The Best Time to Pay Your Credit Card Bill (And Increase Your Credit Score)

So I talk a lot about credit usage on this channel. And what that means is basically how much of your available credit on your credit cards you're using compared to what your limit is, because believe it or not, if you're spending more than 30% of what your limit is, then your credit score can actually be affected negatively. And if you're keeping that below 30%, then it can boost your credit score. And so that's what we're going to be talking about today is when you can actually pay off your credit card exactly to the point where you can get that utilization almost perfect so that you can have the best optimal credit score possible. So basically the goal here is that you want to have the lowest credit usage possible when it's actually reported to the bureaus, because what's reported to them is what's going to affect your credit score. So if you can pay down your credit card as much as possible, right before that information is given to the credit bureaus, then you're going to have the best chance of having a boosted credit score because your usage at that point would be the lowest possible. Now, what I've found in my personal experience of using and paying off credit cards is that generally you're going to have a billing cycle that's about 30 days long. And right after that billing cycle ends, your statement balance is going to become available. And that's about the time that that information is usually given to the credit bureaus. So without getting super confusing here, let's just pretend that your billing cycle starts on the first of the month and ends on the 30th. Therefore you would know that as long as you pay down that credit card, as much as possible by the 29th, then that information is what's probably going to be given to the bureaus. Therefore you're going to have the smallest credit usage that you can get. And that's going to help boost your credit score as long as it's well below 30% of your limits. And if you really want to get specific with your billing cycle, you can actually look at one of your previous statements and check the account summary. And inside of that, you will see the opening and closing dates. And with that information, you'll know for sure how long that billing cycle actually went for on each month that you're looking at. Now this part can get a little bit confusing because you're always going to have a credit card due date. That's due about 25 days after the billing cycle ends. So if the cycle ends on the 30th, then you're probably going to have a due date around the 25th, the following month. And you have to make sure that you at least make the minimum payment by the due date in order to avoid any penalties or anything like that from the credit card companies. And in a best case scenario, if you don't want to pay any interest on your credit card, just make sure to pay off the statement balance in full by the due date. And as long as you do that continually, then you don't have to pay interest on your credit cards and you really don't have to worry about that side of things. So let's pretend that you pay off your entire statement balance in full by the due date, but because you've been making a bunch of different purchases during the month, you still owe $2,000. Well, if you don't want that $2,000 to show up on your next statement balance, which is what's going to be reported to the bureaus, then you need to pay that down as soon as possible. Because like I said, if your due date's on the 25th, the cycle ends on the 30th, then you're probably going to want to pay down that credit card as much as you possibly can by the 29th in order to get that number as low as possible for your credit usage. Because let's say that the limit on your credit card is $5,000 and you end up leaving that $2,000 as your next statement balance. Well, 2,000 divided by 5,000 is 40% and that means that 40% is being used. So a 40% usage score is actually bad and that is going to hurt your credit score. But let's say that you get that all the way down to $50 before it's reported. Well, $50 divided by 5,000, which is your limit ends up only being 1% credit usage. So if you really want to get the best possible credit usage and you have the money to be paying down your credit card, then definitely pay it down by the time that cycle ends so that that information is reported as accurate as possible to the credit bureaus.