Does immediately paying off my credit card affect my credit rating?

Hopelessly_Addicted

Hello everyone,

I've recently noticed that the Natwest banking app has an option to check your credit score, which updates each month.  I've been checking it and my last score is 627 out of 710, which it marks as 'good'.  All seems well, and it looks like this score updates once a month on the 26th for me.

Underneath my credit score, it has suggestions on how to improve it.  One of the notes is that I'm currently not using any of my £XXXX total credit limit (which is two credit cards).  I do use one credit card regularly (and the other one is a spare which I've not used yet), but I pay it off in full each month, usually within a day or two of getting an e-mail letting me know that my bill is due (I don't like being in any debt!). This usually happens around the 23rd/24th of the month, so I expect my credit card balance is £0 each time my score refreshes on the 26th.

Is it worth holding off for a week or two before clearing my balance ASAP after getting the bill?

Thanks.

molerat

As long as you are paying after the bill is produced then there is no problem - the "not used" scenario only really applies to paying off straight after a purchase rather than waiting for it to be billed.  This seems to be a quirk in the system they are using by only looking at your balance on a set date rather than billed balance which is what the CRAs usually report.

Hopelessly_Addicted

molerat said:

As long as you are paying after the bill is produced then there is no problem - the "not used" scenario only really applies to paying off straight after a purchase rather than waiting for it to be billed.  This seems to be a quirk in the system they are using by only looking at your balance on a set date rather than billed balance which is what the CRAs usually report.

Makes sense, thank you.  I'm gonna test it by paying off my bill after the 26th this time round.

[Deleted User]

Remember that any change in your behaviour will drop your score, but waiting for your statement before clearing will demonstrate to lenders that you can manage credit.

Always look to appeal to lenders, never to boost your credit score.

penners324

Set up a direct debit to pay on the due date....

You score will go down with Clearscore but up with Experian and Credit Karma if you pay it like that....

But no one actually uses your score except those companies to sell you more credit products 

Ebe_Scrooge

Hopelessly_Addicted said:

Makes sense, thank you.  I'm gonna test it by paying off my bill after the 26th this time round.

Just be careful as to when the "payment due" date is.  Typically, payment will be due around 3 weeks or so after your statement is produced.  I can't be sure from your description, but I'm guessing the email you get on on the 23/24th means your statement has just been produced - in which case, waiting a week before paying it is fine.  But do double-check.

As Molerat says, it's probably just a glitch - and you really don't want to pay any attention to your meaningless "score".  But obviously you do want to be building up a good credit history, which is what really matters.

And yes, a DD to pay the full amount is the simplest and safest way of doing it.

As a slight aside, you say " I do use one credit card regularly (and the other one is a spare which I've not used yet)".  It's worth putting a small transaction through the "unused" card once every few months, just to keep it active (the usual rules apply - only use it to buy something you needed to by anyway, and pay it in full when the statement arrives).  Unused cards can get closed by the issuer (as it costs them money to provide you with a line of credit).  And having more than one lender who's prepared to offer you credit is a good sign on your credit record.  It may only make a small difference, but if you've got the card anyway, and can trust yourself not to abuse it, you may as well take advantage and use it to your advantage.

MalMonroe

Agree with Penners324. 

Why not set up a direct debit so you don't have to worry? If anything does go wrong, you have the direct debit guarantee to fall back on.

I have two credit cards - one at the moment is still on 0% interest as it's a transferred balance and that's just being paid off by a set amount each month. The other one I spend on but with the instruction to clear the balance every month. That's working well for me right now and when the BT 0% interest ends I'll be paying off that card in full. The money for that is in my savings account. I actually do have another credit card so three in all but I have 'frozen' that one for the time being. I may close it but haven't decided yet. The lender says I don't have to close it yet if I don't wish to. I check my banking app daily - simply because I can, it's just so easy. Novelty hasn't worn off yet! But I feel more in control that way.

My credit reports are all good. I'm not bothered about any scores - although they are also good and one is 'excellent' - because they aren't seen by lenders. 

Hopelessly_Addicted

Ebe_Scrooge said:

Hopelessly_Addicted said:

Makes sense, thank you.  I'm gonna test it by paying off my bill after the 26th this time round.

Just be careful as to when the "payment due" date is.  Typically, payment will be due around 3 weeks or so after your statement is produced.  I can't be sure from your description, but I'm guessing the email you get on on the 23/24th means your statement has just been produced - in which case, waiting a week before paying it is fine.  But do double-check.

As Molerat says, it's probably just a glitch - and you really don't want to pay any attention to your meaningless "score".  But obviously you do want to be building up a good credit history, which is what really matters.

And yes, a DD to pay the full amount is the simplest and safest way of doing it.

As a slight aside, you say " I do use one credit card regularly (and the other one is a spare which I've not used yet)".  It's worth putting a small transaction through the "unused" card once every few months, just to keep it active (the usual rules apply - only use it to buy something you needed to by anyway, and pay it in full when the statement arrives).  Unused cards can get closed by the issuer (as it costs them money to provide you with a line of credit).  And having more than one lender who's prepared to offer you credit is a good sign on your credit record.  It may only make a small difference, but if you've got the card anyway, and can trust yourself not to abuse it, you may as well take advantage and use it to your advantage.

Thanks to you and everyone that has responded.

I'm thankful and fortunate not to have any credit card balance or debt owing for over a decade now.  Yep, the e-mail I get around the 24th means that the statement has just been produced and it's not due until the following month.  I usually pay pretty much on the day, mobile banking has made things so easy.  Noted on the tip to use the other CC - I'll be sure to give it a go.