Credit utilization ratio: timing is everything

Dear Speaking of Credit,
Is it true that paying off my credit cards every billing cycle may not benefit my score as much as I hope, because creditors can pull my credit scores at a time during the month when my balances are @ 50%? I have utilization ratios @ 50-70 % between cycles, because of business expenses. –Richard

Dear Richard,
You don’t need to worry about when your creditors pull your scores each month, as long as your balances as of each card’s closing/statement date are as low as you can make them. No matter when your scores are pulled during the month, the last reported closing/statement date balances are the only ones the scores will ever see.

Your credit card balances are updated once per month by the card companies, usually with your balance as of your last closing/statement date. Your credit report will only reflect 50-70% utilized balances if that’s where your balances stand as of the last closing/statement date.

For example, your utilization can be 100 percent every day of the month, except for your closing/statement date when it’s 10 percent. If so, no matter when your scores are pulled during the month, the score will see 10 percent utilization across the board.

If your closing date/statement balances are higher than you and your score would like, and if you’re not already doing this, pay both the last closing/statement balance and some of the newer charges down before the closing date each month to reduce the closing date/statement balance. Ideally, you want your utilization to be below 10 percent on each card as of the closing/statement every month. But if you can’t get that low, do the best you can while working toward it as a goal.

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