statement closing date

[Anonymous]

My statement closing date for my 2 cards are approximately 3 weeks from the due date.  In order to have a low credit utilization reported to the credit reporting agencies the payments must be made before the statement closing date this much I know.  Now, do you have to pay even earlier lets's say 2 days earlier to account for processing?  Strange question but I just got dinged 30 points cause one of my cards was at 40 percent but I paid it in full by the due date.  Any clarification on the subject would be greatly appreciated.

[jl4]

I just learned this myself so I'll share what I learned.

Whatever your statement balance is will be what's reported on your CRs and your statement balance is whatever the account balance is after the closing date. If you want to control that, make sure they receive any payments you plan to make before the close of business (usualy 8PM ET but can vary) on your closing date. To play it safe, roll that back one or two days and then just don't use the card and you'll be golden. When they receive your payment and consider it depends on how its sent and from what direction you initiated the payment. For example, I have three cards paid via my bank's Bill Pay feature. One card "receives" my payment the following business day electronically, one receives it two buisness days later, and the third receives it 5 business days later (check). If you make a payment via your CC's site, it should tell you when it'll be received. That date is the date you'll want to be at or before the last date of your cycle (close date). Again, an extra day or two for padding never hurts (unless you can't finanically manage it). 

[Anonymous]

My fico took over 30 point hit and I paid the balance in full not realizing must pay before closing date.  I did hear that utilization has no memory, as long as I bring it back to below 10 percent next time it will increase again.  Also, is there a diiference between an 8 percent utilization rate and a zero balance?  In other words, is better to always try to get the card to zero balance before the closing date.  Thanks jl4 for your input.  It helps tremendously.  I never knew any of this.

[HeavenOhio]

Good info above. I'll add that I have a couple of cards that I've seen close in the morning of the closing date. So yes, it's best to get your card down to the desired balance a bit ahead of time. If you know how fast your payments process from past experience, you can cut it a little closer. Also note that if a weekend is involved, there might be a delay that wouldn't occur if payment is made during the week.

You can probably find your exact closing date either in your online account or on your statement. On some cards, the closing dates float around a little. Those tend to display the closing date fairly prominently in your online account. If you have any questions about exact dates, people here would have info on when cards from well known banks would close.

[HeavenOhio]

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@Anonymouswrote:

My fico took over 30 point hit and I paid the balance in full not realizing must pay before closing date.  I did hear that utilization has no memory, as long as I bring it back to below 10 percent next time it will increase again.  Also, is there a diiference between an 8 percent utilization rate and a zero balance?  In other words, is better to always try to get the card to zero balance before the closing date.  Thanks jl4 for your input.  It helps tremendously.  I never knew any of this.

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First, note that below 10% actually means 8.9% or below. 9.00000001% will round up to 10% and will no longer be below 10%.

If you have more than one card, ideally one would report a small positive balance while the rest report zero. All cards at zero will ding you. If you have only one card, it's better to report a small positive balance than it is to report a zero balance.

[Loquat]

Best suggestion if you want to stay ahead...push a payment higher than your statement balace before your due date.  If you plan to continue to use the card while waiting for the statement to cut then push even more.  Continue to use your card and let the current usage eat away at the credit.  Guaranteed to post without a balance because any time a new charge post it'll be cancelled out by the remaining credit.  Just be sure that your credit is enough to cover your spend pattern so that you don't eat up the credit before the statement actually closes.

[Anonymous]

That clears it up entirely,  So ideally one at zero and the other around 8%.  Really who would've known about all of these intricacies.  Thank God for this forum.  For years I had great credit and never followed these rules.  Thanks for the advice.

This is why it is very important to get cli because with low balances a couple of small purchases and you are over the ideal utilization number.

[Loquat]

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@Anonymouswrote:

That clears it up entirely,  So ideally one at zero and the other around 8%.  Really who would've known about all of these intricacies.  Thank God for this forum.  For years I had great credit and never followed these rules.  Thanks for the advice.

This is why it is very important to get cli because with low balances a couple of small purchases and you are over the ideal utilization number.

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Keep in mind that utilization has no memory.  Unless you're planning for some huge purchase (i.e. mortgage) then it doesn't really matter all that much.  Just pay your bill when it's due and don't carry a balance unless you need to.  I use to include obtaining an auto loan in there with optimization but honestly the tiers for decent APR's on auto loans isn't that high of a bar to reach...you can get a pretty decent rate with a 670+ score.  

[Anonymous]

Thank you for the feedback.  I am confused about one thing.  8 percent is ideal, but I heard as long as you are below 30 percent, your score shouldn't be affected.  I have read that in many different articles.  By the way that ding took my score down well below 670.  I presume the 30 percent point is just misinformation or not for people really in the know.

[HeavenOhio]

Below 30% (28.9% or below) is the second best scoring tier. The importance of this tier is that it's what's considered to be "responsible borrowing." You'll keep lenders happy at this level, but the 8.9% level will improve your score a little more.

Getting more technical, the gurus in the scoring forum tell us that overall utilization of 8.9% or below with no more than 28.9% on the card with a positive balance should produce an optimal score. However, some have reported a ding at 5% overall utilization and/or an individual card utilization that's somewhat lower than 28.9%.

If you really want to be safe, report a tiny balance on that one card, e.g. $5–10. Don't go below $5 because some lenders will forgive small balances rather than bothering to bill you. If that happens, a balance of zero will be reported.

After a month with this extremely low utilization, you can play around a bit to see what FICO will allow you to do before you get dinged. If a ding is unacceptable to you, you can always fix it the following month. Or you might find that a bit of a ding is just fine if it allows you to use your cards in a manner that's more convenient for you.

As mentioned, the time you really want to optimize your score is when you're applying for important credit, especially a mortgage. The rest of the time, as long as you find your scores to be acceptable, you have a lot of leeway. But it's kind of fun and potentially useful to learn how your scores might shift at a time when there's little risk involved with playing around.