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Real Talk! Here's Exactly When to Pay Off Credit Balances to Improve Your Credit Score

May 18, 2017
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No doubt there are several important factors to consider when carrying a credit card, including the right time to pay off balances. That’s because credit utilization (your debt divided by your available credit) is reported to credit bureaus and later reflected in your credit score. The thinking goes that the better a cardholder is at managing their available debt, the better their credit score should be. But when is the right time to pay off balances?

In the video segment below, Motley Fool analysts Michael Douglass and Nathan Hamilton answer a user-submitted question about the right time to pay off balances to improve your credit score.

Michael Douglass: Tim asks, “Don’t credit card companies report agencies once a month? If you have a $0 balance on day one, make a purchase and pay off immediately before the next time that the credit card reports to the agency, would score actually be affected?”

Nathan Hamilton:
They report on the statement date.

Douglass: Usually.

Hamilton:
Yes. Typically report on the statement date. You’ll want to look at the date on your statement. You could run up $100,000 if you have a $100,000 credit limit and pay it off a day before the statement date, and $0 is going to be reported to the credit bureaus.

Douglass: Yeah, that’s how that works. 

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