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? asked in Business & FinanceCredit · 2 months ago

Will paying off my credit debt the same month I maxed out my card help build my credit? ?

If I max out my credit card and pay the debt off within 2 months frequently Will my credit score increase? 

10 Answers

  • Amy
    Lv 7
    2 months ago
    Favorite Answer

    If you pay off the debt before it is reported to the credit bureaus (which is often, but not always, the same time the credit card company generates your bill), then your credit report will show a zero balance and that you paid on time. If you pay after you get the bill, then your report shows a high balance and that you paid on time.

    A large part of your credit score is whether you made at least the minimum payment on time. 

    Another part is how much you owe relative to your credit limit. And at this point we have to get into the technicalities of credit score calculation.

    There are several different "credit score"s. FICO and its competitors periodically come out with improved versions, but most lenders continue to use whichever old algorithm they are used to. Prior to 2020, FICO scores only looked at your current credit-card balance. You could max out your card every month and then pay it off right before someone runs a credit check, and your score would be the same as if you'd never maxed it out. But the newest FICO version does look at your history, so there's no quick recovery from maxing out your card every month.

    An easier way to improve your utilization ratio is to increase the limit on your cards.


    TLDR: paying your credit card debt before you get the bill will immediately improve your credit score for most lenders, but for others you'd have to do this every month.

  • Anonymous
    2 months ago

    You should use your credit card simply as a convenience to not carry cash. Pay the card balance every month and you can earn 2% or more of the total of your purchases.  Which adds up.  You will establish an excellent credit rating, but it is not a big thing because you don't need it.

  • 2 months ago

    Yes, it should do that, but may not. 

  • 2 months ago

    as far as i know they track if you pay on time and how much you spend overall. it just shows them that you have the money to pay off X amount of debt in X time.

    I would assume a person who spends a creditcard purchase of 500 a month (groceries gas etc) and pays it off during salary day. would have a better credit score than a person who spends 100 bucks a month  doing the exact same thing.

    Following that logic a person who spends 900 a month but pays 500  would likely get the same but possibly lower score, because you are telling them that you are living beyond your means and its likely that one hiccup in finances  will mean you can end up not paying the debt you owe (a risky person).

    spend alot, pay it off every month,  or every paycheck date. 

    basically I highly suggest you don't use a credit card like a credit card, rather use it like a bank card.. don't spend what you don't have.

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  • 2 months ago

    Years ago,. a financial official for HSBC told me that it raises one's credit score if the amount spent on each credit card remains at least one-half below the max allowed. Another score-raiser is paying on time every time, and adding at least $5 above the minimum amount, the latter also cutting down on the amount of interest you pay (making it easier to pay off earlier).  

    If you don't miss the in-between first payment between the time you max out and the time you pay it off two months later, you should be able to get your credit score up.  

  • kswck2
    Lv 7
    2 months ago

    Your credit score is calculated by how Little credit is used as compared to the overall amount of credit you have. 

    If you max out a 30k credit limit, just paying it off Once does nothing to your credit score. 

  • 2 months ago

    No.  If you max out your card frequently, then your credit score will decrease.  If you are trying to build credit, you should not use more than 10% of the limit.

  • Shay
    Lv 7
    2 months ago

    Maxing out your card and paying it off doesn't increase your credit score any higher than just making a small purchase and paying that off.

    What matters is NOT carrying a balance that is more than 30% of your card - that can HURT your score.

    Otherwise - your credit score doesn't improve any differently if you spend and pay off $1000 vs spending and paying off $50.

    It is just about usage and pay back.  Use a little - pay it back - your score will increase just the same as making big purchases.  

    You also can use your card to pay for things you need anyway.  Set your card to pay your phone bill or your cable bill.  Then use the money you would have spent on those items to pay the card when the bill cycles.  This helps build credit without even spending money that you wouldn't have spent anyway.

    Building a good credit score takes a long time.  You aren't going to see any big gains in a short time no matter what you do.  But you can see big losses on your score if you have a late payment or something in collections.  So - pay things on time - don't let anything go to collections - and keep your credit card balance below 30% and your score will grow over time.  

  • Anonymous
    2 months ago

    Paying it off when due is best.

  • Anonymous
    2 months ago

    Maxing out your card will decrease your score.   Don't spend more than half of your line of credit.

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