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Having a good credit score is important for getting approved for loans and credit cards with the best terms One way to boost your credit score is to pay your credit card bills strategically, Here’s a detailed guide on when to pay your credit card bill to increase your credit score
How Credit Card Payments Affect Your Credit Score
- Your credit utilization ratio makes up 30% of your credit score. This ratio compares your credit card balances to your total credit limits.
- Credit bureaus don’t get updated with your balance in real-time. Your balance on a certain date each month gets reported to the bureaus.
- Paying your balance down before this monthly reporting date can lower your utilization ratio and boost your credit score.
Understand Your Credit Card’s Billing Cycle
To pay strategically, you first need to understand these key dates in your billing cycle
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Statement Date This is when your card issuer generates your monthly statement, compiling all your card activity and charges for that period. Any new transactions after this date go on the next statement.
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Due Date: The date your minimum payment is due. If you don’t pay by this date, you’ll have to pay late fees.
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Reporting Date: The date your balance gets reported to the credit bureaus. This typically aligns closely with your statement date.
Pay Before The Reporting Date
Pay your balance early so it’s lower when your card issuer reports it to the credit bureaus.
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For example, if your statement date is the 5th and your reporting date is the 10th, pay your balance down before the 10th.
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Even if your due date is later, like the 25th, pay early so your lower balance gets reported.
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This lowers your utilization ratio and can boost your credit score.
Aim to get your balance below 30% of your credit limit before the reporting date. Credit experts recommend keeping utilization below 30% for the best credit scores.
Set Up Automatic Payments
Having your credit card bill paid automatically on the due date can help you avoid late fees. You might want to set up a second automatic payment a few days before the end of your billing cycle to lower your usage before it is reported.
Just make sure that your linked account has enough money in it to cover the early payment without going overdrawn. Keep a buffer just in case.
Pay Multiple Times Per Month
Rather than one large payment, consider making multiple, smaller payments throughout your billing cycle. This incrementally lowers your balance as your cycle progresses.
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For instance, make a payment halfway through your cycle on top of the payment that’s due on the due date.
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Breaking payments up lessens the average daily balance used to calculate your interest charges.
Pay Before Making Big Purchases
If you’ll be making a large purchase that will significantly raise your balance, try to pay your card down to lower your utilization first.
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For example, if you’ll be spending $2,000 for a vacation, pay your current balance down to $0 first if possible.
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Then the $2,000 purchase will only increase your balance to the cost of the purchase rather than tacking onto existing debt.
Avoid Missing Due Dates
While paying early helps lower your utilization, the most important thing is still paying your minimum payment by the due date.
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Late payments get reported to the credit bureaus and can severely damage your credit score.
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Set up autopay or payment reminders to avoid forgetting due dates. Review statements carefully.
Other Ways To Improve Your Credit Score
Along with strategic payment timing, some other credit score boosting tips include:
- Paying your balance in full each month
- Keeping credit accounts open long-term
- Limiting hard credit inquiries by only applying for credit when needed
- Building a history of on-time payments
- Maintaining low credit utilization overall
The Bottom Line
Paying your credit card bills early, before your billing cycle closes, can lower your balance when it gets reported to the credit bureaus. This decreases your credit utilization ratio, which makes up a significant portion of your credit score calculation.
Aim to get your balance below 30% of your credit limit before it gets reported for the optimal utilization that helps boost your credit score. Pay early, but never miss your official due date either.
When is the best time to pay your credit card bill?
At the very least, you should pay your credit card bill by its due date every month. If youre like most credit card users, as long as you do that, youre fine. But in some cases, you can do yourself a favor by paying your bill earlier. Thats because the balance that gets reported to the credit bureaus can have a direct effect on your credit scores.
To understand the effects of paying early, it helps to know how the credit card billing cycle works.
Paying early could help your credit
One of the primary factors in your credit score is your credit utilization ratio. This is the amount you owe as a percentage of your credit limit. For example, if you have a $5,000 credit limit and your balance is $2,000, your utilization is 40%. Generally, the lower your utilization, the better, and utilization above 30% could be damaging to your credit scores. This is where changing up your credit card payment comes in.
Some people mistakenly believe that 30% utilization is a target — that you should aim to keep your credit card utilization around 30%. This is based on a misunderstanding. The 30% number should be viewed as a cap. It’s best to assume that use above 30% will hurt your credit, but the lower it is, the better.
Credit scores are based on account information reported to the credit bureaus. That information includes your balance and your credit limit, from which the scoring formula determines your utilization ratio. But this information isnt continually updated in real time. Its reported only once a month, on the reporting date defined above.
In the example above, say your payment is due on the 20th of each month, but your issuer reports your balance on the 15th. If your issuer reported a $2,000 balance on the 15th, the credit bureaus would see a 40% utilization — even if you paid your bill in full just days later. Your credit score could end up getting dinged, even though your payment habits are solid.
So consider paying early whenever your credit utilization nears that 30% mark, regardless of when your bill is actually due. By monitoring your utilization and keeping it in check, you’ll be in good shape to get reported to the credit bureaus on any day of the month.
A final note on utilization: Credit utilization “has no memory,” meaning that it doesnt have a lasting effect on credit scores. High utilization one month might knock points off, but if your ratio goes back down the next month, your scores should recover.
BEST Day to Pay your Credit Card Bill (Increase Credit Score)
FAQ
On what days should I pay my credit card to increase my score?
Ideally, make your credit card purchases and pay off the balance by the 25th of each month. This will allow you to avoid interest charges and keep a good credit score.
What is the 15 3 rule?
What is the 15/3 rule? The 15/3 rule, a trending credit card repayment method, suggests paying your credit card bill in two payments—both 15 days and 3 days before your payment due date. Proponents say it helps raise credit scores more quickly, but there’s no real proof. Building credit takes time and effort.
When should I pay my credit card bill for a good credit score?
If you want to avoid late fees and bad marks on your credit report, the best time to pay your credit card bill is before it’s due. And if you can swing it, pay your entire balance before the due date to avoid interest charges altogether.
When to pay bills to increase credit score?
So consider paying early whenever your credit utilization nears that 30% mark, regardless of when your bill is actually due. It’s possible for the credit bureaus to report you on any day of the month if you keep an eye on your usage and don’t go overboard.
When should I pay my credit card bill?
You might be able to save money by paying your credit card bill early if you carry a balance from month to month or if your balance regularly exceeds 200% of your credit limit. When is the best time to pay your credit card bill? Every month, you should pay it by the due date at the very least.
Does paying off credit card debt improve your credit score?
It’s a common myth that carrying a balance and paying off your credit card debt over time will benefit your credit score. In fact, paying off your bill every month, on time, and keeping your balance low throughout the month is best for your score.
Will paying off my credit card balance every month improve my credit score?
Paying off your credit card balance every month is one of the factors that can help you improve your scores. Companies use several factors to calculate your credit scores. One factor they look at is how much credit you are using compared to how much you have available.
Should I pay my credit card balance early?
If you always pay your full statement balance by the due date, you will maintain a credit card grace period and you will never be charged interest. That said, if you won’t be able to pay the full statement balance and you have to carry debt into the next month, paying early can reduce your interest costs.
How does a credit card affect your credit score?
In the case of a credit card, they look at the balance you owe compared to your available credit. Consistently paying off your credit card on time every month is one step toward improving your credit scores.
Should you pay your credit card bill before a statement closes?
If you make a credit card payment before the statement closing date, it can reduce the balance reported to the credit bureaus, which could be positive for your credit score, Ulzheimer says. While paying your credit card bill before your statement closes can help boost your credit score, you probably don’t need to do it every month.
