One of the most important things to do to be proactive about building good credit is to pay all of your bills on time every month without fail. Missing a payment or making a payment late can hurt your credit score more than any other factor. Many people wonder if paying early might help their credit score, and we often hear people ask, “Should I pay my credit card balance before the statement date?”
How Paying Early Can Benefit You
People sometimes think that carrying a balance may help to build credit, but there isn’t any benefit to having an outstanding balance if you can afford to pay the entire amount back in full. The longer you owe the balance, the more money you end up paying toward interest. If you make a major purchase and pay all or part of it back before the statement drops, you may be able to avoid paying any interest.
The percent of available credit that you’ve borrowed is known as credit utilization, and this number can have a big impact on your credit score. If you’ve borrowed more than 30 percent of your available credit on a credit card, try to pay it down as soon as possible. There’s no need to wait for the due date.
Reporting to the Credit Bureau
Creditors typically report to one or more credit bureaus each month. Some may report to all three bureaus while some may only report to one or two. Those that report to more than one credit bureau may do so at different times during the month, which is one reason your scores may be slightly different on the reports from different credit bureaus.
A good way to work on paying back debt is to make more than one payment each month. Even shifting your payment to pay one or two weeks early may help to improve your credit score. The earlier you pay all or part of your balance back, the better chance you have that your creditor reports a lower balance, which means lower credit utilization.
Protecting Your Credit Score
Having a good credit score can help you to get approved for credit at the best rate and terms, so it’s important to take care of your credit. Be sure to pay at least the minimum payment on or before the due date each month and pay extra if you can. This helps you to avoid expensive late charges or hurting your credit by not paying your bills.
Another thing to do is avoid borrowing more than you need. Racking up a lot of credit card debt can cause you to have difficulty making your payments sooner or later and a high credit utilization rate can harm your score.
Your Credit Report
Pay attention to what’s being reported on your credit reports and make sure there aren’t any errors such as wrong balances or wrong payment status. Dovly is an AI credit engine that can help you dispute any errors you find on your credit report. Try it risk-free with our free membership tier. Get in touch with Dovly today.