Paying bills on time is crucial to maintain a positive credit score. A consumer’s credit payment history accounts for up to 35% of their FICO score, according to myFICO. Keeping track of statement closing dates, due dates and splitting bills into bimonthly payments can help borrowers avoid late or missed payments and save money.
4 Tips To Improve Your Credit Score
There are multiple ways to improve your credit score and avoid late payments and fees. Here’s how I did it.
1. Raise Your Credit Score by Getting Credit for Monthly Expenses You Pay
I used Experian Boost to increase my credit score by getting credit for positive utility, cellphone and streaming service payments. This strategy won’t work to raise your credit scores with Equifax or TransUnion — only Experian. Here’s how to do it:
- First, I signed up for an Experian membership and Boost.
- Next, I gave Experian permission to connect to my online bank and credit card accounts that I use to pay my utility, cellphone and streaming service bills. You can also get credit for rent payments.
- Once Experian identified my payments and verified the related accounts, it added the payment history for each account to my Experian credit file.
The whole process took about five minutes, and the effect on my credit score happened immediately. The average gain to one’s credit score that’s not related to rent data is 13 points, according to Experian.
Why This Helps
- You can get credit for payments you’re already making. There’s no effort on your part other than signing up for Boost and going through the verification process.
- You can get an immediate boost to your credit score. Experian claims the process to boost your credit score based on your positive payment history relating to things like utilities and streaming services takes about five minutes. In my experience, it did.
2. Raise Your Credit Score by Paying Bills Bimonthly
If you have less than perfect credit, you might be surprised at how quickly you can improve your credit scores, beginning with paying your bills bimonthly. Here are the steps I took:
- First, I itemized a list of all of my bills, including minimum payments and due dates.
- Then, I decided which two days of the month to make payments.
- Next, I divided each bill by two to determine the bimonthly payment amounts.
- Finally, I set up the payments for each bill in advance. You can also set a reminder to pay your bills if you don’t want to schedule your payments ahead of time.
Why This Helps
- You can avoid missing payments. When you create a plan to consistently pay your bills twice per month, you won’t have to worry about missed payments. It not only can help your credit scores improve, but it also can help you avoid late payment fees.
- You can reduce interest and pay debts faster. Many lenders compound interest daily, and bimonthly payments reduce the principal amount of money owed. Therefore, when you make bimonthly payments, you slow the compounding interest rate, helping you save money.
- You can lower credit utilization scores. Mid-cycle payments could reduce the amount borrowers owe, leading lenders to report lower balances to credit reporting agencies. Lower credit utilization scores could help improve your credit score.
3. Making Payments Before the Closing Date — Another Trick to Raising Credit Scores
Splitting loan payments into two bimonthly payments can be helpful. However, I was also able to expand on my credit score improvement by making sure I made my payments before the statement closing date, which is the last day of your credit card’s billing cycle. Here’s how I did it:
- First, I figured out the statement closing date for each of my creditors. This is different from your due date and usually occurs 21 to 25 days before your payment is due.
- Next, I set up automatic payments to occur before the statement closing date, so I wouldn’t miss the opportunity.
How This Helps
Making payments before your statement closing date utilizes specific timing to your advantage. The goal is to ensure that lenders report a lower balance to credit reporting bureaus by the end of the billing cycle, which will decrease your credit utilization, potentially resulting in a higher credit score.
4. Raise Your Credit Score With Additional Payments
I usually have money left over in my budget, so I’ve also made additional payments above and beyond the minimum due. Doing so helped me pay down my debt faster, avoid late fees and cut down on interest.
Why This Works
There are several reasons why making extra payments can help your credit scores:
- Quickly reduce balances. Credit utilization is important in how credit reporting agencies calculate credit scores. Additional payments reduce balances faster.
- No late payments. Late payments can cause credit scores to fall dramatically, while consistent on-time payments can increase scores. Extra payments likely decrease the chances that you will have late payments.
- Cut down on interest. Extra payments that reduce your balance more quickly could save you hundreds or even thousands of dollars of interest over time.
Implementing these relatively easy hacks toward financial responsibility can help you push your credit scores higher when performed consistently until your debt is paid. However, these are not the only option toward credit score improvement. Additionally, it’s not a bad idea to pay charges in real time, instead of waiting until the amount appears on the bill.
FAQ on Hacks for Improving Your Credit ScoreBetter credit scores likely mean better loan terms, which can improve borrowers' financial situations. Here are some of the most common questions about hacks for improving your credit score.
- What is the 15-and-3 credit hack?
- The 15-and-3 credit hack is named so because you make half of your payment 15 days before the due date and the other half three days before the due date. However, many financial experts discount its effectiveness for improving your credit score. It's better to schedule your payment before your credit card's statement closing date.
- Is it better to make two payments a month on a credit card?
- Yes. When you make two payments per month to your credit card, you can reduce the balance in the middle of the billing cycle, which cuts down on the compound interest. It may also result in your credit card issuer reporting a smaller balance to credit reporting agencies, which could positively impact your credit scores.