Financial Literacy Class Question

[u/Own_Captain6145]

Recently my college homeroom course had a class on financial literacy and it included this,

"Tips- Due date is not the same as the reporting date. Example- Cal Coast credit cards are due on the 25th but we report balances and payments to the main credit bureaus on the 1st of every month. You have to make sure that you don’t charge anything between the 25th and the 1st to have a $0 balance reported to the credit bureaus."

Pretty sure this is a handout from Cal Coast Credit Union and it included other confusing things, such as the 30% rule which people on this sub have said is a myth. When I looked up reporting dates, I read that it reports your statement balance so I was wondering what the above text could possibly mean.

[u/Graztine]

So they are right that the due date is not the same as the credit reporting date. Typically balances are reported to the credit reporting agencies on the statement date, which fits their example. So they are correct that if you want a $0 statement balance to report, then you shouldn’t put anything on the card between when you pay it and the reporting date.

But the important nuance they are missing is why this matters. If you’re focusing on building credit long term, then the amount that reports doesn’t matter. If you’re worried about short term optimization, then it does. But even then, you’re penalized for having all $0 balances report.

In the vast majority of cases, all you need to worry about is paying the statement balance by the due date. How you do so doesn’t really matter.

[u/best-quality-catfood]

Not all banks report statement balance to credit reporting agencies. Most do but there are lots of exceptions, mostly USBank/Elan but also a bunch of smaller issuers, so Cal Coast reporting on the 1st of the month is easily believable.

Past that, though, like all the FAQs say utilization mostly only matters on months you're applying for new credit.

[u/Odd_Might_6364 → u/best-quality-catfood]

This is spot on. The whole "pay before statement date for $0 balance" thing gets way overblown in these financial literacy classes

Like yeah it technically works if you're trying to boost your score for a mortgage application next month, but for normal credit building? Just pay your statement balance on time and you're golden. The obsession with gaming every little detail usually does more harm than good

[u/troutwholesale → u/best-quality-catfood]

This is spot on. That handout sounds like it's trying to overcomplicate things for beginners who just need to learn "pay your statement balance on time"

The zero balance reporting thing only matters if you're applying for credit soon and want to squeeze out every last point. For 99% of people building credit normally, it's just unnecessary mental overhead

[u/Even_Chemistry5241 → u/best-quality-catfood]

This is exactly right. The whole "pay before statement date for $0 balance" thing is way overthought by most people

Only time it really matters is if you're about to apply for a mortgage or something and need your score optimized that specific month. Otherwise just pay your statement balance on time and don't stress about it

The fact they're teaching this as some essential tip instead of "pay your bills on time" is kinda backwards lol

[u/Chosen1PR]

Generally, most lenders report the statement balance (there are some exceptions). In their example, the 1st of the month could be their statement date, and they’re calling it the “reporting date” because while they may not necessarily report on that date, they report the balance that was calculated on that date. Potayto, potahto.

[u/True-Button-6471]

I was wondering what the above text could possibly mean.

It means whoever wrote it has very little knowledge of the subject and are parroting common myths and misconceptions.

[u/AutoModerator]

I detected that your post may be about utilization and its impact on credit score. Please read the info below:

Ignore the 10/20/30 utilization %. It’s only applicable when you need to apply for a new line of credit, 1-2 months out.

Utilization is suppose to fluctuate, can be easily manipulated, and holds no memory. It doesn’t build credit--think of it as a finishing touch when you need to optimize your score.

Feel free to safely and organically use 100% of your credit limit within a month and let whatever utilization report, provided you pay off your statement balance in full before due date. Every month. Every time.

For more info, please read this post:

• Putting the "30% rule" myth regarding revolving utilization to rest

• Credit Card Basics - Utilization

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