How can certain credit card payment patterns affect my credit score?

Question

My bank allows me to pay off any portion of balance at any time, even if I have not received my statement for those purchases yet. I'm wondering if the frequency, amount, or way that I pay off my balance can affect my credit score, and how (assuming that I'm always paying off statements in full every month and therefore accruing no interest)? Specifically:

• AutoPay vs. paying manually
• Paying off balance every few days (manually) vs. paying off balance once a month after statement arrives (manually)
• Paying off ONLY statement balance (manually) vs. paying off all purchases including those that haven't hit a statement yet (manually)

Right now, I just use AutoPay, but I'm wondering if this could be bad for my credit score, or if I can improve my credit score by paying off my balance more frequently to maintain a lower average balance over time.

Answer 1

• AutoPay vs. paying manually

It doesn't make a difference if the bill is paid by auto pay or you go in and manually make a payment. If you are concerned about checking the website a day late, use auto pay. If you want to make sure you check for unknown charges pay manually. But it has no impact on the credit score.

• Paying off balance every few days (manually) vs. paying off balance once a month after statement arrives (manually).

The only day that matters (except paying late) is the day your balance is reported, which generally is a day or two after the statement date. If you wait for it to arrive by mail you are probably paying it down after they have reported it. If you pay it right after the statement date you might get it to zero.

• Paying off ONLY statement balance (manually) vs. paying off all purchases including those that haven't hit a statement yet (manually)

This is overkill. You are trying to make sure you always have a zero balance.

Even in a month where you achieve perfect utilization the benefit will go away the next month. If one month you you are out of the perfect zone the few points you drop will bounce back the next month. There utilization rate is a snapshot, not an average or a trend.

If you were applying for a mortgage, or a car loan in the next month or two; then making sure your utilization rate gives you an above average boost makes sense. But if you aren't applying for credit you are just wasting energy.

Of course if you have a balance you are paying down, then paying sooner than the due date can save you money.