Episode Transcript
[00:00:00] Speaker A: It's Take Control Tuesday. That means I have Mansa Moussa on the phone with me. And Mansa, last week we talked about how using your statement dates can manage your cash flow. Today we're going to do something more with that statement date.
[00:00:15] Speaker B: Yeah, the statement closing date on your credit card statement. If you use that wisely, number one, as we said in the previous episode, that you can keep your cash longer. But today we're going to talk about how that statement date and how you can manage that so that you improve your credit score.
Now, whatever your balance is on, your statement date is the balance that's reported to the credit bureau.
[00:00:48] Speaker A: Okay?
[00:00:49] Speaker B: All right. So if you lower that balance that's reported to the credit bureau will be lower and that balance is part of your credit utilization ratio, which is 30% of your score.
[00:01:05] Speaker A: Yeah.
[00:01:06] Speaker B: All of that to say is this will have a big impact on your score if you do it right.
So let's say your statement closing date is the 10th and you had a major expense and you had to put $1,000 charge on your credit card which has a $2,000 limit.
[00:01:27] Speaker A: Okay.
[00:01:28] Speaker B: Now that's a 50% utilization ratio and the credit scoring model doesn't like that. Right now you are able to pay $700 of the thousand dollars. You're able to come up with that much if you pay that on the 7th of the month rather than the owner after the statement closing date of the 10th. If you pay it on the 7th, then your balance left is 300 and that's what will report to the credit bureau. Oh, now it only looks like you're using $300 of your $2,000 limit, which is good news and will improve your score.
[00:02:16] Speaker A: Right.
[00:02:20] Speaker B: Now here's the other thing that normally will happen on the next credit report, in other words, in 30 days. So you do that this month.
You should see it a month of reporting later so you're able to move your score quickly.
But if you have major purchases coming up in your life, you know, a car loan, a mortgage, a business loan, whatever, then do this for three or more months prior to application and it's a cumulative benefit. So every month you do it is better and the second month is even better and the third month is even better. Randy, you can add almost depending on where you're starting from 50 points to your credit score just by making sure that what's reported to the credit bureau on your statement closing date is as low as you can possibly make it.
[00:03:24] Speaker A: Man, that just made me really excited.
[00:03:27] Speaker B: And once again, we're not talking about paying any more money or anything like that. And listen, this plan works regardless of what your position is. If you're a person that pays your balance in full every month, then this is just going to keep your balances low and that's going to keep your score strong.
[00:03:47] Speaker A: Yes.
[00:03:47] Speaker B: If you carry a balance, then this is going to help you twice. Number one, it's going to show a lower number to the credit bureau, which is going to help you and you'll end because you're paying a little earlier, you're going to pay less interest over time.
And the third one is if you're a person where you're in the rebuilding credit mode, a smaller balance showing up after the statement closes can bump your score. Like I said, the very next month. But it also shows proof that you're working on your credit. So once again, this isn't any tricks or anything. This is just knowing how the system works and working it.
[00:04:33] Speaker A: Absolutely.
[00:04:34] Speaker B: We all know our due date. Not missing that on the credit card statement, but knowing that statement closing date can have a lot of impact on your score and your cash flow.
[00:04:47] Speaker A: Man, that is so exciting to me. I'm going to go back and check those dates again.
And you can also hear this again by going to take controltuesday.com both part one and part two. Manta, as always, thank you so much.
[00:05:04] Speaker B: Thank you.
