the AZEO method for the first time this month. I previously kept a very small balance on all cards (usually 1 to 2 percent), then read on my credit report that I had “too many revolving accounts with balances.” This month’s strategy is intended to fix that.
So would it be okay to make a purchase and then pay the balance when I get home or later that week? Would this still build a good credit history? Thanks! 🙂
My credit utilization is super high because my account is in collection. Should I pay the account off just to get the utilization low or let it fall off because the credit card is already in collection. I have a Badcock credit card $1000. and the balance says its $1200.00
Yes because my utilization says 108% according to Credit Karma and Transunion is not reporting my credit utilization. I just want to know do I need to call them and make payments to get it to lower my credit utilization. The account was open last year and they are still adding $15 every month.
I'm not quite sure what you're asking - are you asking if you should pay your bills or not? Generally I think it's a good idea to pay your bills. If you don't pay the bill, you may also get sued by the lender. - John G
No. i experimented one month and paid my balance in full thus giving me 0% utilization and...it dropped my score. The next month I carried a small balance about 9% utilization and guess what, my score went back up.
I'll explain once apon a time i was new to credit cards. your first bill statement you want to owe 1% to 7% of your credit card limit lower the better, but one day after that first bill statement pay it in full!! use the credit card again but make sure you again owe that 1% to 7% on the next bill statement! the credit card company will tell you to owe less than 30% which will give you a good score, do what i tell you you will have an excellent score and not pay interest.
im trying to get my credit clean and score up before they raise rates for financing on homes..lucky yesterday the feds chose not to raise rates and leave them where they are for now..dont know what would benefit me better..better score and locked in prime low rate, or what ok credit and going for a home loan before the feds raise the rates? im very worried and dont wanna loose out...rates may never get this low again in my life time
+Mark Jacob Wow that's an intriguing question you have. I wish I could predict the future and let you know, but if I could do that... Oh well. Whichever option you choose, you'll be able to improve your credit score as you go. Perhaps eventually it'd be smart to refinance your loan once you can get better rates. Good luck! Feel free to let us know how you decide either way. - Brendan H.
As long as I pay my balance off in full and on time, this doesn't concern me. However, I am working on lowering my credit utilization rate. My credit score has fluctuated from going up 46 points to going down 30 points. This had more to do with my credit utilization and not because of being late or missed payments. I pay in full 100 percent of the time.
They'll usually use whatever the highest balance that's been reported for the card. Watch this to learn more about how those cards work: th-cam.com/video/vnpRkNyulFg/w-d-xo.html - John G
If it's a card with no annual fee and you don't use it then a credit card doesn't cost anything to have. If you're new to credit cards I recommend you start by reading this guide: www.creditcardinsider.com/learn/definitive-guide-how-to-build-credit-with-credit-cards/ - John G
I have been trying to figure according to credit karma my equifax dropped overnight 45 points when a new tradeline was added showing the credit lime thereby reducing my utilization rate from 70% to 45%. None of my personal line have any balance the only thing with balance is an account that I am an authorized user on. Why did this occur?
+My Hangout Academy It's possible the new credit line brought down your average age of accounts significantly enough to cause the drop. As far as credit scoring models go, a longer average age of accounts is better. - John G
I was told to leave a small balance on my card $5-$10. Because paying it in full before the reporting date can be interpreted as not being used. Next month trying something new.
If you pay off the entire new balance and statement balance before the due date your credit scores might be lower than if you have 1% utilization or some other small utilization amount. See this post: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/ - John G
I lost 13 points for paying my balance to zero and having no balance on my cards and I'm rebuilding credit and have access to my fico alerts daily . Pretty bummed because I was almost to 600. Very confused why it dropped. It says balance decreased by 54 dollars and said -13 on equifax
Yes, you may see lower credit scores at 0% than 1% utilization. This page explains more: www.creditcardinsider.com/blog/best-credit-utilization-ratio/ - John G
Last month I had one off my card report 0% utilization and this month I had it reporting a 7% utilization and my score drop 1 point So you saying it’s better to have it reporting a 0% correct ?
The due date is likely for the previous statement period. Read this page for detailed information about how paying a credit card bill works: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/ - John G
If I have a $1000 limit and I spend $200. Then I pay it in full between the statement closing and the due date is that a good move? Or should I only pay $199? That way I have a small amount left on the balance.
As John says in this video, 1% is technically better than 0% for credit scoring models. Since credit scoring models are very complex and I don't know your full credit situation I can't tell you for sure what you should do, but looking at just this specific account it sounds like you'd be better off almost paying it off than paying it off completely so there is a very small balance reported instead of no balance. But you may want to experiment with paying it off entirely or almost paying it off and see which yields you better credit scores in your situation, since this utilization factor is re-calculated each month based on the most recent balances and limits. - John G
Hi, I have a $500 limit Old Navy credit card.I got this for around 6 months.I do not want that card anymore,want to cancel it.So should I request a cancellation or should i just wait for the issuer to cancel it due to inactivity? Thank you
As long as the card is paid off and has no annual off your credit is probably better off if you just leave it open and don't use it. They may eventually close it due to inactivity. Read this to learn more: www.creditcardinsider.com/learn/when-to-close-a-credit-card/ - John G
Generally the accounts are both seen as revolving credit accounts. See this video to learn more about that: th-cam.com/video/QNVU3UeXF28/w-d-xo.html - John G
Thank you John & I thought i was doing brilliant by paying on the due date. Will change it to the statement closing date & see how things shoot up. Does that apply to the AmEx charge cars as well ?
No, business credit cards do not show up on credit reports the same way personal cards do. See this to learn more: th-cam.com/video/Glp1oD7_zks/w-d-xo.html - John G
Nope! That’s why it’s good to build your personal credit... build a business and just use your business credit cards... max them out and pay them on time without having to worry about utilization and all the other games like inquires!
Hi so i usually pay off my card on the due date and don't start using it till after the closing date. Is that ok? Can i just not pay the due date and just pay off everything on the closing date? Will i have interests problems?
Hi there John, In your video you mentioned that the optimum time to pay your credit card balance is by the statement closing date. You made the comment that it is ideal to pay the balance in full before the statement closing date so that you carry a 0 balance and in turn a 0% utilization ratio. Is it better to pay the entire balance before the closing date or right on the closing date? The reason I ask this is because I have been told that carrying a balance of 0$ to your statement date can hurt you since it appears as if you have not utilized any of your credit. Could you please clarify and explain which is the best way to pay? Also, I just want to make it clear that when I mean paying the balance, I mean paying in full since I do not ever pay just the minimum required. Thank you so much!
In the video, John says that you'll earn more points in credit scoring models with a 1% utilization ratio than 0%. I realize the what he says after that can be confusing. When he suggests paying off the full amount he's saying it can be simpler to just pay off the full amount than it is to hit exactly 1% utilization if you're concerned about your utilization being high. See this blog post for more about the topic: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/ - John G
how come my credit score dropped does it have anything to do with the credit card company reports to the credit bureau sometimes reports a zero balance sometimes reports a balance I am guessing that’s what could be the problem have to leave a balance, or leave a zero balance to be reported to the credit bureauwhat is your thoughts?
This is great, thank you! I'd heard conflicting advice, where some advised you should leave 1%-5% as a balance to incur minimal interest while still at least showing something on utilization, but definitely felt like this (paying it off in full prior to the statement date) is a better option. I'm glad to get a knowledgeable person confirming this for me. Thanks!
That's terrible advice. My Credit score is around 820 and I always pay my card in full and have never ever paid interest. Only ones who stand there benefit are the credit card companies
I went from 0% to a 1% ultization on vantage score 3.0 model and my score went down 1pt. In my case 0% was better cause when I paid it off to 0%, it went back up.
Hi, I don't understand your question and what you mean by "make mine down." To learn about utilization, I recommend you read this post: www.creditcardinsider.com/blog/how-does-the-credit-card-utilization-percentage-impact-my-credit-score/ - John G
Emileo, it will only make your credit score go down if your utilization is "too high" when the statement cuts. You can use your card, rack up a lot of rewards and cash back, just make sure you have a low utilization by paying down your balance before the statement date. Coming from a Dave Ramsey, debit card mentality, I like the technique John suggests in this video. I make my transactions, get my points/rewards and show a 0 utilization by paying off all my charges before the statement date. It's like using a debit card with a bit of float to play with! ;-)
Hi, When I apply for an auto loan I'm sure they will put my credit report through their scoring model and then my credit score will come out. Do lenders just go by the credit score or will they look at my credit report no matter what?
+Harvonater It depends on the lender, but they will likely look at information outside of one of your many different credit scores. The credit scores can act as a quick filter, but there is leeway with many creditors. Also, they may request other information, like income, that is not on your credit reports, and thus could not be included in your credit scores (see this video for more about that: th-cam.com/video/SVwuU7Kzyj4/w-d-xo.html). Sometimes, if you are denied, you can contact an analyst or underwriter at the bank and discuss why you were denied. They may offer you alternative terms under which they are willing to grant you credit based on your specific situation. So, to answer your question, it depends on the lender, but it is likely they will use one of your credit reports and any other information your provide to calculate some sort of score based on their own internal risk models to decide whether to grant you a loan, and what the terms will be. - John G
what advice do you have on us building up our credit to buy a home? what score range shoukd we have so that we are not getting the horrible loan and rates for a first time home buyer? im also looking to find any help sometimes offered to first time home buyers..my sister and husband got like $30,000.00 towards their down payment and that money never had to be repaid unlese they sold the house before the first five or ten years..
+Mark Jacob Building your credit is the same whether you're in the market for credit cards or a home. Once you get into the "Excellent" range, about a 740 FICO score, you're pretty much going to get the best rates possible. We don't really cover mortgages and home buying, but you can learn some more in this video: "Is my credit different for credit cards VS mortgages?" : th-cam.com/video/tjli4_GG1JI/w-d-xo.html And this post: www.creditcardinsider.com/insider/five-credit-mistakes-to-avoid-when-shopping-for-a-mortgage-loan/ This vid is related too, "How Do I Get A Perfect Credit Score?" : th-cam.com/video/VmCdCaoDHZs/w-d-xo.html - Brendan H.
In general we recommend paying the full statement balance each month by the due date to avoid interest. You can also decide to pay more early if you want to reduce reported utilization. Read this to learn more: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/ - John G
Are you asking about points from some kind of rewards program on your credit card? Or points in credit scores? If you pay off your full balance before the statement date (and report a $0 balance) for all your accounts then you will probably not end up with maximum points with most credit scoring models. See this blog post to learn more: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/ - John G
Thanks for the quick reply. Yes, I was asking about points for a reward program, which depends what the balance is. For example 10 points for each $1 spent. I always thought that it depends what the balance is, but maybe it depends what the usage is? Could you explain, please.
With most credit cards that earn points, if you earn a point per dollar, for example, as long as you spend $10 and don't return the item you'll earn 10 points, regardless of when you pay off that purchase. If you want to know about a specific card's reward program just read the terms of the rewards program on that specific card. - John G
I don't quite understand your question. To learn more about paying your bill and the different dates I recommend you read these pages: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/ www.creditcardinsider.com/learn/how-paying-a-credit-card-works/ - John G
Hello again. Your videos are so informative, and I enjoy occasionally coming back to rewatch them. After watching this particular one, I have two more questions. I'll post the first one here, then the other one in a separate post. First question… Concerning reported credit card utilization, does FICO only look at the aggregate utilization, or does it also look at "per card" utilization? Let's say a user has five credit cards. Four of these cards report 0% utilization, but the last one reports a 50% utilization. Will FICO penalize the user's score because of the 50% utilization? Or is it only concerned with that 10% aggregate?
Slidellian Great question! I believe that FICO looks at the aggregate utilization, rather than "per card" utilization. As I mentioned in response to your other question, I'll ask John for details on this, as well as if there is any effect from carrying balances on multiple cards each month compared to paying off most of them. I'll let you know as soon as I get a response! - Brendan Harkness
so if my credit limit is $200 and all.i want to do is use for gas so charge about $60 a month on it i need to pay down those $60 to 10 dollars before my billing statement comes in and then the next day pay the balance in full? please help i am 18 and i am wanting to get a great credit score
If you spend $60 in a statement period and your limit is $200, then you could reduce your reported utilization by making an extra payment before the statement close date. I always recommend people set up auto-pay for the full new balance. That way, you will never end up paying interest, and you will still build positive credit history. Then, if you want to reduce the utilization that's reported, you could make an extra payment before the statement closing date. You can still have very good credit scores without this extra payment to reduce your reported utilization. Utilization only updates every month (it's not historical) so you can use it as a way to boost your scores when you need it to be higher. Doing it every month doesn't have any long term benefits for your credit scores. I hope this helps. If you have any other questions please ask. - John G
I hope this doesn't sound confusing. Is it BAD to use my credit card for making purchases instead of cash then reimbursing the card with that cash the same or next two days or so? How often should a card be used?
8 months late… but, No it’s not bad at all. Plenty of people do that. Use your card for everything that you can use it for. Get all the points you can if you have a points or cash back card. It piles up
Yes, if you carry a balance from one statement period to the next you'll pay interest with most cads. You do not need to carry a balance to show utilization, since with most cards you can avoid interest as long as you pay the full statement balance each month. Read these to learn more: • www.creditcardinsider.com/blog/whats-a-grace-period-for-a-credit-card-the-secret-to-never-paying-interest/ • www.creditcardinsider.com/blog/best-credit-utilization-ratio/ - John G
Hi John...I'm wondering about the last piece of advice you gave in this video to be true or not. I've had experience with this recently. I may not be a credit expert like yourself, but I have brought my credit score from 550 or so to 803 after and update this week as a matter of fact. What I'm skeptical about is when your saying you can or should pay your balance down by the statement closing date. I have found this to lower your credit score. If you do this two consecutive months in a row you now have 0% utilization which I have found to hurt your score. Even though your using your cards every month how are the Big 3 ..EQ,TU,EX...supposed to know your using these cards if there is nothing to report? That is if you pay them off completely before they are reported. It's almost the same thing with having all those cards and not using them. Eventually they are gonna close your accounts if they lay dormant for too long, Right? It seems to work better to pay the cards down literally to a buck and leave it to report then to pay off completely. I have seen a 20 to 30 point jump doing this in one month once I figured out what I was doing wrong. It's also got to be better to rotate those cards every few months then to not use them at all if your gonna keep them open....Tell me if I'm on the right track here. One more thing I was told even though this is a little hard to do, there should be a small window of time between the reporting and you paying off your balance to not get hit with any interest, but you have to let something small report not 0%. Thanks
I understand you're confused about the idea John mentions about paying in full. Having a $0 balance reported, or 0% utilization, will general not yield credit scores as high as a 1% utilization. John mentions paying in full as a way to reduce balances if you're concerned about utilization. Earlier in the video he says "there's a reality that actually almost comes across as a myth sometimes that if you have a 1% utilization ratio you're actually going to earn more points in your credit score than if you have a 0% ratio - that's actually true." Read this article to learn more about 0% vs 1% utilization: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/ As far as your next question, if you leave an account inactive too long it may be closed. Using the card and paying it off in full by the statement closing date results in a $0 balance on credit reports, but that is not the same as inactivity. The credit bureaus do not have any say in whether a credit card issuer closes your account. You also mention interest, but it really isn't hard to avoid interest. As long as you pay your new balance by the next due date you usually have a little less than a month of grace period with most cards, so avoiding interest shouldn't be a problem. Read this page to learn more about credit card billing cycles: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/ - John G
Credit Card Inside ....Ok I meant that the credit card companies themselves have been know to close accounts with no activity for a long period I believe. I agree with what your saying. Let me ask you a question, do you know if its possible to add say 6 cards in the same day? In other words will the lenders see these inquires instantly? I want to add 6 cards and get a personal loan all in the same day. I only use 2 prepaid cards right now. The reason I'm wanting to do these is I want to move quicker in establishing the credit I want and need. I know for example if I did it this way all the inquiries would fall off at the same time 2 years from now. I would also have all the cards I would want and need for some time. I want to try it this way rather then adding one waiting 6m to year adding another.....that just won't work for me. What do you think? I was also under the impression you might be able to get 2 cards from one lender using only one credit check,therefore only producing one inquiry...
It could be possible to apply for and be approved for 6 cards in one day, however just because you apply all on the same day that does not mean the banks you apply with later in the day won't see the inquiries from earlier in the day. It's possible they'll be able to see the previous inquiries immediately after they're made. I don't see any reason you would have to decide between applying for 6 cards in one day or spacing each card out 6 months or a year before applying for another card. You could always do something in between depending on your credit needs and how quickly you want to open accounts, like applying for a few cards at once, then one or a few more several months later. Some issuers may group multiple credit inquiries together or be able to approve for multiple products with one inquiry, but that's not always the case. A more common practice is for credit scoring models to group multiple inquiries together when someone in shopping for non-revolving credit, like auto loans or mortgages. See this video for more about that: th-cam.com/video/3-urPnXEbdw/w-d-xo.html - John G
With most credit cards you can avoid interest completely when you pay your previous statement balance in full by the due date. If you've made more purchases since your statement was generated and you want to reduce the balance that gets reported to credit bureaus (to reduce your utilization) you could pay some or all of your new balance, as well, before the statement closing date, so the balance that gets reported to credit bureaus is lower. If you pay it down to a $0 balance, you'll likely see lower credit scores than if you pay it down to 1%-10% utilization. See this article to learn more: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/ - John G
I have a question, I recently received a credit card and my credit went down by 59 points when I opened the account. I only have my 4 student loans on my credit and they've been paid every month. It's my first credit card but I was wondering why would it drop so low and how long would it take for it to increase?
derricktye Hi there, I'm sorry for the delay, it looks like I missed your question. There are a few reasons why your credit might go down after opening a new card. Your FICO score takes into account several categories of activity. Since late payments aren't a problem for you, here they are in order of increasing importance: 1. The hard inquiry from the application - this is a negative mark on your credit, but it is rather small and will no longer affect your credit after 1 year. 2. New accounts - Credit scoring models like to see older accounts on your credit report - every time a new account appears it will reduce your score a bit. The more new accounts you have, the riskier you are seen to be. 3. Average age of accounts - Again, your new account will reduce the average age of your accounts. Your student loans are pulling the average age up, but you'll have to wait a while for your accounts to age and increase your score in this category. This category is probably affecting you more than the others above - check out this video for more info on this topic: th-cam.com/video/Ylt6tpGjE9s/w-d-xo.html 4. Overall debt utilization: This category could be hurting you, depending on how you use your credit card. Credit scoring models will penalize you for having a high credit utilization. Your credit utilization is the total amount of debt you carry on credit cards, compared to your total credit limit. For example, say you have 1 credit card with a $1,000 credit limit. If you have a balance of $100, your credit utilization is 10%. For more credit cards, just add the total balances and compare them to the total credit limit. For the best FICO score possible, experts recommend staying below 30% credit utilization. Your credit utilization is reported when your credit card issuer gives you your monthly statement. Whatever balance you see on the statement will be reported to the credit agencies, and will count towards your utilization. If you pay down your balance throughout the month before you get your statement, you can make sure that the balance on your statement is below that 30% utilization mark (or even down to 0%). You can learn all about credit utilization in our video here: th-cam.com/video/Api5ypjM1hw/w-d-xo.html Those are the factors that I think could reduce your score after getting a new credit card. If you keep using credit responsibly, always paying on time and keeping your credit utilization low, you should definitely expect your scores to rise and keep going up. We have some tips on responsible credit card use here: www.creditcardinsider.com/learn/using-credit-cards-responsibly/ Hopefully that answers your question well enough. Let me know if you have any others! - Brendan Harkness
Lets say you have 4 credit cards with 4 different closing dates. You keep all four cards between 1-3% utilization ratio. * Will your score increase four times a month for each card that reports your payment info? If so what would be the average increase in points (5, 10, 20 etc.) * Thanks.
First of all, you have many different credit scores, not just one (watch this video to learn more about that: th-cam.com/video/rv24rJg0-J0/w-d-xo.html). Your credit scores do not update on a fixed schedule, a credit score is calculated based on the current information on your credit reports when someone requests a certain type of score. See this answer I wrote on Quora about how credit scores get updated: www.quora.com/If-you-pay-down-a-credit-card-balance-how-long-does-it-take-for-the-different-credit-reporting-services-to-update-your-credit-score Credit scoring models are proprietary and complex, so there's no way for me to figure out how much of an increase or decrease you'll see in any of your credit scores based on your utilization. As long as you stick to the fundamentals of keeping balances low and making all your payments on time you should be in good shape. - John G
If I pay my credit card on the statement date rather than the due date won't it show as a late payment? For instants if my card is due on the 19th of the month and my statement date is the 22nd won't that be a late payment?
If you don't pay at least the minimum payment due by the due date then your payment will be late. If your payment is due on the 19th of the month and your statement closing date is the 22nd and you wait until the statement closing date that WILL be a late payment. This video is NOT suggesting you make late payments. Instead, this is a technique you can use to reduce the utilization reported to credit bureaus by paying down balances that are still under the grace period and are not due until the next statement closing date. Read this page to learn more about how paying a credit card bill works: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/ If you have any other questions, please ask! - John G
Thanks for your question Henry Medina. (I think you disabled the ability to reply to your comment) While landlords will often check your credit report and use that when evaluating you, that's not the only thing they count. Some may not check at all. If you don't have credit, you can help sway their opinion by doing things like: - Explaining your credit situation to them in person. - Describing your income and ability to pay your bills, providing proof of past payments. - Getting some positive references from past landlords and employers. - Suggesting a shorter lease period than was previously discussed. - Agreeing to provide a larger upfront security deposit. - Offering to pay a large portion of the rent for coming months upfront. - Finding independent landlords who can make their own decisions and don't have bosses to answer to. - Getting a co-signer with good credit to take responsibility with you. I hope that helps - good luck! - Brendan
My due date is on the 4th of every month. I contacted credit card company asking when statement closing date is. I got two different answers. One told me on the 7th and one told me on the 10th. One told me the do a 'snapshot' of my balance from the 7th-10th so not to charge anything during that time. Credit Card Insider, do you have any advice on this??
Thanks for your question jackie susanne. It sounds like customer service wasn't too helpful. Do you mind sharing who your credit card issuer is? Here are two ways you should be able to see your statement closing date on your own: 1) Online - can you access your account online? If so, it may display your statement closing date somewhere in the details. If it doesn't, you should be able to find a link somewhere that will let you view an online version of your last bill (known as a statement). On that bill, you will find your statement closing date. It may give two dates and simply say "Open Date" and "Close Date." My Discover card statements say "Open Date" and "Close Date," while my Bank of America statements say "Statement Closing Date." 2) Your paper statement - do you have a paper copy of a recent credit card bill? If so, you should be able to find your statement closing date here, in the same way described above. Look for "Open Date" and "Close Date" or "Statement Closing Date," or something similar. I hope that helps! Let us know if you still can't find it.
Credit Card Insider Thanks for writing back! My credit card issuer is Capital One. Ive found an old paper statement and only see this "Aug 08-Sept 07, 2014 31 days in billing cycle"..... that's all I can find.
jackie susanne From that, it looks like your statement closing date is the 7th of the month. The next statement period begins the next day on the 8th, and will close on the 7th of the next month. Here, the phrase "billing cycle" means the same thing as "statement period." Also, the next part says "31 days in billing cycle," and that's referring to how many days were counted in the previous period. I hope that clears it up for you. Let us know if you have any other questions!
Credit Card Insider Awesome! Thank you so much! By watching your videos & following a few great tips my transunion and experian have jumped 30 points! So now that I've opened a couple of other small credit cards I'll look for this on my bill, its sad how long I overlooked that but im glued to your videos to learn all I can! God bless you & thanks again, sir!
jackie susanne Wow, that's awesome! Great to hear. I'm glad you like our content and that we've been able to help. Yes, there is definitely a ton of information involved with credit cards and it's easy to overlook things. Good luck with your credit in the future! If you have any other questions just let us know. Thanks! - Brendan
I have a few question I recently got a credit card with a 7k limit. I was wondering, is paying my rent with my credit card a good idea? if I should how should I go about doing it? hypothetical; lets say, I have the rent full and ready to go in my checking account, but I paid it with my credit card [ is this advisable?] [also, good way to earn cash bach? 1.5%] Then pay the credit card ([ A]later that day or [B] at the end of the 30 day statement closing date?) or NOT at all, best to not use my credit card for this? thanks for your time in advance!
I recommend you read these pages to understand residual interest and how credit card interest works: • www.creditcardinsider.com/learn/how-paying-a-credit-card-works/ • www.creditcardinsider.com/learn/minimum-payments-credit-card-interest-calculated/ - John G
Hi! My name is Lam, and I actually have a wierd question for you. As you have said in the video that the due date is always 21 day after your closing date. I check my account and realize that my closing date is always on the 11th of the month, but my due date is on the 8th of the same month also. For example, as I'm writing this, I have a closing date on 09/11/15, but my due date is on 09/08/15. I'm so confused about this. Could you please help me clear this up? Thank you so much.
+lam nguyen Although the law mandates a 21-day minimum grace period, credit card issuers can choose to increase that if they wish. I think in your case, they have simply extended it a bit more. So, your billing period ends on the 11th of the month, and that is when your statement is generated. You are then being given until the 8th of the next month to pay that bill. I understand why it looks confusing, but that due date is actually for the month before. If you check out the details for an individual statement, you can see the exact time period and purchases that you are being billed for. Hopefully that clears up your question - let us know if you have any others! - Brendan H.
can someone please help me do i pay my full balance on the due date or pay it on full on the statement date??? so my due date is the 22nd and my statement is on the 25th. so do i pay it on the 25th?
We recommend paying the full statement balance on the due date to avoid interest. This page explains more: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/ - John G
The only reason I have a credit card is to build up my score. My question is; is it better to pay my credit card bill off the day after the billing statement period each month or on the exact due date every month? This is my first credit card and I only use 2% of it each month..... It's the Amex everyday card. All of my other bills I pay every month on the due date, so why wouldn't I do the same with my credit card? I would greatly appreciate it if someone could answer my question. I've been researching everything about it, but it's a bit confusing at times when there are so many different opinions on this one subject. Thanks in advance.
Your balance on the statement closing date is what usually gets reported. The time of the month you pay your bill doesn't matter, unless you don't pay the minimum by the due date, when it could be considered late by the bank. - John G
I get paid about 5 to 7 days before (approx 27th to 30th of the month) my statement closes very month. You suggest that I pay the Current Balance in full at the time I get paid, then just not use the card till after the new billing cycle begins (3rd day of the month for me), right? This should allow the new statement to read that I owe $0.00 as the balance was fully paid off before the new cycle began, with no new activity since then.
Credit Card Insider is it though also not good to always have the 0% on all cards always as the bureaus won't know if I actually am using & paying down my debt? Also, do companies dislike erratic payment amounts? For instance, I slowly got too far in the red to pay off my the cards in full so I started putting my entire pay onto the primary card then using the card throughout the month, till I got a refund cheque that allowed me to knock all my cards out in full one day. The day before, I was maxed out (within $1) on multiple cards, with some maxed for 4 months & one never having had a zero balance since the day I got the card (I know this is probably bad). I have never been late on any of the cards, but did do minimum payments before.
+Ivy A Nguyen First of all it's good to hear that you are at least making minimum payments. Missing payments is one of the biggest ways you can damage your credit history for a long time. Similarly to one of your other questions, as long as you are making your minimum payments the credit card companies don't really care when, how, or how frequently you make payments. As John says about utilization percentages in the video "the higher that percentage, the lower your score is going to be" and "you want that percentage to be as low as possible." Even though he says 1% is technically better in scoring models than 0%, that's practically hard to achieve, so simply keeping your utilization as low as possible is probably the best approach to maximizing that factor of your scores. Utilization updates every month, and the historical information is not factored in, so if you were maxed out one month and then pay it all off the next month, once that paid off month is reported to the bureaus it doesn't really matter that you were maxed out the previous month. You can read more about utilization here: www.creditcardinsider.com/insider/how-does-the-credit-card-utilization-percentage-impact-my-credit-score/ - John G
Credit Card Insider Thanks. I am still new to credit despite being 30. I was evicted in Jan 2009 & that civil judgement as well as some abused bank-issued (as in the bank I was with at the time) credit cards in 2007/2008 seems to have fallen off my reports by now. I never filed bankruptcy, interestingly. Scary how long 7 years really can be when lived out. Tough I bet I am in good company anyway, as I bet that was when probably thousands of other cases even in my own state were going on due to the economic crash. Glad I also know that CreditOne & First Premier are not good companies & as such I should cancel these before my annual fee is charged again.
If I want a mortgage with a bank, would it improve my chances to first get a secured credit card with them to establish a credit relationship with the bank?
Hi. Clarity needed. On my current Capital One statement, Payment Due Date is Feb 2nd for billing cycle of Dec 6 to Jan 5th 2020. So is 1/5/20 my statement closing date which is same as Reporting Date (to the bureaus)? If my goal is to reach 750+ FICO score, should I pay any balance around 1/5/2020 for 0% utilization? Or does it really matter if I pay it prior to DUE DATE of 2/2/20. Thanks so much.
In general, credit card issuers usually report on the statement closing date, so it's likely your issuer report on 1/5/20. Credit scoring models generally like to see lower utilization for higher scores, so reducing your balance relative to credit limits could help you have a higher score at any point in time. I recommend you read these pages, since they explain a lot more than I can write here: www.creditcardinsider.com/blog/how-does-the-credit-card-utilization-percentage-impact-my-credit-score/ www.creditcardinsider.com/blog/best-credit-utilization-ratio/ - John G
@@Creditcardinsider John, your response herein coupled with the follow up articles were very helpful. Thank u for that. One last question so I'm 'crystal' clear on this. With my goal to hit 750+ FICO Score with lowest U.R% as possible, as long as my UR% is under 10% (excellent rating), that's all that matters to optimize my score in the UR category, right? So having a 0% UR will not serve me any better than a 1% or 3% or 9% UR%, correct? :)
+claude christopher Scott If the utilization is less than ~20% it generally should not negatively impact on your score. So if it's paid off, that's 0%. - John G
Hi I’m just seeing this video & I have some major concerns. Last month I paid my bill by the statement closing date and got charged a late fee however the percentage was at a 36% I lowered this month to a about 10% I payed on the due date the statement date was 4 days late it reported 0% usage my trans union dropped 45 forgoing from 36% to %0 I’m confused????
I recommend you read this page (and the pages linked from it) for an in-depth look at paying credit card bills: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/ - John G
John, my current FICO scores are 756(EQ), 752(TU) and 745(EX). I do exactly what you've said in this video by paying my balances off in full prior to the statement date. As soon as charges post to the account, I pay them in full so my credit report always reflects a $0 balance on my c/c's. My question is should I leave a balance of 1-2% so the statement can reflect that and give me additional points? My goal is to get to the 780 mark and I'm not sure how to do that except for time. I currently just have an auto loan and nothing else. Thanks in advance.
As this video says, you may be able to get some additional points for having 1-2% reported to the credit bureaus, but that's harder to achieve practically and those extra few points probably won't make much of a difference. You could try it for a few months and see how it goes. Let us know how it works out for you! - John G
So I have two credit cards with two different closing dates so does that mean I get reported twice a month to the 3 bureaus? Also, when leaving a small balance for the closing dates do I leave a balance for both cards or just one card? Please advise, thanks!
Each account is likely reported on its own statement closing date to the credit bureaus. Credit scoring models typically like to see fewer accounts with balances. The overall percentage (across all cards) and each card individually both factor into most credit scoring models. So, to maximize your credit scores try to keep your overall utilization percentage as low as possible, and also the percentage on each card. - John G
It is my understanding that the utilization is reported as of the statement date. So the bureaus would have no way of knowing if you went above 9% (with 0-9% being the "excellent" utilization range) so long as, by the statement date, you were back down between 0-9. Is this correct? I ask because I use my credit card often, and for most purchases, often going as high as 60-65% at some point during the cycle but never more than I can pay back (just the things I would be otherwise paying for via debit transactions or cash). Then, by the statement date, I make sure it's between 0-9, wait a couple days, and then pay it fully and well in advance of the due date. Is this a good strategy?
To your first question: It's correct that most issuers will report your balance on the statement date, and based just on the balance reported the bureaus don't see how that balance changed over the course of the statement period or the activity that contributed to that balance. And to your second question: Yes, that sounds like a good strategy. - John G
You're welcome! If you have any other questions, please ask! And please share any videos from this channel that you find helpful with friends! - John G
Hi, I'm not sure I understand what you're asking. Could you add more detail or rephrase the question? It's always OK to pay off a card and you don't need to wait until a certain date to do that. The statement closing date is just when the balance is usually reported to credit bureaus, so if you pay off the entire balance before the statement closing date you will have 0% utilization reported which will generally not give you scores as high as if you had 1%, but either way your scores should be pretty good if you're paying it off in full. - John G
What different between credit score and FICO are they same or are they different can you explain because my score for three different company are different from FICO
+claude christopher Scott FICO is one brand of credit scores. I recommend you check out this video to learn more about credit scores: What's The Most Important Lesson To Learn About Credit Scores? - th-cam.com/video/rv24rJg0-J0/w-d-xo.html - John G
+Abdulaziz Felata The statement closing date is the one to be most concerned about - that's when your utilization will be reported to the credit reporting agencies. The due date is just when you need to pay to avoid being late. After the statement closing date you'll start on the next statement period, so your activity during that time will be on your next upcoming statement. - Brendan H.
If I have $20000 limit and I spend Rs.10000 every week on my card and pay the bill on same day and leave only $100 before statement closing date is it right ,
Tunechi! Yes. If you’re balance is 0 on the closing date then you have a 0% utilization. 1% is regarded as better than 0% so you should leave a tiny amount for the closing date then pay it off a day or two later.
Thanks for the question Gloria Woods. Credit card bills can be a bit confusing, but you should be able to find all of the information you need on your bill or online. Credit card accounts are usually broken down into billing cycles of about 1 month. The end of a billing cycle is often referred to as the "Statement Closing Date." Depending on your card and your specific terms, after a cycle ends you will then usually have some time to pay off that particular cycle, and the due date for that payment is often called the "Payment Due Date." So, it sounds to me like your Billing Cycle ends each month on the 19th. Then, you are given until the 15th of the next month to pay at least the minimum payment for that billing cycle - the 15th is your Payment Due Date. This is an ongoing process that repeats each month. You will need to pay at least the minimum payment listed by the 15th, your Payment Due Date, to avoid late charges and other possible penalties. Hopefully that answers your question - if you need to know more or anything else, please let us know!
It's good in the sense you wouldn't have any credit card debt, but also you may not see credit scores as high as if you have some utilization reported. Read this to learn more: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/ - John G
My balance is $120.74 and my total available credit is $500. So I was thinking about paying $115.74 before the statement closing date and just have a 1% due balance. Just trying to make sure I do this correctly.
Sure, that sounds like a good way to have low utilization reported. This page may be helpful too: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/ - John G
If I do everything you said to do, which I plan on doing, will having a 0% utilization on my billing statement increase my credit score every month or should I carry a balance of 1 to 9% to raise my credit score every month? My goal at this point in my life is to raise my credit score as quickly as possible.
+love9boy You need to owe 1% to 7% of your credit card limit on your first bill statement.Day after your first bill statement, pay it in full! then use the card many times or a few times that month, but make sure you once again owe 1% to 7% on the next bill statement. Again one day after bill statement pay it in full! If you keep doing this you will not be charged interest.And will get a good credit score.Paying interest wont help your credit score don't listen to that myth. But owing nothing on every bill statement for sure won't help your credit score! because you will only be seen as trustworthy of short term loans.follow my tips you will show your trustworthy of long term loans also!
+wise man I finally figured that out and after paying my first bill, only owing 1% of my credit limit and paying before my due date, my score jumped 23 points! Next week my 2nd card will report to the credit bureaus and I did the same thing, only utilizing 1% of my credit limit and paying before the due date for that particular card and cannot wait to see how that positively impacts my score! Thank you John and thank you wise man!
+love9boy Credit card company will tell you as long as you owe less than 30% of your credit card limit you will have a good credit score.But if you want excellent credit score owe 7% or less!
As John says in this video, if you pay down your balance entirely so a 0% balance gets reported on your statement closing date that's seen as worse in credit scoring models than a 1% balance being reported. What really matters for utilization in credit scoring models is the balance and credit limit reported to credit bureaus. - John G
Can I just pay on my due date and just leave a 1% balance for my closing date? My due date is on the 21st of every month and my closing date in on the 24th so my due date will have to be before my close date so how does this work?
Sure, that would work fine to get 1% reported to the credit bureaus. The due date is always before the closing date, usually by about several days. - John G
Generally, 1% is seen as better than 0% by credit scoring models. Read this to learn more: www.creditcardinsider.com/blog/best-credit-utilization-ratio/ - John G
Second question... Will allowing the banks to report a balance on all of my credit cards each month actually dent my scores? I still keep the reported utilization down to 1% on each card, but one of the credit scoring services I subscribe to recently mentioned something like "Too many accounts with balances." Would it help if I paid some of the balances in full before the closing date, then let just one or two report balances? I've been trying to show responsible use with each card, every month, but now I'm wondering if this is actually counterproductive.
Slidellian This is an interesting question and I'll pass it along to John, but until then - I wouldn't expect that to hurt your scores. I believe that credit scoring models take your total credit card debt into account as compared to your total credit limit, rather than looking at individual cards to check their balances. This would be very surprising to me, but there could be a nuance here that I'm not aware of, however (credit is complicated :-) ) It's hard to say, but I'd guess that the credit scoring service you're using might just be trying to give some friendly advice about not holding a lot of debt, without actually taking into account how much total debt you have. I don't really understand this message otherwise, because generally you want to have more accounts on your report to avoid having a thin credit file. And if you know that your total utilization is very low, it makes this message even more mysterious. I'd suggest trying to dig a bit deeper into that, or to check out a different service and compare their recommendations. Here's a personal example: I have low overall credit utilization, but one of my credit cards does have a high balance. Credit Karma flagged that card as being a potential threat, for being more than 35% utilized. However, Credit Karma also reports my overall credit utilization as very low and gives me an excellent rank in that category. So, this makes me think that the message you got might be a bit misleading. Hopefully that helps for now - I'll let you know as soon as I get a response from John! - Brendan Harkness
Thanks, Brendan! Since I posted this, I did see a video somewhere where John mentioned FICO penalizing you for having too many accounts with balances. The weird thing is, on some of these cards, I was only allowing them to report balances as low as around $10, just to show activity. But this month, I'm only going to allow my Chase card to report a balance, then see what happens.
Slidellian I love that you're doing such detailed personal research and being so thorough! I think I was not exactly right when I said that having multiple cards reporting a balance will not affect your scores, and I'm very thankful that you've led me to look deeper here. So, thanks! This is definitely a tricky issue, and we should get to the bottom of it. I think the confusion came from this: when it comes to your revolving utilization ratio, FICO doesn't care whether the balances are on one card or several. However, there are 2 other components to the "Amounts Owed" category that I wasn't taking into consideration correctly, and almost seem conflicting. FICO calls these 2 components: "Whether you're showing an amount owed on certain types of accounts" and "How many accounts have balances" Read more about them here: www.myfico.com/CreditEducation/Amounts-Owed.aspx FICO says that having a small balance on accounts may be better than having no balance at all; but FICO also says that having too many accounts with balances can indicate higher risk, and be detrimental. So, while carrying small balances on accounts can be good for your credit score, too many accounts with balances can also be detrimental. The real question is, how many accounts with balances is too many? I'm not sure how to answer that question exactly, it may differ by person and by the version of FICO being used. That is where the credit monitoring services come in, which probably have an automatic alert that triggers when a certain number of credit accounts have balances. I think you're doing the right thing now: paying attention to your credit monitoring service, and making small changes to see how they affect your credit. I think this investigative approach is probably the right way for everyone, rather than trying to give a generic answer of "you should have this many accounts and should have these kinds of balances on them." So, I commend your efforts, and would love to hear the results of your experiments. Thanks so much! By the way, perhaps you're thinking of this video, where John does indeed mention that FICO penalizes for having too many accounts with balances: th-cam.com/video/Y6mY3Rlzp_k/w-d-xo.html - Brendan Harkness
+Credit Card Insider Thank you for the link and the feedback! I love talking about credit. About seven years ago, I began doing quite a bit of reading on the subject, and I became hooked. I've even been called a "FICO fanatic" by one of my "friends" lol. I live just outside of New Orleans. If you guys ever make it there, let me know, and I'll buy a couple of rounds of cafe au lait and beignets.
My question is if my card limit is 20000 and I have made many payments of like 1000-3000 and 10000 and I am making payment at the same time on the same day and again next day I spend 9000 and pay same day my limit will remain intact and if I leave 200 balance on my card to be paid before due is it good or not
A $200 balance on a $20000 limit is only 10%, which is quite low for utilization, so that sounds good to me. As far as your credit limit availability, I recommend you read the terms of your card, because the way the credit limit and the time it takes to process payments (and free up more of your credit limit) can vary from one card to the next. - John G
Thanks for replying , as soon as I pay my outstanding balance my limit rises again immediately , can spend and pay every other day like this using credit card as a debit card , spends may rise to above $60,000 but will show only $200?
I must say you are the best credit card or Credit adviser I’ve ever seen real talk
I have looked all over to see the differences between statement closing date vs due date and you are the first one the broke it down. Thanks!
Excellent Info , I wish i had this info 20 years ago.
Same here. I'd be a gaziilionaire.
Thanks for all your help John. I love how your videos are short and to the point. Thanks for doing what you do!
Hey, I just noticed this video! Thank you for answering my question!
Slidellian You're welcome!
The way you explain things is FANTASTIC.
Basically they get mad if you don’t let them get any money off you by your credit utilization being 0% so they lower the score nearly forcing you to leave utilization at least at 1% knowing if you do this they get to charge you interest on top of your next statement balance correct? This is so sad but I heard some people credit score goes up for having 0% utilization I’m not sure
Credit card issuers do not determine credit scores. 1% utilization does not mean paying any interest on cards. You can read these pages to learn more about how credit scores work and how to have 1% utilization without paying interest:
www.creditcardinsider.com/learn/whats-in-your-credit-score/
www.creditcardinsider.com/blog/how-does-the-credit-card-utilization-percentage-impact-my-credit-score/
www.creditcardinsider.com/blog/best-credit-utilization-ratio/
www.creditcardinsider.com/learn/how-paying-a-credit-card-works/
- John G
+Saffron Maverick Great question! For some reason I was unable to reply to your comment directly.
Charge cards, whether they're from Amex or anywhere else, are actually a different animal than credit cards.
They don't have a regular credit limit and don't let you transfer a balance from month to month, a process known as revolving.
Charge cards are not calculated into your overall credit utilization. This category is also known as revolving utilization, because it only counts accounts that are designated "revolving."
By the way, if you're aiming to reduce your statement balance, you'll need to pay down your balance before the statement is generated. Look for the "statement closing date" on a statement or online - that's the date at which your billing period ends, so you'll need to send in a payment before that closing date.
Let us know if you have any more questions!
- Brendan H.
John, you helped me go from 602 to 817.
My utilization right now with both my cards is 0.36% will that be reported as 0? Will they round it down? That basically means you have to spend a certain amount in a credit card
The video I’ve been looking for!! Thanks so much!
I have 7 cards and used to have them set to autopay on due date. I recently switched to pay in full the day before the statement close date and my score went up 39 points to 820.
So my usage went up to % percent and my score dropped significantly how do I fix it and how long is the turn around to bring it back up
This guys is super knowledgeable and smart everything he says is on point and they explanation is outstanding!!
This was extremely helpful!!!! Thanks a lot!!!
Okay, my starting cycle is on the 15th and closes on the 14th , but I noticed that due it's on 11th , it's before the 14th which is the closing date and the credit card report's on the 14 th as well.
Thank you so much for this information. I am an international student and didn't know about banking here. My credit score went from 780 to 720 and I was worried that what wrong am I doing. But now I can manage my payments better. Thanks again.
Great! Check out this blog post for more about the topic: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/
- John G
Will my credit card line of credit be closed if I don't use that card
I just recently paid off an account that is a Amex gold which must me paid in full and another card with a 165 balance before my statement dates and when it hit my report I’d went from 770 to 754 for essentially having 0 utilization which still doesn’t make sense my score was higher when I had a balance of 2300 on my Amex
This page explains more about utilization, and how 0% can result in lower scores: www.creditcardinsider.com/blog/best-credit-utilization-ratio/
- John G
It’s amazing that he said this because other people are saying you should keep it below 10% and if you pay it off your score will not go up as high. Someone is right and someone is wrong
Read this page for more details: www.creditcardinsider.com/blog/best-credit-utilization-ratio/
- John G
I am trying the AZEO method for the first time this month. I previously kept a very small balance on all cards (usually 1 to 2 percent), then read on my credit report that I had “too many revolving accounts with balances.” This month’s strategy is intended to fix that.
So would it be okay to make a purchase and then pay the balance when I get home or later that week? Would this still build a good credit history? Thanks! 🙂
my scd is 19th of sept, I just got my first CC and I was thinking about paying 5+ days before my SCD
My credit utilization is super high because my account is in collection. Should I pay the account off just to get the utilization low or let it fall off because the credit card is already in collection. I have a Badcock credit card $1000. and the balance says its $1200.00
Hi, by "let it fall off" do you mean wait 7 years from when it went to collections so it isn't on your credit reports any more?
- John G
Yes because my utilization says 108% according to Credit Karma and Transunion is not reporting my credit utilization. I just want to know do I need to call them and make payments to get it to lower my credit utilization. The account was open last year and they are still adding $15 every month.
I'm not quite sure what you're asking - are you asking if you should pay your bills or not? Generally I think it's a good idea to pay your bills. If you don't pay the bill, you may also get sued by the lender.
- John G
Is the reporting date the same as the closing statement date
Usually, but not always. Read this to learn more: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/
- John G
No. i experimented one month and paid my balance in full thus giving me 0% utilization and...it dropped my score. The next month I carried a small balance about 9% utilization and guess what, my score went back up.
+wise man which will force you to pay interest :/
I'll explain once apon a time i was new to credit cards. your first bill statement you want to owe 1% to 7% of your credit card limit lower the better, but one day after that first bill statement pay it in full!! use the credit card again but make sure you again owe that 1% to 7% on the next bill statement! the credit card company will tell you to owe less than 30% which will give you a good score, do what i tell you you will have an excellent score and not pay interest.
+wise man if you carry a balance you will pay interest on it.
+wise man i have a good understanding on credit. in the last 12 months i raised my score 150 pts
good! glad to see your doing well your more responsible than some others that have credit cards. or should you be giving me advise lol
Great video!!
Too bad you can't set auto payment before closing date :)
Kr En Agreed!
You could, just what he said . thirty days after your purchase pay the balance off in full.
im trying to get my credit clean and score up before they raise rates for financing on homes..lucky yesterday the feds chose not to raise rates and leave them where they are for now..dont know what would benefit me better..better score and locked in prime low rate, or what ok credit and going for a home loan before the feds raise the rates? im very worried and dont wanna loose out...rates may never get this low again in my life time
+Mark Jacob Wow that's an intriguing question you have. I wish I could predict the future and let you know, but if I could do that... Oh well.
Whichever option you choose, you'll be able to improve your credit score as you go. Perhaps eventually it'd be smart to refinance your loan once you can get better rates.
Good luck! Feel free to let us know how you decide either way.
- Brendan H.
Extremely useful. Thank you!
As long as I pay my balance off in full and on time, this doesn't concern me. However, I am working on lowering my credit utilization rate. My credit score has fluctuated from going up 46 points to going down 30 points. This had more to do with my credit utilization and not because of being late or missed payments. I pay in full 100 percent of the time.
What about AMEX charge cards that don't have a official pre set spending limit?
They'll usually use whatever the highest balance that's been reported for the card. Watch this to learn more about how those cards work: th-cam.com/video/vnpRkNyulFg/w-d-xo.html
- John G
first time watching this channel very helpfull got suscribed keep up the good work👍👍👍👍
+omar gutierrez Great, thanks! Please tell a friend about this channel, too!
- John G
Would u say the statement closing date is the same as reporting date. When it’s actually reported to the bureaus?
It's up to the specific credit card issuer and its policies, but usually the balance on the statement closing date is what's reported.
- John G
Thank you for the valuable information...I have several credit cards and try paid this off before the closing dates.
i wana order a mastercard but i wana know if i d'ont use it at all do i still have to pay fees
If it's a card with no annual fee and you don't use it then a credit card doesn't cost anything to have. If you're new to credit cards I recommend you start by reading this guide: www.creditcardinsider.com/learn/definitive-guide-how-to-build-credit-with-credit-cards/
- John G
I have been trying to figure according to credit karma my equifax dropped overnight 45 points when a new tradeline was added showing the credit lime thereby reducing my utilization rate from 70% to 45%. None of my personal line have any balance the only thing with balance is an account that I am an authorized user on. Why did this occur?
+My Hangout Academy It's possible the new credit line brought down your average age of accounts significantly enough to cause the drop. As far as credit scoring models go, a longer average age of accounts is better.
- John G
I was told to leave a small balance on my card $5-$10. Because paying it in full before the reporting date can be interpreted as not being used. Next month trying something new.
If you pay off the entire new balance and statement balance before the due date your credit scores might be lower than if you have 1% utilization or some other small utilization amount. See this post: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/
- John G
I lost 13 points for paying my balance to zero and having no balance on my cards and I'm rebuilding credit and have access to my fico alerts daily . Pretty bummed because I was almost to 600. Very confused why it dropped. It says balance decreased by 54 dollars and said -13 on equifax
Yes, you may see lower credit scores at 0% than 1% utilization. This page explains more: www.creditcardinsider.com/blog/best-credit-utilization-ratio/
- John G
Last month I had one off my card report 0% utilization and this month I had it reporting a 7% utilization and my score drop 1 point So you saying it’s better to have it reporting a 0% correct ?
Is the 1% for each card or both cards combined should equal 1%?
Both are factored into most credit scoring models.
- John G
I have a statement date of 12-22-20 and due 12-20-20, should due date after statement due?
The due date is likely for the previous statement period. Read this page for detailed information about how paying a credit card bill works: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/
- John G
If I have a $1000 limit and I spend $200. Then I pay it in full between the statement closing and the due date is that a good move? Or should I only pay $199? That way I have a small amount left on the balance.
As John says in this video, 1% is technically better than 0% for credit scoring models. Since credit scoring models are very complex and I don't know your full credit situation I can't tell you for sure what you should do, but looking at just this specific account it sounds like you'd be better off almost paying it off than paying it off completely so there is a very small balance reported instead of no balance. But you may want to experiment with paying it off entirely or almost paying it off and see which yields you better credit scores in your situation, since this utilization factor is re-calculated each month based on the most recent balances and limits.
- John G
Hi,
I have a $500 limit Old Navy credit card.I got this for around 6 months.I do not want that card anymore,want to cancel it.So should I request a cancellation or should i just wait for the issuer to cancel it due to inactivity?
Thank you
As long as the card is paid off and has no annual off your credit is probably better off if you just leave it open and don't use it. They may eventually close it due to inactivity. Read this to learn more: www.creditcardinsider.com/learn/when-to-close-a-credit-card/
- John G
if secure credit card score and unsecured load score display separately or is there any way bank can know if it is secure or unsecured loan..?
Generally the accounts are both seen as revolving credit accounts. See this video to learn more about that: th-cam.com/video/QNVU3UeXF28/w-d-xo.html
- John G
Thank you John & I thought i was doing brilliant by paying on the due date. Will change it to the statement closing date & see how things shoot up. Does that apply to the AmEx charge cars as well ?
Does a Business credit card affect utilization ratio and age the same way personal credit cards do?
No, business credit cards do not show up on credit reports the same way personal cards do. See this to learn more: th-cam.com/video/Glp1oD7_zks/w-d-xo.html
- John G
Nope! That’s why it’s good to build your personal credit... build a business and just use your business credit cards... max them out and pay them on time without having to worry about utilization and all the other games like inquires!
Hi so i usually pay off my card on the due date and don't start using it till after the closing date. Is that ok?
Can i just not pay the due date and just pay off everything on the closing date? Will i have interests problems?
Hi there John,
In your video you mentioned that the optimum time to pay your credit card balance is by the statement closing date. You made the comment that it is ideal to pay the balance in full before the statement closing date so that you carry a 0 balance and in turn a 0% utilization ratio. Is it better to pay the entire balance before the closing date or right on the closing date? The reason I ask this is because I have been told that carrying a balance of 0$ to your statement date can hurt you since it appears as if you have not utilized any of your credit. Could you please clarify and explain which is the best way to pay? Also, I just want to make it clear that when I mean paying the balance, I mean paying in full since I do not ever pay just the minimum required. Thank you so much!
In the video, John says that you'll earn more points in credit scoring models with a 1% utilization ratio than 0%. I realize the what he says after that can be confusing. When he suggests paying off the full amount he's saying it can be simpler to just pay off the full amount than it is to hit exactly 1% utilization if you're concerned about your utilization being high. See this blog post for more about the topic: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/
- John G
how come my credit score dropped does it have anything to do with the credit card company reports to the credit bureau sometimes reports a zero balance sometimes reports a balance I am guessing that’s what could be the problem have to leave a balance, or leave a zero balance to be reported to the credit bureauwhat is your thoughts?
Wow, that was some good info. I just subscribed.
This is great, thank you! I'd heard conflicting advice, where some advised you should leave 1%-5% as a balance to incur minimal interest while still at least showing something on utilization, but definitely felt like this (paying it off in full prior to the statement date) is a better option. I'm glad to get a knowledgeable person confirming this for me. Thanks!
You should incur no interest because the report date and the due date are not the same.
That's terrible advice. My Credit score is around 820 and I always pay my card in full and have never ever paid interest. Only ones who stand there benefit are the credit card companies
Great video John!
I went from 0% to a 1% ultization on vantage score 3.0 model and my score went down 1pt. In my case 0% was better cause when I paid it off to 0%, it went back up.
I mostly agree with what you said, however I wish you would’ve explained the nuance of the all zero penalty in addition.
I don't get it so using my credit card alot will make mine down.? Then what about credit that say rewards or cash backs.?
Hi, I don't understand your question and what you mean by "make mine down." To learn about utilization, I recommend you read this post: www.creditcardinsider.com/blog/how-does-the-credit-card-utilization-percentage-impact-my-credit-score/
- John G
Emileo, it will only make your credit score go down if your utilization is "too high" when the statement cuts. You can use your card, rack up a lot of rewards and cash back, just make sure you have a low utilization by paying down your balance before the statement date.
Coming from a Dave Ramsey, debit card mentality, I like the technique John suggests in this video. I make my transactions, get my points/rewards and show a 0 utilization by paying off all my charges before the statement date.
It's like using a debit card with a bit of float to play with! ;-)
Hi, When I apply for an auto loan I'm sure they will put my credit report through their scoring model and then my credit score will come out. Do lenders just go by the credit score or will they look at my credit report no matter what?
+Harvonater It depends on the lender, but they will likely look at information outside of one of your many different credit scores. The credit scores can act as a quick filter, but there is leeway with many creditors. Also, they may request other information, like income, that is not on your credit reports, and thus could not be included in your credit scores (see this video for more about that: th-cam.com/video/SVwuU7Kzyj4/w-d-xo.html). Sometimes, if you are denied, you can contact an analyst or underwriter at the bank and discuss why you were denied. They may offer you alternative terms under which they are willing to grant you credit based on your specific situation. So, to answer your question, it depends on the lender, but it is likely they will use one of your credit reports and any other information your provide to calculate some sort of score based on their own internal risk models to decide whether to grant you a loan, and what the terms will be.
- John G
what advice do you have on us building up our credit to buy a home? what score range shoukd we have so that we are not getting the horrible loan and rates for a first time home buyer? im also looking to find any help sometimes offered to first time home buyers..my sister and husband got like $30,000.00 towards their down payment and that money never had to be repaid unlese they sold the house before the first five or ten years..
+Mark Jacob Building your credit is the same whether you're in the market for credit cards or a home. Once you get into the "Excellent" range, about a 740 FICO score, you're pretty much going to get the best rates possible.
We don't really cover mortgages and home buying, but you can learn some more in this video: "Is my credit different for credit cards VS mortgages?" : th-cam.com/video/tjli4_GG1JI/w-d-xo.html
And this post: www.creditcardinsider.com/insider/five-credit-mistakes-to-avoid-when-shopping-for-a-mortgage-loan/
This vid is related too, "How Do I Get A Perfect Credit Score?" : th-cam.com/video/VmCdCaoDHZs/w-d-xo.html
- Brendan H.
On my credit card, should I pay in full on the closing statement date, 10 th, or pay in full , before ahead for statement closing date???
In general we recommend paying the full statement balance each month by the due date to avoid interest. You can also decide to pay more early if you want to reduce reported utilization. Read this to learn more: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/
- John G
So how do you get your points if you pay in full before the statement date???
Are you asking about points from some kind of rewards program on your credit card? Or points in credit scores? If you pay off your full balance before the statement date (and report a $0 balance) for all your accounts then you will probably not end up with maximum points with most credit scoring models. See this blog post to learn more: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/
- John G
Thanks for the quick reply. Yes, I was asking about points for a reward program, which depends what the balance is. For example 10 points for each $1 spent. I always thought that it depends what the balance is, but maybe it depends what the usage is? Could you explain, please.
With most credit cards that earn points, if you earn a point per dollar, for example, as long as you spend $10 and don't return the item you'll earn 10 points, regardless of when you pay off that purchase. If you want to know about a specific card's reward program just read the terms of the rewards program on that specific card.
- John G
Thanks John!
wait so let’s say i have $300 limit. i use the card aug. 1st. i pay aug. 30th for the closing date? instead of aug 31 which is the due date?
I don't quite understand your question. To learn more about paying your bill and the different dates I recommend you read these pages:
www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/
www.creditcardinsider.com/learn/how-paying-a-credit-card-works/
- John G
Hello again. Your videos are so informative, and I enjoy occasionally coming back to rewatch them. After watching this particular one, I have two more questions. I'll post the first one here, then the other one in a separate post.
First question… Concerning reported credit card utilization, does FICO only look at the aggregate utilization, or does it also look at "per card" utilization?
Let's say a user has five credit cards. Four of these cards report 0% utilization, but the last one reports a 50% utilization. Will FICO penalize the user's score because of the 50% utilization? Or is it only concerned with that 10% aggregate?
Slidellian Great question! I believe that FICO looks at the aggregate utilization, rather than "per card" utilization.
As I mentioned in response to your other question, I'll ask John for details on this, as well as if there is any effect from carrying balances on multiple cards each month compared to paying off most of them.
I'll let you know as soon as I get a response!
- Brendan Harkness
Thanks!
Hi, someone got bankrupt or default in the uk then if person move to the USA will it have impact in their USA credit report or score? Please answer 😊
I'm not sure, as we are only focused on the US.
- John G
so if my credit limit is $200 and all.i want to do is use for gas so charge about $60 a month on it i need to pay down those $60 to 10 dollars before my billing statement comes in and then the next day pay the balance in full? please help i am 18 and i am wanting to get a great credit score
If you spend $60 in a statement period and your limit is $200, then you could reduce your reported utilization by making an extra payment before the statement close date. I always recommend people set up auto-pay for the full new balance. That way, you will never end up paying interest, and you will still build positive credit history. Then, if you want to reduce the utilization that's reported, you could make an extra payment before the statement closing date. You can still have very good credit scores without this extra payment to reduce your reported utilization. Utilization only updates every month (it's not historical) so you can use it as a way to boost your scores when you need it to be higher. Doing it every month doesn't have any long term benefits for your credit scores. I hope this helps. If you have any other questions please ask.
- John G
I hope this doesn't sound confusing.
Is it BAD to use my credit card for making purchases instead of cash then reimbursing the card with that cash the same or next two days or so? How often should a card be used?
8 months late… but, No it’s not bad at all. Plenty of people do that. Use your card for everything that you can use it for. Get all the points you can if you have a points or cash back card. It piles up
But wouldn’t carrying over a balance make you pay interest?
Yes, if you carry a balance from one statement period to the next you'll pay interest with most cads. You do not need to carry a balance to show utilization, since with most cards you can avoid interest as long as you pay the full statement balance each month. Read these to learn more:
• www.creditcardinsider.com/blog/whats-a-grace-period-for-a-credit-card-the-secret-to-never-paying-interest/
• www.creditcardinsider.com/blog/best-credit-utilization-ratio/
- John G
Hi John...I'm wondering about the last piece of advice you gave in this video to be true or not. I've had experience with this recently. I may not be a credit expert like yourself, but I have brought my credit score from 550 or so to 803 after and update this week as a matter of fact. What I'm skeptical about is when your saying you can or should pay your balance down by the statement closing date. I have found this to lower your credit score. If you do this two consecutive months in a row you now have 0% utilization which I have found to hurt your score. Even though your using your cards every month how are the Big 3 ..EQ,TU,EX...supposed to know your using these cards if there is nothing to report? That is if you pay them off completely before they are reported. It's almost the same thing with having all those cards and not using them. Eventually they are gonna close your accounts if they lay dormant for too long, Right? It seems to work better to pay the cards down literally to a buck and leave it to report then to pay off completely. I have seen a 20 to 30 point jump doing this in one month once I figured out what I was doing wrong. It's also got to be better to rotate those cards every few months then to not use them at all if your gonna keep them open....Tell me if I'm on the right track here. One more thing I was told even though this is a little hard to do, there should be a small window of time between the reporting and you paying off your balance to not get hit with any interest, but you have to let something small report not 0%. Thanks
I understand you're confused about the idea John mentions about paying in full. Having a $0 balance reported, or 0% utilization, will general not yield credit scores as high as a 1% utilization. John mentions paying in full as a way to reduce balances if you're concerned about utilization. Earlier in the video he says "there's a reality that actually almost comes across as a myth sometimes that if you have a 1% utilization ratio you're actually going to earn more points in your credit score than if you have a 0% ratio - that's actually true." Read this article to learn more about 0% vs 1% utilization: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/ As far as your next question, if you leave an account inactive too long it may be closed. Using the card and paying it off in full by the statement closing date results in a $0 balance on credit reports, but that is not the same as inactivity. The credit bureaus do not have any say in whether a credit card issuer closes your account. You also mention interest, but it really isn't hard to avoid interest. As long as you pay your new balance by the next due date you usually have a little less than a month of grace period with most cards, so avoiding interest shouldn't be a problem. Read this page to learn more about credit card billing cycles: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/
- John G
Credit Card Inside ....Ok I meant that the credit card companies themselves have been know to close accounts with no activity for a long period I believe. I agree with what your saying. Let me ask you a question, do you know if its possible to add say 6 cards in the same day? In other words will the lenders see these inquires instantly? I want to add 6 cards and get a personal loan all in the same day. I only use 2 prepaid cards right now. The reason I'm wanting to do these is I want to move quicker in establishing the credit I want and need. I know for example if I did it this way all the inquiries would fall off at the same time 2 years from now. I would also have all the cards I would want and need for some time. I want to try it this way rather then adding one waiting 6m to year adding another.....that just won't work for me. What do you think? I was also under the impression you might be able to get 2 cards from one lender using only one credit check,therefore only producing one inquiry...
It could be possible to apply for and be approved for 6 cards in one day, however just because you apply all on the same day that does not mean the banks you apply with later in the day won't see the inquiries from earlier in the day. It's possible they'll be able to see the previous inquiries immediately after they're made.
I don't see any reason you would have to decide between applying for 6 cards in one day or spacing each card out 6 months or a year before applying for another card. You could always do something in between depending on your credit needs and how quickly you want to open accounts, like applying for a few cards at once, then one or a few more several months later.
Some issuers may group multiple credit inquiries together or be able to approve for multiple products with one inquiry, but that's not always the case. A more common practice is for credit scoring models to group multiple inquiries together when someone in shopping for non-revolving credit, like auto loans or mortgages. See this video for more about that: th-cam.com/video/3-urPnXEbdw/w-d-xo.html
- John G
Credit Card Insider ok...Thanks John
You're welcome
i have a question my due date is 7th if every month and my statementt closing is the 11th when should I pay it in full
With most credit cards you can avoid interest completely when you pay your previous statement balance in full by the due date. If you've made more purchases since your statement was generated and you want to reduce the balance that gets reported to credit bureaus (to reduce your utilization) you could pay some or all of your new balance, as well, before the statement closing date, so the balance that gets reported to credit bureaus is lower. If you pay it down to a $0 balance, you'll likely see lower credit scores than if you pay it down to 1%-10% utilization. See this article to learn more: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/
- John G
I have a question, I recently received a credit card and my credit went down by 59 points when I opened the account. I only have my 4 student loans on my credit and they've been paid every month. It's my first credit card but I was wondering why would it drop so low and how long would it take for it to increase?
derricktye Hi there, I'm sorry for the delay, it looks like I missed your question. There are a few reasons why your credit might go down after opening a new card. Your FICO score takes into account several categories of activity. Since late payments aren't a problem for you, here they are in order of increasing importance:
1. The hard inquiry from the application - this is a negative mark on your credit, but it is rather small and will no longer affect your credit after 1 year.
2. New accounts - Credit scoring models like to see older accounts on your credit report - every time a new account appears it will reduce your score a bit. The more new accounts you have, the riskier you are seen to be.
3. Average age of accounts - Again, your new account will reduce the average age of your accounts. Your student loans are pulling the average age up, but you'll have to wait a while for your accounts to age and increase your score in this category.
This category is probably affecting you more than the others above - check out this video for more info on this topic: th-cam.com/video/Ylt6tpGjE9s/w-d-xo.html
4. Overall debt utilization: This category could be hurting you, depending on how you use your credit card. Credit scoring models will penalize you for having a high credit utilization. Your credit utilization is the total amount of debt you carry on credit cards, compared to your total credit limit.
For example, say you have 1 credit card with a $1,000 credit limit. If you have a balance of $100, your credit utilization is 10%. For more credit cards, just add the total balances and compare them to the total credit limit.
For the best FICO score possible, experts recommend staying below 30% credit utilization.
Your credit utilization is reported when your credit card issuer gives you your monthly statement. Whatever balance you see on the statement will be reported to the credit agencies, and will count towards your utilization.
If you pay down your balance throughout the month before you get your statement, you can make sure that the balance on your statement is below that 30% utilization mark (or even down to 0%).
You can learn all about credit utilization in our video here: th-cam.com/video/Api5ypjM1hw/w-d-xo.html
Those are the factors that I think could reduce your score after getting a new credit card. If you keep using credit responsibly, always paying on time and keeping your credit utilization low, you should definitely expect your scores to rise and keep going up.
We have some tips on responsible credit card use here: www.creditcardinsider.com/learn/using-credit-cards-responsibly/
Hopefully that answers your question well enough. Let me know if you have any others!
- Brendan Harkness
Lets say you have 4 credit cards with 4 different closing dates.
You keep all four cards between 1-3% utilization ratio.
*
Will your score increase four times a month for each card that reports your payment info?
If so what would be the average increase in points (5, 10, 20 etc.)
*
Thanks.
First of all, you have many different credit scores, not just one (watch this video to learn more about that: th-cam.com/video/rv24rJg0-J0/w-d-xo.html).
Your credit scores do not update on a fixed schedule, a credit score is calculated based on the current information on your credit reports when someone requests a certain type of score. See this answer I wrote on Quora about how credit scores get updated: www.quora.com/If-you-pay-down-a-credit-card-balance-how-long-does-it-take-for-the-different-credit-reporting-services-to-update-your-credit-score
Credit scoring models are proprietary and complex, so there's no way for me to figure out how much of an increase or decrease you'll see in any of your credit scores based on your utilization. As long as you stick to the fundamentals of keeping balances low and making all your payments on time you should be in good shape.
- John G
If I pay my credit card on the statement date rather than the due date won't it show as a late payment? For instants if my card is due on the 19th of the month and my statement date is the 22nd won't that be a late payment?
If you don't pay at least the minimum payment due by the due date then your payment will be late. If your payment is due on the 19th of the month and your statement closing date is the 22nd and you wait until the statement closing date that WILL be a late payment. This video is NOT suggesting you make late payments. Instead, this is a technique you can use to reduce the utilization reported to credit bureaus by paying down balances that are still under the grace period and are not due until the next statement closing date. Read this page to learn more about how paying a credit card bill works: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/
If you have any other questions, please ask!
- John G
Thanks for your question Henry Medina. (I think you disabled the ability to reply to your comment)
While landlords will often check your credit report and use that when evaluating you, that's not the only thing they count. Some may not check at all. If you don't have credit, you can help sway their opinion by doing things like:
- Explaining your credit situation to them in person.
- Describing your income and ability to pay your bills, providing proof of past payments.
- Getting some positive references from past landlords and employers.
- Suggesting a shorter lease period than was previously discussed.
- Agreeing to provide a larger upfront security deposit.
- Offering to pay a large portion of the rent for coming months upfront.
- Finding independent landlords who can make their own decisions and don't have bosses to answer to.
- Getting a co-signer with good credit to take responsibility with you.
I hope that helps - good luck!
- Brendan
Very informative videos. Could anyone help me about doing velocity banking strategy in the uk.
My due date is on the 4th of every month. I contacted credit card company asking when statement closing date is. I got two different answers. One told me on the 7th and one told me on the 10th. One told me the do a 'snapshot' of my balance from the 7th-10th so not to charge anything during that time. Credit Card Insider, do you have any advice on this??
Thanks for your question jackie susanne. It sounds like customer service wasn't too helpful. Do you mind sharing who your credit card issuer is? Here are two ways you should be able to see your statement closing date on your own:
1) Online - can you access your account online? If so, it may display your statement closing date somewhere in the details. If it doesn't, you should be able to find a link somewhere that will let you view an online version of your last bill (known as a statement).
On that bill, you will find your statement closing date. It may give two dates and simply say "Open Date" and "Close Date." My Discover card statements say "Open Date" and "Close Date," while my Bank of America statements say "Statement Closing Date."
2) Your paper statement - do you have a paper copy of a recent credit card bill? If so, you should be able to find your statement closing date here, in the same way described above. Look for "Open Date" and "Close Date" or "Statement Closing Date," or something similar.
I hope that helps! Let us know if you still can't find it.
Credit Card Insider
Thanks for writing back! My credit card issuer is Capital One. Ive found an old paper statement and only see this "Aug 08-Sept 07, 2014 31 days in billing cycle"..... that's all I can find.
jackie susanne From that, it looks like your statement closing date is the 7th of the month. The next statement period begins the next day on the 8th, and will close on the 7th of the next month. Here, the phrase "billing cycle" means the same thing as "statement period."
Also, the next part says "31 days in billing cycle," and that's referring to how many days were counted in the previous period.
I hope that clears it up for you. Let us know if you have any other questions!
Credit Card Insider
Awesome! Thank you so much! By watching your videos & following a few great tips my transunion and experian have jumped 30 points! So now that I've opened a couple of other small credit cards I'll look for this on my bill, its sad how long I overlooked that but im glued to your videos to learn all I can! God bless you & thanks again, sir!
jackie susanne Wow, that's awesome! Great to hear. I'm glad you like our content and that we've been able to help. Yes, there is definitely a ton of information involved with credit cards and it's easy to overlook things.
Good luck with your credit in the future! If you have any other questions just let us know. Thanks!
- Brendan
I have a few question
I recently got a credit card with a 7k limit.
I was wondering, is paying my rent with my credit card a good idea? if I should how should I go about doing it?
hypothetical; lets say, I have the rent full and ready to go in my checking account, but I paid it with my credit card [ is this advisable?] [also, good way to earn cash bach? 1.5%] Then pay the credit card ([ A]later that day or [B] at the end of the 30 day statement closing date?)
or NOT at all, best to not use my credit card for this?
thanks for your time in advance!
Thank you so much for educating us!! I have a query how do you explain residual interest? Thank you!
I recommend you read these pages to understand residual interest and how credit card interest works:
• www.creditcardinsider.com/learn/how-paying-a-credit-card-works/
• www.creditcardinsider.com/learn/minimum-payments-credit-card-interest-calculated/
- John G
Credit Card Insider thanks I am much obliged!!
Hi! My name is Lam, and I actually have a wierd question for you. As you have said in the video that the due date is always 21 day after your closing date. I check my account and realize that my closing date is always on the 11th of the month, but my due date is on the 8th of the same month also. For example, as I'm writing this, I have a closing date on 09/11/15, but my due date is on 09/08/15. I'm so confused about this. Could you please help me clear this up? Thank you so much.
+lam nguyen Although the law mandates a 21-day minimum grace period, credit card issuers can choose to increase that if they wish. I think in your case, they have simply extended it a bit more.
So, your billing period ends on the 11th of the month, and that is when your statement is generated. You are then being given until the 8th of the next month to pay that bill.
I understand why it looks confusing, but that due date is actually for the month before. If you check out the details for an individual statement, you can see the exact time period and purchases that you are being billed for.
Hopefully that clears up your question - let us know if you have any others!
- Brendan H.
Thank you very much 😊
can someone please help me do i pay my full balance on the due date or pay it on full on the statement date??? so my due date is the 22nd and my statement is on the 25th. so
do i pay it on the 25th?
We recommend paying the full statement balance on the due date to avoid interest. This page explains more: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/
- John G
The only reason I have a credit card is to build up my score. My question is; is it better to pay my credit card bill off the day after the billing statement period each month or on the exact due date every month? This is my first credit card and I only use 2% of it each month..... It's the Amex everyday card. All of my other bills I pay every month on the due date, so why wouldn't I do the same with my credit card? I would greatly appreciate it if someone could answer my question. I've been researching everything about it, but it's a bit confusing at times when there are so many different opinions on this one subject. Thanks in advance.
Your balance on the statement closing date is what usually gets reported. The time of the month you pay your bill doesn't matter, unless you don't pay the minimum by the due date, when it could be considered late by the bank.
- John G
I get paid about 5 to 7 days before (approx 27th to 30th of the month) my statement closes very month. You suggest that I pay the Current Balance in full at the time I get paid, then just not use the card till after the new billing cycle begins (3rd day of the month for me), right? This should allow the new statement to read that I owe $0.00 as the balance was fully paid off before the new cycle began, with no new activity since then.
+Ivy A Nguyen Yes, that sounds like a good approach for getting a 0% utilization reported for the card.
- John G
Credit Card Insider is it though also not good to always have the 0% on all cards always as the bureaus won't know if I actually am using & paying down my debt? Also, do companies dislike erratic payment amounts? For instance, I slowly got too far in the red to pay off my the cards in full so I started putting my entire pay onto the primary card then using the card throughout the month, till I got a refund cheque that allowed me to knock all my cards out in full one day. The day before, I was maxed out (within $1) on multiple cards, with some maxed for 4 months & one never having had a zero balance since the day I got the card (I know this is probably bad). I have never been late on any of the cards, but did do minimum payments before.
+Ivy A Nguyen First of all it's good to hear that you are at least making minimum payments. Missing payments is one of the biggest ways you can damage your credit history for a long time. Similarly to one of your other questions, as long as you are making your minimum payments the credit card companies don't really care when, how, or how frequently you make payments.
As John says about utilization percentages in the video "the higher that percentage, the lower your score is going to be" and "you want that percentage to be as low as possible." Even though he says 1% is technically better in scoring models than 0%, that's practically hard to achieve, so simply keeping your utilization as low as possible is probably the best approach to maximizing that factor of your scores.
Utilization updates every month, and the historical information is not factored in, so if you were maxed out one month and then pay it all off the next month, once that paid off month is reported to the bureaus it doesn't really matter that you were maxed out the previous month. You can read more about utilization here: www.creditcardinsider.com/insider/how-does-the-credit-card-utilization-percentage-impact-my-credit-score/
- John G
Credit Card Insider Thanks. I am still new to credit despite being 30. I was evicted in Jan 2009 & that civil judgement as well as some abused bank-issued (as in the bank I was with at the time) credit cards in 2007/2008 seems to have fallen off my reports by now. I never filed bankruptcy, interestingly. Scary how long 7 years really can be when lived out. Tough I bet I am in good company anyway, as I bet that was when probably thousands of other cases even in my own state were going on due to the economic crash. Glad I also know that CreditOne & First Premier are not good companies & as such I should cancel these before my annual fee is charged again.
If I want a mortgage with a bank, would it improve my chances to first get a secured credit card with them to establish a credit relationship with the bank?
It may, that depends on the bank and if they consider that in their lending decision.
- John G
@@Creditcardinsider thank you
Hi. Clarity needed. On my current Capital One statement, Payment Due Date is Feb 2nd for billing cycle of Dec 6 to Jan 5th 2020. So is 1/5/20 my statement closing date which is same as Reporting Date (to the bureaus)? If my goal is to reach 750+ FICO score, should I pay any balance around 1/5/2020 for 0% utilization? Or does it really matter if I pay it prior to DUE DATE of 2/2/20. Thanks so much.
In general, credit card issuers usually report on the statement closing date, so it's likely your issuer report on 1/5/20. Credit scoring models generally like to see lower utilization for higher scores, so reducing your balance relative to credit limits could help you have a higher score at any point in time. I recommend you read these pages, since they explain a lot more than I can write here:
www.creditcardinsider.com/blog/how-does-the-credit-card-utilization-percentage-impact-my-credit-score/
www.creditcardinsider.com/blog/best-credit-utilization-ratio/
- John G
@@Creditcardinsider John, your response herein coupled with the follow up articles were very helpful. Thank u for that. One last question so I'm 'crystal' clear on this. With my goal to hit 750+ FICO Score with lowest U.R% as possible, as long as my UR% is under 10% (excellent rating), that's all that matters to optimize my score in the UR category, right? So having a 0% UR will not serve me any better than a 1% or 3% or 9% UR%, correct? :)
So if the credit limit is 1000 and on a credit card and it all paid off will it still hurt me utilization and credit score
+claude christopher Scott If the utilization is less than ~20% it generally should not negatively impact on your score. So if it's paid off, that's 0%.
- John G
Hi I’m just seeing this video & I have some major concerns. Last month I paid my bill by the statement closing date and got charged a late fee however the percentage was at a 36% I lowered this month to a about 10% I payed on the due date the statement date was 4 days late it reported 0% usage my trans union dropped 45 forgoing from 36% to %0 I’m confused????
I recommend you read this page (and the pages linked from it) for an in-depth look at paying credit card bills: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/
- John G
John, my current FICO scores are 756(EQ), 752(TU) and 745(EX). I do exactly what you've said in this video by paying my balances off in full prior to the statement date. As soon as charges post to the account, I pay them in full so my credit report always reflects a $0 balance on my c/c's. My question is should I leave a balance of 1-2% so the statement can reflect that and give me additional points? My goal is to get to the 780 mark and I'm not sure how to do that except for time. I currently just have an auto loan and nothing else. Thanks in advance.
As this video says, you may be able to get some additional points for having 1-2% reported to the credit bureaus, but that's harder to achieve practically and those extra few points probably won't make much of a difference. You could try it for a few months and see how it goes. Let us know how it works out for you!
- John G
hello thomas, i wanted to follow up with you. Did leaving a 1-2% balance help increase your score?
So I have two credit cards with two different closing dates so does that mean I get reported twice a month to the 3 bureaus? Also, when leaving a small balance for the closing dates do I leave a balance for both cards or just one card? Please advise, thanks!
Each account is likely reported on its own statement closing date to the credit bureaus. Credit scoring models typically like to see fewer accounts with balances. The overall percentage (across all cards) and each card individually both factor into most credit scoring models. So, to maximize your credit scores try to keep your overall utilization percentage as low as possible, and also the percentage on each card.
- John G
It is my understanding that the utilization is reported as of the statement date. So the bureaus would have no way of knowing if you went above 9% (with 0-9% being the "excellent" utilization range) so long as, by the statement date, you were back down between 0-9. Is this correct? I ask because I use my credit card often, and for most purchases, often going as high as 60-65% at some point during the cycle but never more than I can pay back (just the things I would be otherwise paying for via debit transactions or cash). Then, by the statement date, I make sure it's between 0-9, wait a couple days, and then pay it fully and well in advance of the due date. Is this a good strategy?
To your first question: It's correct that most issuers will report your balance on the statement date, and based just on the balance reported the bureaus don't see how that balance changed over the course of the statement period or the activity that contributed to that balance. And to your second question: Yes, that sounds like a good strategy.
- John G
Thanks for your prompt response!
You're welcome! If you have any other questions, please ask! And please share any videos from this channel that you find helpful with friends!
- John G
Is it okay to pay it right off? Vs waiting to the statement closing date?
Great video!!
Hi, I'm not sure I understand what you're asking. Could you add more detail or rephrase the question? It's always OK to pay off a card and you don't need to wait until a certain date to do that. The statement closing date is just when the balance is usually reported to credit bureaus, so if you pay off the entire balance before the statement closing date you will have 0% utilization reported which will generally not give you scores as high as if you had 1%, but either way your scores should be pretty good if you're paying it off in full.
- John G
What different between credit score and FICO are they same or are they different can you explain because my score for three different company are different from FICO
+claude christopher Scott FICO is one brand of credit scores. I recommend you check out this video to learn more about credit scores: What's The Most Important Lesson To Learn About Credit Scores? - th-cam.com/video/rv24rJg0-J0/w-d-xo.html
- John G
so the safest way is to keep the balance at $0 for both the statement closing and due date right
+Abdulaziz Felata The statement closing date is the one to be most concerned about - that's when your utilization will be reported to the credit reporting agencies. The due date is just when you need to pay to avoid being late.
After the statement closing date you'll start on the next statement period, so your activity during that time will be on your next upcoming statement.
- Brendan H.
Credit Card Insider So I should leave something on the balance when the statement occurs??
If I have $20000 limit and I spend Rs.10000 every week on my card and pay the bill on same day and leave only $100 before statement closing date is it right ,
Tunechi! Yes. If you’re balance is 0 on the closing date then you have a 0% utilization. 1% is regarded as better than 0% so you should leave a tiny amount for the closing date then pay it off a day or two later.
MegaBall PowerBall this explains well
I have a question, My bill is due on the 15th and the end of my statement is the 19th. How does that work for when I should pay my credit card off?
Thanks for the question Gloria Woods. Credit card bills can be a bit confusing, but you should be able to find all of the information you need on your bill or online.
Credit card accounts are usually broken down into billing cycles of about 1 month. The end of a billing cycle is often referred to as the "Statement Closing Date." Depending on your card and your specific terms, after a cycle ends you will then usually have some time to pay off that particular cycle, and the due date for that payment is often called the "Payment Due Date."
So, it sounds to me like your Billing Cycle ends each month on the 19th. Then, you are given until the 15th of the next month to pay at least the minimum payment for that billing cycle - the 15th is your Payment Due Date. This is an ongoing process that repeats each month.
You will need to pay at least the minimum payment listed by the 15th, your Payment Due Date, to avoid late charges and other possible penalties.
Hopefully that answers your question - if you need to know more or anything else, please let us know!
Thank you!
John that is not true I had zero balance on my credit balance they dropped my credit score by 16 points I don't understand what's going on
i keep my credit utilasation under 10% and pay off my balance every month before due date but still got a 23 point drop on my score
There are other factors that go into credit scores. Read this to learn more: www.creditcardinsider.com/learn/whats-in-your-credit-score/
- John G
So say if my statement closing date is May 7, but I pay the entire balance by May 4 then that's a good thing.
It's good in the sense you wouldn't have any credit card debt, but also you may not see credit scores as high as if you have some utilization reported. Read this to learn more: www.creditcardinsider.com/blog/0-credit-utilization-hurt-credit-scores/
- John G
My balance is $120.74 and my total available credit is $500. So I was thinking about paying $115.74 before the statement closing date and just have a 1% due balance. Just trying to make sure I do this correctly.
Sure, that sounds like a good way to have low utilization reported. This page may be helpful too: www.creditcardinsider.com/learn/how-paying-a-credit-card-works/
- John G
If I do everything you said to do, which I plan on doing, will having a 0% utilization on my billing statement increase my credit score every month or should I carry a balance of 1 to 9% to raise my credit score every month? My goal at this point in my life is to raise my credit score as quickly as possible.
+love9boy You need to owe 1% to 7% of your credit card limit on your first bill statement.Day after your first bill statement, pay it in full! then use the card many times or a few times that month, but make sure you once again owe 1% to 7% on the next bill statement. Again one day after bill statement pay it in full! If you keep doing this you will not be charged interest.And will get a good credit score.Paying interest wont help your credit score don't listen to that myth. But owing nothing on every bill statement for sure won't help your credit score! because you will only be seen as trustworthy of short term loans.follow my tips you will show your trustworthy of long term loans also!
+wise man I finally figured that out and after paying my first bill, only owing 1% of my credit limit and paying before my due date, my score jumped 23 points! Next week my 2nd card will report to the credit bureaus and I did the same thing, only utilizing 1% of my credit limit and paying before the due date for that particular card and cannot wait to see how that positively impacts my score! Thank you John and thank you wise man!
+love9boy Credit card company will tell you as long as you owe less than 30% of your credit card limit you will have a good credit score.But if you want excellent credit score owe 7% or less!
+wise man Wow that is great advice
love9boy don't ever pay a single dollar in interest on a credit card.
i use 2-3% utilization and used to pay within next 2-3 days. how good is it for scoring?
As John says in this video, if you pay down your balance entirely so a 0% balance gets reported on your statement closing date that's seen as worse in credit scoring models than a 1% balance being reported. What really matters for utilization in credit scoring models is the balance and credit limit reported to credit bureaus.
- John G
Can I just pay on my due date and just leave a 1% balance for my closing date? My due date is on the 21st of every month and my closing date in on the 24th so my due date will have to be before my close date so how does this work?
Sure, that would work fine to get 1% reported to the credit bureaus. The due date is always before the closing date, usually by about several days.
- John G
+Credit Card Insider thanks John, I hope this works!
How about paying it down to 1%? By closing date?
Generally, 1% is seen as better than 0% by credit scoring models. Read this to learn more: www.creditcardinsider.com/blog/best-credit-utilization-ratio/
- John G
Second question... Will allowing the banks to report a balance on all of my credit cards each month actually dent my scores? I still keep the reported utilization down to 1% on each card, but one of the credit scoring services I subscribe to recently mentioned something like "Too many accounts with balances." Would it help if I paid some of the balances in full before the closing date, then let just one or two report balances? I've been trying to show responsible use with each card, every month, but now I'm wondering if this is actually counterproductive.
Slidellian This is an interesting question and I'll pass it along to John, but until then - I wouldn't expect that to hurt your scores. I believe that credit scoring models take your total credit card debt into account as compared to your total credit limit, rather than looking at individual cards to check their balances.
This would be very surprising to me, but there could be a nuance here that I'm not aware of, however (credit is complicated :-) )
It's hard to say, but I'd guess that the credit scoring service you're using might just be trying to give some friendly advice about not holding a lot of debt, without actually taking into account how much total debt you have. I don't really understand this message otherwise, because generally you want to have more accounts on your report to avoid having a thin credit file.
And if you know that your total utilization is very low, it makes this message even more mysterious. I'd suggest trying to dig a bit deeper into that, or to check out a different service and compare their recommendations.
Here's a personal example: I have low overall credit utilization, but one of my credit cards does have a high balance. Credit Karma flagged that card as being a potential threat, for being more than 35% utilized. However, Credit Karma also reports my overall credit utilization as very low and gives me an excellent rank in that category. So, this makes me think that the message you got might be a bit misleading.
Hopefully that helps for now - I'll let you know as soon as I get a response from John!
- Brendan Harkness
Thanks, Brendan! Since I posted this, I did see a video somewhere where John mentioned FICO penalizing you for having too many accounts with balances. The weird thing is, on some of these cards, I was only allowing them to report balances as low as around $10, just to show activity. But this month, I'm only going to allow my Chase card to report a balance, then see what happens.
Slidellian I love that you're doing such detailed personal research and being so thorough! I think I was not exactly right when I said that having multiple cards reporting a balance will not affect your scores, and I'm very thankful that you've led me to look deeper here. So, thanks!
This is definitely a tricky issue, and we should get to the bottom of it.
I think the confusion came from this: when it comes to your revolving utilization ratio, FICO doesn't care whether the balances are on one card or several.
However, there are 2 other components to the "Amounts Owed" category that I wasn't taking into consideration correctly, and almost seem conflicting.
FICO calls these 2 components: "Whether you're showing an amount owed on certain types of accounts" and "How many accounts have balances"
Read more about them here: www.myfico.com/CreditEducation/Amounts-Owed.aspx
FICO says that having a small balance on accounts may be better than having no balance at all; but FICO also says that having too many accounts with balances can indicate higher risk, and be detrimental.
So, while carrying small balances on accounts can be good for your credit score, too many accounts with balances can also be detrimental. The real question is, how many accounts with balances is too many?
I'm not sure how to answer that question exactly, it may differ by person and by the version of FICO being used. That is where the credit monitoring services come in, which probably have an automatic alert that triggers when a certain number of credit accounts have balances.
I think you're doing the right thing now: paying attention to your credit monitoring service, and making small changes to see how they affect your credit.
I think this investigative approach is probably the right way for everyone, rather than trying to give a generic answer of "you should have this many accounts and should have these kinds of balances on them."
So, I commend your efforts, and would love to hear the results of your experiments.
Thanks so much!
By the way, perhaps you're thinking of this video, where John does indeed mention that FICO penalizes for having too many accounts with balances: th-cam.com/video/Y6mY3Rlzp_k/w-d-xo.html
- Brendan Harkness
+Credit Card Insider Thank you for the link and the feedback! I love talking about credit. About seven years ago, I began doing quite a bit of reading on the subject, and I became hooked. I've even been called a "FICO fanatic" by one of my "friends" lol.
I live just outside of New Orleans. If you guys ever make it there, let me know, and I'll buy a couple of rounds of cafe au lait and beignets.
My question is if my card limit is 20000 and I have made many payments of like 1000-3000 and 10000 and I am making payment at the same time on the same day and again next day I spend 9000 and pay same day my limit will remain intact and if I leave 200 balance on my card to be paid before due is it good or not
A $200 balance on a $20000 limit is only 10%, which is quite low for utilization, so that sounds good to me. As far as your credit limit availability, I recommend you read the terms of your card, because the way the credit limit and the time it takes to process payments (and free up more of your credit limit) can vary from one card to the next.
- John G
Thanks for replying , as soon as I pay my outstanding balance my limit rises again immediately , can spend and pay every other day like this using credit card as a debit card , spends may rise to above $60,000 but will show only $200?
Yes, most credit cards work that way. To be sure, check the terms of your card.
- John G