7 little-known facts about your credit card - No. 5: Card balances can be tricky

If you understand how credit works, you are aware that it is better to pay off your card in full each month and keep your credit utilization ratio (the proportion of your entire credit limit that you are currently using) low.

Make it a priority to never carry a balance by always paying in whole before the payment due date if you want to establish or keep good credit.

Your credit report may not be telling lenders that, though. How come?

The difficulty is that credit card companies typically release their reports soon after the end of the billing cycle, which can be a few days or even weeks before to the day on which your payment is due.

However, if you still haven't paid your account as the billing cycle is coming to an end, the balance due will appear on your credit report. It can significantly lower your credit score if the balance is substantial (more than 30% of your credit limit).

If you fully pay your card and it is reported during the following billing cycle, this might only be a minor problem. On the other hand, if you're getting ready to apply for a large loan, like a mortgage, a sudden high credit card balance on your credit report could not be good.

It's advisable to continually be aware of your credit card balances in order to avoid that—and to settle them as soon as the transactions post.

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