Credit score and paying my balance before the closing date?

Question

If I pay my balance before the closing date, my balance goes to zero and that is what is reported to the bureaus. Given so, would that hardly affect credit? I want my credit to go up as fast as possible, but I don't know if I should wait and leave the balance until the closing date passes and then pay before the due date, which is 25 days after. Will leaving the balance get me higher/more credit than leaving zero to be reported by paying before the closing date? I am an absolute newbie to this, so I could use a lil' help! I want to know if I should leave the balance until after the closing so that my balance gets reported, and then I pay it before the due date to avoid interest; or if I just pay it off right away and my score is the same as if I did so after closing. I don't know the process.

I don't even worry about fees since there's no annual one and I would never pay interest since I never fail to make payments in full every single time and incur no other fees.

Answer 1

TL;DR

Not all banks report utilization from the bill date. They can report any day during their cycle.

There are two issues here.

Yes, if a bill shows zero balance, it may pull your score down a bit. Some time back, I did exactly what you are asking, I paid in full the day the bill was cut, to produce a zero balance bill. And my score dropped a few points that cycle.

Second, and negating a bit of my sentence above, we've assumed that utilization is reported along with the bill. That's what I'd always seen, and I assumed was true. A couple months back, I was at a financial conference, and representatives from Experion were there. I asked about reporting, and they told me that a card can report any time during the cycle.

By a remarkable coincidence, a card I've had for 18 years changed banks. (An affinity card, branded by a company, but issued by a bank, which changed, one bank sold their portfolio to another.) Now, I posted on another answer about paying more than the balance due, just before the bill was cut. Which, in theory, should have shown 0 utilization on my next credit report. But.

Despite the bill being issued 11/16 and due 12/15, the utilization was reported 10/31.

(Disclosure - my score is high enough that I don't need +/- 20 points, I am a financial blogger, and tinkerer. This is all an experiment to see how utilization is calculated, and how it impacts score. My answer here is to make one major point, the first line.)

Answer 2

As long as the payment reaches them before the due date, I doubt they'll notice or report how much before.

Answer 3

keshlam, the payment should be reported -- that is how they value your credit.

If you pay before the closing date the bureaus will see zero -- and your credit will suffer to grow.

That's why there's a big distinction between "closing date" and "due date" -- closing date is when that month's cycle ends and due date is when you have to pay before you are charged late fees.

You pay your balance AFTER the closing date, but BEFORE the due date -- that's how you build credit fastest and avoid any interest/fees, all while trying to utilize less than 25% of your credit limit.

On the next cycle your credit is 100% (if paid in full); you owe no money and have no interest/fees; and you have until the next end of billing cycle to make new purchases that will reflect on your credit -- and then the next due date thereafter and so on. Just always know the start/close of the cycles.