It is widely known that the amount a consumer owes versus their available credit limit represents 30% of their FICO score. Experts in the industry often counsel consumers to keep their credit card balances as low as possible, and if possible, pay them in full every month. The idea, of course, is that if you pay down your balance to zero, it will appear that you owe nothing even though you have a lot of available credit. This, naturally, will help raise your credit score.
A Key ingredient to this strategy, however, is often neglected. First, you must find out what day of the month your credit card company reports your balance to the credit bureaus. Often times this can be a few days before your account's due date. Armed with this information, you will want to ensure your balance is paid down to zero just prior to them reporting the balance. Otherwise, even though you have good intentions, they may report the balance on the account just before it's paid off. This can then have a negative impact on your credit score since it will appear that you are carrying a balance.
You must also take into account what the current balance is at the time of payment and not at the end of the billing period. Typically, there can be days or weeks that pass between when you receive your credit card statement and when the payment is due. If you are like most consumers, you usually continue to use your credit card during that time. As a result, by the time you make your payment, if you only pay what's due on the statement, a balance will remain from the new charges. To combat this, you can call your credit card company or check your account online prior to making your payment to accommodate any new or pending charges that arise after receiving your statement.
While paying your credit card balance in full every month may feel like the responsible thing to do, if you're not paying before your credit card company's reporting date or paying more than the amount due to accommodate any new charges, you may wind up hurting yourself financially.
Other Resources: