Paying credit card before statement is issued

lopedog

Hi,

I've been finding conflicting advice as to whether paying off my credit card before the statement has been issued is a good or bad thing. Some people seem to think because the debt & payment aren't recorded on a statement then the CRA's will have no record of it, whereas other people seem to think that the payments will be reported/recorded regardless.

I've only just been issued the card in the last 2 weeks, have made some purchases and then paid them off on my next pay day as I'm paid weekly, and I'm now just confused as to whether this is a good thing or not from a credit building perspective, as I'm trying to keep the very low limit card (younger me made bad decisions and flatlined my credit rating) with as much balance as possible in case of an emergency while also trying to use it to build credit for better credit limits in the future.

Any clarification would be amazing

Olinda99

I think it is just a statement balance that is reported to the cra so if you want to build your credit history you will be better off having a little bit on the statement and then paying it off even if it was only a couple of days after the statement date

Dobbibill

set up a direct debit to take the money when requested. the CRAs will then get accurate reporting that you are using your card and avoid any doubt. (If you opt for this, make sure you pay attention to when the first DD payment will be taken as it's often not done in time for your next payment/statement but will be the following one)

paying your CC off too soon will result in a zero balance being reported to the CRAs which isn't going to build any credit history. 

As long as you don't miss/make a late payment on your CC, you could always try both ways and monitor your credit reports. 

400ixl

The CRA's get a balance and and adverse markers such as missed payments. If paying it off each pay day works for you then do that. It will make minimal difference really. Using up a higher percentage of the credit available is equally as bad as using a very low percentage.

Us it as best suits your needs as long as it is paid off in full before the statement payment date.

CliveOfIndia

When your statement is generated, the outstanding balance is reported to the CRAs.  If you repay in full once the statement is generated, then this demonstrates good financial management - as well as meaning you pay zero interest.

If you pay off transactions mid-cycle, then the statement will show zero balance.  Not an issue as such, but it does mean you're not building up a solid credit history.

So if your primary objective is to build up a good history, you need to wait until the statement is generated then repay in full - ideally by means of a Direct Debit.  How you pay the statement is irrelevant in terms of your credit history, but a Direct Debit does mean you'll never forget (particularly useful if you're away on holiday, for instance).  You do, of course, need to make sure you have sufficient funds in your bank account to honour the DD.

born_again

lopedog said:

Hi,

I've been finding conflicting advice as to whether paying off my credit card before the statement has been issued is a good or bad thing. Some people seem to think because the debt & payment aren't recorded on a statement then the CRA's will have no record of it, whereas other people seem to think that the payments will be reported/recorded regardless.

I've only just been issued the card in the last 2 weeks, have made some purchases and then paid them off on my next pay day as I'm paid weekly, and I'm now just confused as to whether this is a good thing or not from a credit building perspective, as I'm trying to keep the very low limit card (younger me made bad decisions and flatlined my credit rating) with as much balance as possible in case of an emergency while also trying to use it to build credit for better credit limits in the future.

Any clarification would be amazing

Forget about the CRA. What they produce (Number) is never seen by lenders.
What matters is credit history, which banks can see.

The bigger point. Is why pay off early before statement is issued. Might as well just use your debit card.
This is missing the point of a CC & the interest free period. 

As you get paid weekly, then put the amount you have spent on the CC into a savings acc & use that to pay off the bill before the due date on statement. OK you won't make much interest in a month, but you will make more than you are now.

CliveOfIndia

born_again said:

lopedog said:

Hi,

I've been finding conflicting advice as to whether paying off my credit card before the statement has been issued is a good or bad thing. Some people seem to think because the debt & payment aren't recorded on a statement then the CRA's will have no record of it, whereas other people seem to think that the payments will be reported/recorded regardless.

I've only just been issued the card in the last 2 weeks, have made some purchases and then paid them off on my next pay day as I'm paid weekly, and I'm now just confused as to whether this is a good thing or not from a credit building perspective, as I'm trying to keep the very low limit card (younger me made bad decisions and flatlined my credit rating) with as much balance as possible in case of an emergency while also trying to use it to build credit for better credit limits in the future.

Any clarification would be amazing

Forget about the CRA. What they produce (Number) is never seen by lenders.

Just for clarification, it's not correct to say you should disregard the CRA.

You're absolutely correct in saying that the score they generate is meaningless, and is not seen by lenders.  However, what they also record is your payment history and outstanding debt - and this information is important to lenders.

The_Groat_Counter

CliveOfIndia said:

born_again said:

Forget about the CRA. What they produce (Number) is never seen by lenders.

Just for clarification, it's not correct to say you should disregard the CRA.

You're absolutely correct in saying that the score they generate is meaningless, and is not seen by lenders.  However, what they also record is your payment history and outstanding debt - and this information is important to lenders.

Agreed - so called "credit scores" are the things to disregard, but your credit history as recorded by the Credit Reference Agencies (CRAs) is the important information.

Also agree with others upthread - the best approach in terms of building a good credit history is to have a Direct Debit set up to pay off the statement in full each month.

Olenna

CliveOfIndia said:

born_again said:

lopedog said:

Hi,

I've been finding conflicting advice as to whether paying off my credit card before the statement has been issued is a good or bad thing. Some people seem to think because the debt & payment aren't recorded on a statement then the CRA's will have no record of it, whereas other people seem to think that the payments will be reported/recorded regardless.

I've only just been issued the card in the last 2 weeks, have made some purchases and then paid them off on my next pay day as I'm paid weekly, and I'm now just confused as to whether this is a good thing or not from a credit building perspective, as I'm trying to keep the very low limit card (younger me made bad decisions and flatlined my credit rating) with as much balance as possible in case of an emergency while also trying to use it to build credit for better credit limits in the future.

Any clarification would be amazing

Forget about the CRA. What they produce (Number) is never seen by lenders.

Just for clarification, it's not correct to say you should disregard the CRA.

You're absolutely correct in saying that the score they generate is meaningless, and is not seen by lenders.  However, what they also record is your payment history and outstanding debt - and this information is important to lenders.

They also usually show the total value of new items transacted on the card - so would show the OP transactions including payments.

The most important thing is that the OP doesn't incur interest and repays what is borrowed.   

Nasqueron

Olenna said:

CliveOfIndia said:

born_again said:

lopedog said:

Hi,

I've been finding conflicting advice as to whether paying off my credit card before the statement has been issued is a good or bad thing. Some people seem to think because the debt & payment aren't recorded on a statement then the CRA's will have no record of it, whereas other people seem to think that the payments will be reported/recorded regardless.

I've only just been issued the card in the last 2 weeks, have made some purchases and then paid them off on my next pay day as I'm paid weekly, and I'm now just confused as to whether this is a good thing or not from a credit building perspective, as I'm trying to keep the very low limit card (younger me made bad decisions and flatlined my credit rating) with as much balance as possible in case of an emergency while also trying to use it to build credit for better credit limits in the future.

Any clarification would be amazing

Forget about the CRA. What they produce (Number) is never seen by lenders.

Just for clarification, it's not correct to say you should disregard the CRA.

You're absolutely correct in saying that the score they generate is meaningless, and is not seen by lenders.  However, what they also record is your payment history and outstanding debt - and this information is important to lenders.

They also usually show the total value of new items transacted on the card - so would show the OP transactions including payments.

The most important thing is that the OP doesn't incur interest and repays what is borrowed.   

Most, if not all, credit cards do not spend / waste money doing constant updates to the CRAs when you buy stuff, just the monthly statement total

born_again

CliveOfIndia said:

born_again said:

lopedog said:

Hi,

I've been finding conflicting advice as to whether paying off my credit card before the statement has been issued is a good or bad thing. Some people seem to think because the debt & payment aren't recorded on a statement then the CRA's will have no record of it, whereas other people seem to think that the payments will be reported/recorded regardless.

I've only just been issued the card in the last 2 weeks, have made some purchases and then paid them off on my next pay day as I'm paid weekly, and I'm now just confused as to whether this is a good thing or not from a credit building perspective, as I'm trying to keep the very low limit card (younger me made bad decisions and flatlined my credit rating) with as much balance as possible in case of an emergency while also trying to use it to build credit for better credit limits in the future.

Any clarification would be amazing

Forget about the CRA. What they produce (Number) is never seen by lenders.

Just for clarification, it's not correct to say you should disregard the CRA.

You're absolutely correct in saying that the score they generate is meaningless, and is not seen by lenders.  However, what they also record is your payment history and outstanding debt - and this information is important to lenders.

You missed  bit in what you quoted..

What matters is credit history, which banks can see.

👍