An Interview with Rod Griffin, the Senior Director of Public Education and Advocacy for Experian
It wasn't until recently that I became aware of Reddit. I found countless financial questions posed that were clearly important and written by someone looking for help. Take, for instance, this important question.
It didn't take long to realize that many of the responses on Reddit to important financial questions were an absolute cesspool of bad advice. Take, for instance, the responses from the screenshot below.
Is Paying My Credit Card Way Before the Due Date a Bad Idea?
Rod Griffin is one of the nation's leading credit education experts, so I posed this question to him, along with the screenshot. His responses are as follows:
Myth: Just Pay the Statement Amount
Paying a credit card long before the due date won't hurt your credit scores, but it won't necessarily help them, either. Credit scores look at whether or not the bill was paid "on time," which means by the account's due date. Your credit report typically shows the balance due at the end of the billing cycle, and paying in advance may or may not change that.
If the payment occurs after the lender's billing cycle ends, it will still show in the credit report. The date the billing cycle ends is often not the same as the due date. So, paying in advance doesn't mean you will have a zero balance showing in your credit history.
The only way to have a zero balance appear in your credit report is to pay off any balance on the card and then not use it again for at least a month, or maybe more. That would ensure the account is updated to show a zero balance. If you use the card during the month, that activity will be reflected in the credit report.
Myth: Do Not Pay Your Full Credit Card Balance
One of the most pervasive myths in credit scoring is that you should not pay the balance in full each month on your credit card. The fact is that paying your balance in full is the best thing you can do. The only thing that carrying a balance does is cause you to pay interest or fees. It just costs you more money.
The lower your utilization rate (balance-to-limit ratio) on your credit cards, the better it is for your credit scores. Paying the balance in full ensures the utilization reflected in your credit report will be as low as possible.
Trying to Manipulate Credit Scores
Trying to manipulate credit scores usually backfires on people. They usually don't know the date for the billing cycle's end. If they are using credit cards for automated payments, for things like points or cash back – and then paying off those charges – it can be difficult if not impossible to control when those charges are made, it is usually determined by the service provider, which then makes it very difficult to time your payment so that the balance is paid before the end of the billing cycle.
Common Sense Strategies for Higher Credit Scores
If you want to have good or even excellent scores, don’t try gimmicks. Just use your common sense.
Pay the bill on time; ideally pay it in full.
Keep your balances as low as possible.
Do both over and over and over again. That’s all it takes to have good credit scores.
Promises for a quick fix, a miracle solution, or insider secrets are big red flags that the person doesn't really know what they are talking about.
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