You might often wonder at what point of the month you should make a payment towards your credit card balance. You may also like to know how much of the balance to pay up at that point. Let’s get this question paid cleared up in this post.
Stay below 9% utilization
Firstly, know that all your credit card balances get reported to the credit bureaus only once a month. With most credit cards it is when the statement prints (find a detailed list here).
Check your statements for the closing date. Before the statement prints, you want to make sure your credit card is not over 9% credit utilization.
If your balance is above 9% credit utilization, then pay the balance down to $2.
Date Last Activity (DLA)
The reason I recommend you to pay up the balance but leave $2 is so that when your statement prints, you want the bank to report a balance due and a balance paid. If you pay the full balance before the statement prints the account will always be reported to the credit bureaus as a $0 balance. This will cause the DLA on your credit report never to update. Fico does not count into their scoring models positive accounts that were not active within the last 6 months. Having your accounts report as $0 month after month will make the account look inactive, which will cause the account, including all the positive payment history, to be excluded from your credit score.
Remaining balance
Once the statement is printed you should pay up the rest of the balance. You can do so at any point before the due date. Make sure you don’t pay too close to the due date so that in case the payment bounces or gets lost in the mail, etc., you have enough time to fix it.
How to calculate your credit utilization
Following is how to calculate the credit utilization of your card so that you know if it’s above 9%.
Divide the credit card balance by the credit card credit limit, then multiply the result by 100. You now end up with a percentage which is your credit utilization. You can try out this calculator to plug in your numbers and get your results.
I hope this organizes your monthly payments so that they are not only paid, but paid well!
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Excuse my ignorance but what do you mean exactly by
“The statement prints”?
The day of the month your statement is generated