Credit Score, Credit Card, Pay in advance

[Deleted User]

There is absolutely no reason to pay your credit card balance early. The only exception to this would be if you have inadvertently gone over your limit by a few pounds in which case making a quick payment to bring the amount back into the black should avoid a charge/flag on your credit file.

goaroundnow

If you are bothered about or want to help your credit score, there is/are reason(s) to pay off credit-cards before statement and, hence, have a "0" balance reported on the credit file:

1) Some credit scorecards positively view (i.e. reward in the score) zero balance accounts.

2) If you use your card a lot in a month and that balance is reported to the agencies then:

a) you could be close to your credit-limit, so lowering your score due to limit v balance ratio issues

and/or

b) you could look over-indebted or, at least, increasing your income v debt ratio.

A lot of companies report your balance at the end of the month, not necessarily your statement balance. In this case, it may or may not be necessary to pay early to prevent the balance being reported to the agencies.

[Deleted User]

goaroundnow wrote: »

If you are bothered about or want to help your credit score, there is/are reason(s) to pay off credit-cards before statement and, hence, have a "0" balance reported on the credit file:

1) Some credit scorecards positively view (i.e. reward in the score) zero balance accounts.

2) If you use your card a lot in a month and that balance is reported to the agencies then:

a) you could be close to your credit-limit, so lowering your score due to limit v balance ratio issues

and/or

b) you could look over-indebted or, at least, increasing your income v debt ratio.

A lot of companies report your balance at the end of the month, not necessarily your statement balance. In this case, it may or may not be necessary to pay early to prevent the balance being reported to the agencies.

I think I'd have to respectfully disagree with this... Of course, none of us know exactly how lenders assess people before providing them with credit but in my experience, actually using your card and paying off in full is viewed more favourably than an account always reported as £0 - card use is, after all, how issuers make their money.

Bear in mind that lenders report payments to the credit reference agencies. I would say that it is almost always better for a card to be active rather than appear inactive. Slight caveat on this though - even if you are paying in full each month, don't go too near your credit limit as (apparently) some lenders don't like this.

SnowTiger

goaroundnow wrote: »

If you are bothered about or want to help your credit score, there is/are reason(s) to pay off credit-cards before statement and, hence, have a "0" balance reported on the credit file:

1) Some credit scorecards positively view (i.e. reward in the score) zero balance accounts.

[...]

A lot of companies report your balance at the end of the month, not necessarily your statement balance. In this case, it may or may not be necessary to pay early to prevent the balance being reported to the agencies.

I think it's extremely unlikely that someone who has access to credit, but appears not to use it, would be credit scored higher than someone who does (appear to) use it.

yangptangkipperbang

Is the OP referring to his "credit score" from one of the commercial credit reference agencies ?

If so, what ever silly numbers appear on these have no bearing on what a card issuer will do when it comes to their issuing a card or determining a card limit. They make their own mind up - not Experian or Equifax or any other......................

[Deleted User]

yangptangkipperbang wrote: »

Is the OP referring to his "credit score" from one of the commercial credit reference agencies ?

If so, what ever silly numbers appear on these have no bearing on what a card issuer will do when it comes to their issuing a card or determining a card limit. They make their own mind up - not Experian or Equifax or any other......................

geekonthepc

goaroundnow wrote: »

If you are bothered about or want to help your credit score, there is/are reason(s) to pay off credit-cards before statement and, hence, have a "0" balance reported on the credit file:

1) Some credit scorecards positively view (i.e. reward in the score) zero balance accounts.

2) If you use your card a lot in a month and that balance is reported to the agencies then:

a) you could be close to your credit-limit, so lowering your score due to limit v balance ratio issues

and/or

b) you could look over-indebted or, at least, increasing your income v debt ratio.

A lot of companies report your balance at the end of the month, not necessarily your statement balance. In this case, it may or may not be necessary to pay early to prevent the balance being reported to the agencies.

To be honest I can see where you're coming from - I check my credit report monthly and up until recently I was on a £400 limit. I'd get through £300 a month easily every month, and then pay the entire balance off. After checking my credit card on my CR, it was reporting the balance at the end of the month - not the statement balance. My credit report "advice" then listed that my credit:limit ratio was consistently high.

HOWEVER, I still pay mine off every month after the statement and see nothing wrong in doing so, no matter what the credit reports say. As someone has already pointed out, lenders want to see you borrowing money responsibly - not taking out cards and leaving them with 0 balances all the time. If your credit report is constantly reporting a 0 balance, this will do you no favours. Barclaycard just agreed a credit limit increase with me last week, so I must be doing something right.