One Simple Habit That Could Help Your Credit Score

One Simple Habit That Could Help Your Credit Score

Home - Quick Tips - One Simple Habit That Could Help Your Credit Score

One Simple Habit That Could Help Your Credit Score

When it comes to credit cards, there’s a lot of misinformation out there. One of the most damaging myths is that paying down your entire balance each month won’t earn you any credit. Not only is that info completely false but, as it turns out, you could potentially help your credit score by making payments more than once a month.

This is a trick I heard of a few months back that’s so simple you’ll wonder why you hadn’t considered it sooner. See, when I was first approved for my Discover card, the credit limit was set at only $4,500. Not that I planned to spend that much in any given month, but I did want to keep my credit utilization — which is the second largest factor in determining your credit score — under 10% while still getting all the benefits that spending on that card entailed. So what’s a boy to do in this situation? Keep my balance low by making additional payments throughout my billing cycle.

After my purchases had posted and that 10% usage barrier ($450 in my case) was surpassed, I’d simply make a payment to bring my balance back down. In doing so, I still received all the cash back I was entitled to but my credit scores started gaining a few points as I continued to employ this method. Better yet, by making sure my balance is paid in full each month, I’ve never had to pay interest on my card.

Although I can only speculate on whether it’s the direct result of this practice or just my good borrowing in general, Discover has steadily increased my credit limit in recent months. Because of this, my need to make extra payments to remain under 10% usage has diminished. Still, there have been some months where my spending is heavier than normal and I bust this credit-saving method out once again.

As simple as it may seem, the practice of making multiple monthly payments to keep your credit card balance low is surprisingly effective for helping your credit score. While you may not see a huge boost, it will at least prevent you from getting dinged by a rising credit utilization. In the end, getting into this easy habit will allow you to earn rewards, avoid interest fees, and keep your credit score as pristine as it can be.

Author

Kyle Burbank

Kyle is a freelance writer and author whose first book, "The E-Ticket Life" is now available on Amazon. In addition to his weekly "Money at 30" column on Dyer News, he is also the editorial director and a writer for the Disney fan site LaughingPlace.com and the founder of Money@30.com.

Other Articles by Kyle Burbank

A Quick Tip on Tipping Internationally

If there's one part of our financial culture that confuses and worries me, it's tipping. See, I want to be a good person and give a nice tip (even if I really don't want to spend the extra cash), but I just never know what even constitutes a "good tip."...

Top Tips for Selling & Promoting Your Book at a Trade Show or Signing

From my experience, selling your book at a trade show, expo, convention, or what have you can be a great way to meet readers and promote your work. The trick is to first find an event you think would make sense to host your book at then consider ways you can draw people to your booth.

Buy One, Get One Chipotle is Just a Beat Away

Whenever you mention Chipotle to someone, you're likely to get one of two distinct reactions: "ooooo" or "ewww." In many cases, that latter reaction is the result of a rough patch the burrito chain went through involving an E. coli outbreak along with some other food safety issues. Ever since...

Comments

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *