Credit card utilization (balance in relation to limit) is a key role player in your credit scores. Your scores can sometimes significantly increase or decrease based upon the balance reporting to the credit bureaus. In essence, 30% of your FICO scores (165 points) are a factor in your overall credit score.
One of the statements I often hear when consulting my clients about their credit, “I make my payments on time on my credit cards, I don’t understand why my scores are low. I pay off my cards every month”.
My question at that point is “When do you pay off your cards?” The answer I typically hear “on the due date”.
The problem with that is your balances have already been reported to the credit bureaus. Almost all credit card banks report your balances at the STATEMENT DATE not the DUE DATE. Did the little light bulb turn on in your head?
That’s great that you pay off your cards monthly, but you’re doing it too late. So simply reset your payment date 4 days before your statement date on your accounts. You can max out your cards and pay them off using this process and never get caught with high utilization on your credit card accounts.
If you have any questions about your credit report and scores, feel free to contact me direct.
President and Certified Credit Expert