How to pay off credit card to achieve best credit score

larks1981

I recently acquired an aqua credit card to help repair my credit.

Out of the following, which is the best way to manage my repayments to achieve the fastest positive impact on credit score and my relationship with aqua.

1 . Pay for something on credit card, and ASAP ( ie same day or next day) go online and make payment in full back to credit card. Perhaps doing this a couple times per month.

2. Use credit card throughout month, wait for bill and settle in full by card payment or DD.

3. Doesn't matter as long as bill is settled in full each month.

4. Other... Please explain.

Thank you for your help in advance

zerog

2.
1 won't show up on your credit report as using the card at all.
2 will not result in any interest being charged as long as you do pay the full amount of each statement.

dresdendave

As per the previous reply, wait for statement and then pay in full before due date.

Paying extra amounts during the month can cause confusion as the statement may be finalised while a payment is being processed.

gglaze

This is debatable, but...

If your primary goal is to do anything possible to improve your credit (as opposed to simply avoiding all interest costs)... then you may want to consider not paying off your bill in full. For example, paying off almost all of it, but just leaving a few pounds to roll over to the next month. The idea here is to allow some interest to be earned by the bank offering you credit, and showing some revolving balance (although very small relative to your available credit). If it's a very small amount, the interest charges hopefully wont be much, and it might be worth it. This is an attempt to "game" the system a bit, by making it look like you are a more "profitable" credit customer, while at the same time making it look like you are in control of your finances by keeping your revolving balance very low. I would attempt something like this, perhaps for 3 months in a row, and then on the 4th month, go ahead and pay everything off for a few months, and then perhaps come back to this strategy again.

The other effect of this is that, perhaps, the card provider will see you as a "profitable" customer and trigger a better credit limit increase. This can again look better on your credit report.

I certainly wouldn't advocate letting this spin out of control and getting a huge revolving debt that you will have trouble paying off. But if you can do it in a controlled manner, you might be able to game the system a bit - as you say, your primary goal is to improve your credit as soon as possible.

But again it is debatable whether this strategy can really have any benefit. But other than costing a few pounds on interest, I can't see how it could hurt.

Absolutely agree with the other replies here - don't pay it off before your due date. The first thing you must do is make sure your report shows you "using" your credit.

The_Boss

gglaze wrote: »

This is debatable, but...

If your primary goal is to do anything possible to improve your credit (as opposed to simply avoiding all interest costs)... then you may want to consider not paying off your bill in full. For example, paying off almost all of it, but just leaving a few pounds to roll over to the next month. The idea here is to allow some interest to be earned by the bank offering you credit, and showing some revolving balance (although very small relative to your available credit). If it's a very small amount, the interest charges hopefully wont be much, and it might be worth it. This is an attempt to "game" the system a bit, by making it look like you are a more "profitable" credit customer, while at the same time making it look like you are in control of your finances by keeping your revolving balance very low. I would attempt something like this, perhaps for 3 months in a row, and then on the 4th month, go ahead and pay everything off for a few months, and then perhaps come back to this strategy again.

The other effect of this is that, perhaps, the card provider will see you as a "profitable" customer and trigger a better credit limit increase. This can again look better on your credit report.

I certainly wouldn't advocate letting this spin out of control and getting a huge revolving debt that you will have trouble paying off. But if you can do it in a controlled manner, you might be able to game the system a bit - as you say, your primary goal is to improve your credit as soon as possible.

But again it is debatable whether this strategy can really have any benefit. But other than costing a few pounds on interest, I can't see how it could hurt.

Absolutely agree with the other replies here - don't pay it off before your due date. The first thing you must do is make sure your report shows you "using" your credit.

If you pay off all but a little bit then you are still charged interest on the whole lot. Especially expensive with Aqua who charge high interest rates.

The best way would be (the first two would specifically apply to Aqua, others are general).

To pay on time
Not to go over the credit limit
Try not to use more than 50% of available limit on any of cards, but certainly not on most cards
If making a minimum payment, pay a little extra on top so it is not flagged with a 'minimum payment' marker

Also, I'd consider..
Keeping accounts open as long as possible.
Keeping accounts open for a while after a promotional period ends so that not all months are recorded with a 'promotional period?' flag.