There is a theory that if you took an infinite number of monkeys and set them before an infinite number of typewriters (for you youngins, that’s a keyboard with a built-in printer), given an infinite amount of time – they’d almost surely type the complete works of William Shakespeare. They’d also type a lot of run-on sentences, like I just did. Monkeys are clueless about punctuation.
You’d get a lot of gibberish – as I experienced on my quest for a specific answer when I was preparing to apply for a loan to refinance my mortgage.
The question that I could not get answered with absolute certainty was:
When my credit is run and it shows a balance on my credit card, is that balance what is due the day my credit is pulled or is that from some other point in time?
This matters because part of your credit score is based upon how much debt you are carrying. It seemed logical to me that they’d just use the total due on my most recent statement.
Going with my gut, as I watched the rates go down for a few months, I overpaid my everyday credit card before the statement dropped. Like most folks, I usually wait for a credit card statement to show up before I pay it off in full, but I wanted to make sure it showed a zero balance.
My hunch was right. On June 2nd, I gave the go-ahead to my mortgage guy to run my credit. My everyday credit card had a zero balance, but I screwed-up elsewhere! I had three other credit cards that I didn’t pay off early. Their previous month’s TOTAL statement balances of $25, $5, and $2 showed up on my credit report. See below.
Under “Key factors that adversely affected your credit score”, two of the bureaus cited “TOO MANY ACCOUNTS WITH BALANCES”. Thankfully, I already had excellent credit, so this whopping $32 did not hurt me. This is more proof that it’s a myth that owing money on your credit card is good for your credit score.
If you are going to apply for any loan, make sure that you have paid off your credit card balances in full, even overpay them, before the cards’ statements drop.
For Chip’s Monkey Tips, I’m Chip Chinery.
This is a screen capture from my June credit pull showing May card balances:
These are screen captures from the credit cards’ May statements due in June: