In “The Blueprint”, I spoke about the Prism Money Management app and how valuable it was in helping you to pay your bills on time each month. What I didn’t mention is how useful it is for helping to raise your credit scores. Knowing your creditor’s statement closing dates is vital to reaching your credit goals.
You’re probably asking how can a financial app help me raise my scores when the app just reminds you to pay your bills on time. That’s true. It does do that but it does so much more. It also allows you to pay each of your bills right from within the app, which is pretty cool in itself, but wait, there’s more.
What the Prism app does better than anything is to let you know at a glance your statements starting and closing dates for each of your bills. The app makes them viewable all in one place without the need to log in to each creditor’s website or needing to wait for your statement to arrive in the mail if you have not yet subscribed to paperless billing.
We all know that paying your bills on time is important, but it’s “WHEN” you pay them that’s most important. Let me explain. Your statement closing date is when your creditor reports how much you owe to the credit bureaus each month. Let’s say that your credit card closing date falls on the 3rd of each month. You will want to pay as much on that bill as you can before the statement closes and your balance is reported to the bureaus.
If you know your statements closing date, you can use this information to determine which bills to pay first. For example: If you know that you’re already past the closing date of a particular bill, then paying more towards this bill will do nothing to affect your credit scores because the balance has already been reported to the credit bureaus.
You can also give yourself a short term loan each month by paying all your expenses with a major credit card and then paying the balance off in full before the statement closing date on your next payday. Let’s say that you charge $1000.00 during the first two weeks after payday. As long as you pay the balance in full before the statement closing date, then your creditors will report a zero balance to the credit bureaus, thereby lowering your utilization and raising your scores.
In contrast, if you carry a balance or don’t pay anything towards that $1000.00 by the time your statement closes, then your creditor will report a balance of $1000.00. In this scenario, your utilization increases by $1000.00 which only hurts your credit scores because it shows that you owe more money, thereby, potentially lowering your scores.
Here is one very important thing to note. Only pay your bills “AFTER” your credit card statement is generated and never before. Paying before your statement is available is the equivalent of paying towards last month’s statement instead of your current month’s bill. This could make you think that your current bill is paid, but in fact, you only paid more towards last month’s bill. Now, your creditor can report your current month’s bill as late and unpaid.
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