Paying Down Your Balances Is Essential to Improving Your Credit Score

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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 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 will naturally help raise your credit score.

Even though this process seems easy to understand, there are some important steps you have to take within it in order to keep your credit score where you want it to be. Here is a look at how to pay down your credit card balances and raise your credit score.

Find out the Report Date

15590676_sOne of the most important elements in paying off your credit card balance is finding 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 for an extra month.

Make Sure Your Balance Is Current

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. 15590750_sIf 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, a balance will remain from the new charges because they have not shown up yet. If you forget about this leftover balance, you could end up in default very quickly.

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. You could also keep a log of your charges at all times so you know what to pay and when. Furthermore, you could subtract your available balance from your overall credit to see how much money is owed on the account. If this is more than the billed amount, you know that you still have lingering charges.


  • Total line of credit: $1,000
  • Billed amount: $300
  • Available balance: $500
  • Actual amount owed: $1,000 – $500 = $500

In this case, you would have $200 in charges that have not shown up on the account yet.

Check back on the Card Each Month

Before your credit report date each month, make sure to check back for a balance you might not know about. This is usually the case if you have an annual fee or monthly fee that you don’t remember. You should keep an eye on your accounts anyway, just in case your identity is stolen. This will also let you watch for a phenomenon known as cramming, where a credit card company puts small fees on your account for no reason at all. it is easy to see this happen when you have no balance, and then you can call to inquire about the charges. Hopefully your balance remains zero until you use the card again.

If You Can’t Pay in Full…

If you can’t pay off your balance in full, at least try to get it below that 30% mark. This will do little damage to your credit score, and it will give you money to use however you need to. If you need  a few months to pay everything off, try to pay down as much of the card as you can quickly. Then keep this in mind the next time you make a big purchase on your credit card.

Final Thoughts

15591405_sPaying your credit card balance in full every month is the responsible thing to do. Just note that 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. Make a schedule for your payments that you can stick to, and you’ll be able to maintain your credit score.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

*The content in this article is accurate at the publishing date, and may be subject to changes per the card issuer.

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