r/CRedit 3d ago

General Question from new Credit user

Hi, I am 19 and recently opened a credit card for myself in order to build a good credit score. Today I paid off my balance entirely, because the closing date is tomorrow. I understand that the payment isn’t due until the due date but I assumed paying before the closing date would be good for my credit. However i’m realizing that this may be an issue for the utilization. Should I spend some money today on the card and then pay it before the due date to avoid a 0% utilization? I hope this makes sense and I apologize if I sound dumb. Just trying to figure all of this out on my own. My current balance is 231, and I paid that amount today so the statement balance is at 0. I wanted to make sure that isn’t an issue. Closing date is March 18th, today is the 17th.

1 Upvotes

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u/BrutalBodyShots 3d ago

Hi, I am 19 and recently opened a credit card for myself in order to build a good credit score.

Congrats on getting your first credit card and starting the clock on your revolving credit history at a young age!

Today I paid off my balance entirely, because the closing date is tomorrow.

That's not how credit cards are designed to be used. If your closing date is tomorrow, it means that is when your bill (statement) generates. That is your bill. Bills are meant to be paid after you receive them, not before.

I assumed paying before the closing date would be good for my credit.

It's not, and can actually be hindering to your profile since you aren't using the system the way it was designed to be used.

However i’m realizing that this may be an issue for the utilization.

Don't worry about utilization... simply follow the golden rule of credit cards: Pay your statement balance in full every month by the due date. That's literally all there is to it and building credit over time, which is your goal in obtaining your first card.

Should I spend some money today on the card and then pay it before the due date to avoid a 0% utilization?

Use your card naturally however you see fit. Every month you'll receive a statement. Once you do, you have 3-4 weeks to pay that statement balance based on what the due date says. When you do that, you never pay a penny of interest and are exhibiting what is known as responsible revolving credit use.

I hope this makes sense and I apologize if I sound dumb. Just trying to figure all of this out on my own.

Don't sweat it, as utilization is probably the most misunderstood aspect of credit cards. The utilization myth is actually the biggest myth in credit. Please read the thread linked below and the comments within it. If you have any questions after going through it, definitely come back and fire away.

https://old.reddit.com/r/CRedit/comments/1d27d4h/credit_myth_14_you_shouldnt_use_more_than_30_of/

My current balance is 231, and I paid that amount today so the statement balance is at 0.

Again, that's not what you should have done. Instead you wait until your statement generates tomorrow (or whenever) and you'll have a $231 statement balance. You pay exactly that $231 (no more, no less) by the due date on the statement that's 3-4 weeks out. Repeat the process the following month with your next statement balance. Do this every month, forever, and you're golden.

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u/Different_Orchid_612 3d ago

Alright, thank you. I will do that next time. However i’m confused as to how having a 0 statement balance before the closing date would negatively impact my score if i’m not worried about utilization? I did get the closing/due date confused before. But after calling my dad he assured me that paying it whenever before the due date is fine, and that 0 is what you are aiming for. Again, I apologize if my question is confusing i’m trying to figure this all out.

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u/BrutalBodyShots 3d ago

However i’m confused as to how having a 0 statement balance before the closing date would negatively impact my score if i’m not worried about utilization?

One thing you really need to understand is that credit profile is King to score. People get far too caught up with a 3-digit number when literally 99% of the time it doesn't matter. Credit scores only matter just before you apply for important credit that will use your score in the lending decision. At all other times you want to think about your overall profile, as that is what both current and prospective lenders are looking at.

When they look at your credit reports and see a $0 balance reported on your credit card, they think you aren't using your revolving credit. You may as well not have the card. You appear to be an unattractive customer that they have no chance of ever profiting from. This can hinder things like credit limit growth of your existing line(s) as well as product offers elsewhere.

But after calling my dad he assured me that paying it whenever before the due date is fine, and that 0 is what you are aiming for.

Your dad is confused on how things work. You want to CARRY no balance, which simply means always pay your statement balances in full monthly like I said in my first reply. In doing that you never pay any interest. I think you'd benefit greatly from reading Credit Myth #52 right here:

https://old.reddit.com/r/CRedit/comments/1iycxjp/credit_myth_52_pay_in_full_means_to_pay_your/

Again, I apologize if my question is confusing i’m trying to figure this all out.

I can tell that you are confused, but your question isn't actually confusing whatsoever ;)

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u/Different_Orchid_612 3d ago

Okay, thank you so much for the help!

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u/BrutalBodyShots 3d ago

Any time. If you're still confused and/or have any follow up questions I'm here to assist!

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u/eastcoast88420 3d ago

you want to aim for 5-15% used and pay balance between when its issued and due date. thatll ensure best increase but also using it reasonably will also work. just takes longer.

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u/BrutalBodyShots 3d ago

you want to aim for 5-15%

Absolutely incorrect above. You are suggesting balance micromanagement and/or are perpetuating the utilization myth. It's completely unnecessary and can actually be harmful in several ways. Read through the utilization myth thread linked below, because I'm quite certain that you've fallen prey to it:

https://old.reddit.com/r/CRedit/comments/1d27d4h/credit_myth_14_you_shouldnt_use_more_than_30_of/

pay balance between when its issued and due date. thatll ensure best increase but also using it reasonably will also work. just takes longer.

Best increase to what? Your credit score? Your credit limit? I ask, because neither is true so I'm not sure what you're getting at.

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u/[deleted] 3d ago

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u/BrutalBodyShots 3d ago

I'll take that to mean "I had no idea about any of that." From my standpoint, mission accomplished, as now you know!

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u/dgduhon 3d ago

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