Credit

Paying a credit card balance before a statement closing date

Most credit card issuers and lenders update your credit file when they report the balance to the credit bureaus. It is very important to know the statement closing date of every credit card and loan account that you have because the statement closing date has a very big impact on your credit score.

For the simplicity’s sake, I will explain this subject in the form of questions and answers to make it easy for you to understand the process.

Why is it so important to know the credit card statement closing date?

Most credit card issuers and lenders report the account balance to the credit bureaus once a month at the end of the account billing cycle known as statement closing date. In most cases, your credit reports show the same balance that shows on your latest credit card account statement. It takes up to 2-5 days from the statement closing date for the balance on your credit report to be updated. For this reason, your FICO score usually gets updated few days after your statement closing date. For example, if your statement closing date is Feb 1st, then a new statement gets generated on Feb 1st, and the balance that shows on that statement will show on your credit reports within 2 to 5 days after Feb 1st because it takes few days for the credit bureaus to update the balance.

What is the difference between a statement closing date and a payment due date?

Whenever you have a balance on your credit card, you are required to make a payment toward that balance on or before a payment due date. A payment due date is usually several days after the statement closing date. However, a statement closing date is a date when a new statement is generated with a new balance and that balance is usually reported to credit bureaus.

What should I do if I want my credit reports to show $0 credit card balance?

In some situations, it is a wise idea to have $0 or low balance on your credit reports especially before applying for a loan or a new credit because some creditors will give you better rates if your credit reports show low utilization. If this is what you are trying to do, you might need to pay the balance in full before the statement closing date after you make sure that all pending transactions on your credit card get posted. For example, if your statement closing date is Feb 1st, you can stop using the card on Jan 25th and wait until Jan 30th to allow enough time for all pending transactions to get posted and then pay the balance in full on Jan 30th so that your new statement gets generated on Feb 1st with $0 balance and that balance will show on your credit reports few days after Feb 1st. I am using these dates as an example. You should call your credit issuer to find out when your statement closing date is.

Is it possible to change the statement closing date to another date?

Most credit issuers will allow you to change the statement closing date if you call them and make the request over the phone. The payment due date will automatically change when the statement closing date changes. Some people usually like to have the statement closing date to be the same for all accounts so that they get a better idea when their credit reports and FICO scores get updated with the new balances.

Do all credit card issuers report the balance to credit bureaus on the statement closing date?

Although the majority of banks report the credit card balance on the statement closing date, few credit card issuers such as US bank reports the account balance on a specific day determined by the bank not by your billing cycle and it is usually the first day or the last day of the month.

Bottom line:

Statement closing date is very important because most credit card issuers report the balance to credit bureaus on that date. If you are trying to improve your FICO score to get approved for a good credit card or a loan, you may need to pay down your balance before the statement closing date.