How to Manage Your Money Like The Rich

10 Money Mistakes That STOP YOU From Becoming Rich

So i talk a lot about credit usage on this channel and what that means is basically how much of your available credit on your credit cards you're using compared to what your limit is because believe it or not if you're spending more than 30 percent of what your limit is then your credit score can actually be affected negatively and if you're keeping that below 30 then it can boost your credit score and so that's what we're going to be talking about today is when you can actually pay off your credit card exactly to the point where you can get that utilization almost perfect so that you can have the best optimal credit score possible now before i get into everything i want to make it clear that all of the different credit card companies out there they are going to be reporting that information to the credit bureaus at different times and so this is just a generalization of what you can do that's probably going to get reported correctly to the credit bureaus but we don't know when that actually happens so we can just guess and hopefully get that right and that's exactly what we're going to go over so basically the goal here is that you want to have the lowest credit usage possible when it's actually reported to the bureaus because what's reported to them is what's going to affect your credit score so if you can pay down your credit card as much as possible right before that information is given to the credit bureaus then you're going to have the best chance of having a boosted credit score because your usage at that point would be the lowest possible now what i've found in my personal experience of using and paying off credit cards is that generally you're going to have a billing cycle that's about 30 days long and right after that billing cycle ends your statement balance is going to become available and that's about the time that that information is usually given to the credit bureaus because your statement balance is what's always going to be on record and therefore that's the exact same record that's going to be given to the credit bureaus and usually that's going to happen right after that information becomes available so without getting super confusing here let's just pretend that your billing cycle starts on the first of the month and ends on the 30th therefore you would know that as long as you pay down that credit card as much as possible by the 29th then that information is what's probably going to be given to the bureaus therefore you're going to have the smallest credit usage that you can get and that's going to help boost your credit score as long as it's well below 30 percent of your limits and if you really want to get specific with your billing cycle you can actually look at one of your previous statements and check the account summary and inside of that you will see the opening and closing dates and with that information you'll know for sure how long that billing cycle actually went for on each month that you're looking at now this part can get a little bit confusing because you're always going to have a credit card due date that's due about 25 days after the billing cycle ends so if the cycle ends on the 30th then you're probably going to have a due date around the 25th the following month and you have to make sure that you at least make the minimum payment by the due date in order to avoid any penalties or anything like that from the credit card companies and in a best case scenario if you don't want to pay any interest on your credit card.

just make sure to pay off the statement balance in full by the due date and as long as you do that continually then you don't have to pay interest on your credit cards and you really don't have to worry about that side of things now what you need to understand is that even if you're not paying any interest on your credit card and you always pay off your statement balance in full that doesn't mean that you're not going to have a continual balance that's going to be reported to the bureaus so the only way that you can get that as low as possible is you're going to have to take the gap between the due date and when the next billing cycle ends and within that gap, you're going to have to pay down your credit card.

even more so that you can get it as low as possible for that credit usage by the time it's reported to the bureaus so let's pretend that you pay off your entire statement balance in full by the due date but because you've been making a bunch of different purchases during the month you still owe two thousand dollars well if you don't want that two thousand dollars to show up on your next statement balance which is what's going to be reported to the bureaus then you need to pay that down as soon as possible because like i said if your due date's on the 25th but the cycle ends on the 30th then you're probably going to want to pay down that credit card as much as you possibly can by the 29th in order to get that number as low as possible for your credit usage so for instance if you could get it all the way down to maybe 50 bucks then your next statement balance would only be 50 in comparison to what your limit is and that is what your total usage is gonna be that's reported to the credit bureaus because let's say that the limit on your credit card is five thousand dollars and you end up leaving that two thousand dollars as your next statement balance well two thousand divided by five thousand is forty percent and that means that forty percent is being used so a forty percent usage score is actually bad and that is going to hurt your credit score.

but let's say that you get that all the way down to 50 before it's reported well 50 divided by 5 000 which is your limit ends up only being one percent credit usage so if you really want to get the best possible credit usage and you have the money to be paying down your credit card then definitely pay it down by the time that cycle ends so that that information is reported as accurately as possible to the credit bureaus now I hope that this video made sense to you guys because I understand this information is kind of confusing because we're talking about statement balances we're talking about due dates billing cycles all sorts of stuff like that so I understand it is a little bit confusing I am going to leave some more credit card articles over here that you guys can watch if you want to learn more on those specific topics so definitely check those out but thanks for visiting this one have a great day.

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