Pay the credit card before I get the statement?
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Does it help to build credit if I pay the credit card company before they send my the statement?
It’s actually a bad idea
Paying the credit card company before they send you the statement is actually a bad idea. Not only it won’t help you build good credit, It will not build credit at all for you!
The credit card companies report to the credit bureaus on a monthly basis. Usually they report three things: your credit limit (an important parameter of your Fico score), your current balance and your payment history.
When you pay before the statement has been sent to you it will show as a $0 balance on your statement and on your credit report.
At first glance it may seem a good idea – to have a zero balance. But as far as credit scores are concerned – this actually has the same effect as not using credit at all, which doesn’t build credit!
So, if you want to build good credit and raise your Fico score, wait for the statement and pay it before the due date.
BTW, if you wait for the statement and pay it in full you enjoy the most important feature of credit card which is the no-interest grace period between when you made the purchase and the due date. If you pay your statements in full before the due date you will never incur interest. A shame to miss it!
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