BEST Day to Pay your Credit Card Bill (Increase Credit Score)

hi bang I'm here to pay my monthly credit card bill oh no worries Jonathan your due date isn't for another 24 days you can just pay me then I could but isn't it right if I pay on this particular date I could potentially boost my credit score yes let me guess you learned this one from me John for all of the daily credit tips as well as Finance tips welcome back to the channel folks for those of you that are returning viewers you all know we talk about everything from free food at Chipotle to buying your first rental property and everything in between and in today's particular video we are talking about the single best day to pay your credit card bill that could potentially boost your credit score is it paying on Sunday no huh then it must be Wednesday not that Fridays none of those the date is the statement closed date or closing date and that's we're going to talk about in this video it's gonna break down into two sections section one we're going to talk about all the factors of a credit score and how to get that perfect 850 in section two we're going to talk about this particular special date that has helped me boost my credit score by 30 points if that sounds like a plan sit down Papa squat tap the thumb icon you know what to do we're gonna Dive Right In section one credit score overview for those of you who don't know your credit score has five key components when going to quickly walk through all five and I'm going to teach you exactly what you need to do to optimize them so that you can be on your path to a perfect 850. so the first component in the heaviest weighted is on time payments this accounts for 35 of your credit score and as the name would imply it is all about making payments on time that's it there's nothing else to it every single time you're getting your credit card bill making sure that you're paying your statements on time every single time you get a mortgage make sure you're paying it on time if you do that you'll be rewarded though quick caveat if you miss your due date it's not the end of the world in fact you have until 30 days before the credit card companies tell the bureaus that you're late however if you do miss your due date you're going to be assessed with late fee so don't miss the due date but if you're a day or two behind it's not going to be the end of the world just pay it off as soon as you can second component is credit utilization and this accounts for 30 of your credit score credit utilization is simply how much of your credit are you actually using as an example let's say you get a credit card you've got a ten thousand dollar credit limit let's say you go buy some items and you charge five thousand dollars of a balance onto the ten thousand dollar credit limit that would mean that your credit utilization is fifty percent now the general rule of thumb is to keep that utilization under thirty percent I recommend keeping it under 10 if you start going over you're actually going to get dinged because it's showing creditors wow John's using a lot of his available credit that seems really risky to us so we're going to ding him and this is the section we're going to focus on a little later when we talk about the best date to pay your credit card bill the third component is your average length of credit history and that accounts for 15 of your credit score this basically looks at how old is your oldest account and what is the average length per individual account on your credit profile most important thing to keep in mind here is do not close your very first card ever if you can avoid it now if it's a terrible card we can talk about it but for the most part don't close that very first card the other thing though is you actually can continue to close cards you get subsequent to that a lot of people think don't ever close a card it'll impact your average length of credit history but the fact is if you close a credit card that getting good standing you paid it off completely it will continue to age on your credit profile for 10 years giving you that positive boost the fourth component is credit mix and that accounts for 10 of your overall credit score this is just looking at if you have different types of credit accounts so a credit card an auto loan a home loan basically a credit card is a revolving Base Credit whereas a home loan or an auto loan is an installment-based credit the fifth component is hard increase and that accounts for 10 of your credit score as well another word for hard inquiry is a hard pull it's when you go and apply for new credit and they pull your credit report the thing to keep in mind is with hard increase they fall off after two years so taking a look at all five components we can see that on-time payments in a credit utilization account for 65 of your score in other words if you pay on time and in full you are well on your way to having a great credit score but here is now a way to boost that even more by focusing specifically on the credit utilization front which counts for 30 of your score and that's what we'll talk about in the second section which is the best date to pay off your credit card bill remember early in the video how I said the best date is the statement close date or the closing date which is not your due date wait a minute I thought we were supposed to pay everything on the due date you are you absolutely are however and this is the hack remember earlier we also said credit utilization is how much of your total credit are you using relative to how much credit the bank gives you okay that makes sense but how do the credit bureaus know how much you're actually using well that actually requires somebody to tell them John's using 10 20 50 and when they tell them that particular date is the state mint close date so let's crystallize this with an example pulling up here my Chase Sapphire Reserve I got up a twenty four thousand dollar credit limit let's say last month I go and I charge off a bunch of things and I end up making ten thousand dollars worth of total purchases I've got ten thousand dollars and I would go ahead and pay off my credit card bill however take a look here my closing date was April 7th which means on April 7th Chase takes a screenshot and sends it off to the credit bureau saying John has used ten thousand dollars of his 24 000 credit limit which is about 41 42 or so you might be thinking well what's the big deal on the due date I'm just gonna go ahead and pay it off which I absolutely am but you see my due date isn't until the 4th of May so from April 7th to May 4th the credit bureaus are saying wow John's using 42 of his credit we're going to ding him and so the smart thing for me to do is be very well aware of when my closing date is and a closing date is typically like a 30-day window or so and making sure that I pay off as much of my credit card bill as possible before the closing date or the state mint close date so that when Chase goes and reports the credit bureaus like oh John only has used a thousand dollars of his 24 000 credit limit great that is much better and it's not going to negatively ding him I actually might positively impact my credit score hopefully that makes sense so go ahead pull up your credit card statement and look for that statement closed date and make sure that if you have big charges coming up and if you're going to get a loan or an auto loan or whatever that you are taking out as much of the use as possible before the state mint closed date which is typically 20 24 or so days before the due date and on the left here is actually an example of this scenario playing out so at the end of last year I was charging off about seven thousand dollars against my Sapphire Reserve which I actually shouldn't have been that big of a deal but it dropped me by 30 points the reason I say it shouldn't have been a big deal is because there's only 30 utilization but regardless this showed me that Hey listen you actually have a huge charge this is what's pulling you down and then on this side right here I ended up paying it off and look at that boom came right back up so that is an example of how credit utilization can really pull you down or pull you right back up in the best way for us to control that is making sure that if we have massive charges coming up and that we have the cash for it to not wait until the due date but pay off before the state mint close date to close it out some of y'all might still be thinking well I want to pay on my due date because of the way my paychecks are coming in is it a big deal if I wait till my due date I don't care for the flux of my credit score then I say absolutely no problem you can pay off on the due date you're not gonna have to pay more interest that's totally fine but I'm saying for those who are like oh I get a 20 to 30 point swing in my credit score and I'm going for a home loan and this might make or break it then I say pay your credit card bills before the statement close date to keep the utilization low so that you could potentially positively boost your credit score a little bit before you go for that loan now folks if you have any comments questions drop them down below and I'll catch you all next video peace

Channel: John Liang

Views: 1,092,742

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Id: 3qJEviF7mRY

Length: 8min 3sec (483 seconds)

Published: Wed Apr 12 2023