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- Why a Good Credit Score Isn't Always About Paying Off Every Bill Immediately</p>
<p>Laura BogartJune 29, 2025 at 10:27 PM</p>
<p>DjelicS / Getty Images</p>
<p>You've got to have good credit: It's one of the first financial lessons drummed into your head at an early age. Without good credit, you'll be limited in the kinds of apartments you can rent and, eventually, the homes you can buy. Your dream car — well, let's just say you'll only be able to see it once your head hits the pillow at night. Good credit opens the door to better interest rates, easier approvals and a more affordable financial life.</p>
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<p>So, you do what you can to keep your score high. Starting with paying every bill on time — maybe even before a statement is issued. That's how you build a solid credit score, right? Well, not exactly. Other factors play a big role, and they don't always involve paying off everything immediately.</p>
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<p>Paying Immediately After Every Purchase? It Might Not Help Your Credit Score</p>
<p>Let's say you're new to credit and trying to be smart: You buy something on your credit card and pay it off right away — maybe even the same day. You treat it like a debit card, thinking you're building credit by showing responsible use.</p>
<p>But here's the catch: If you pay before your statement is issued, that balance may never be reported to the credit bureaus. In other words, there's no record of usage and, crucially, no credit-building benefit.</p>
<p>Credit scoring models use the balance shown on your statement, not your real-time activity. So if your balance is $0 when your statement closes, you don't show any utilization — which is a big factor in your credit score.</p>
<p>A better move is to let a small balance report (ideally less than 10% of your credit limit) and then pay it off before your due date to avoid interest. This way, you're still being smart with your money, but you're also giving your credit score something to work with.</p>
<p>Credit Utilization Rate Counts</p>
<p>One of the biggest factors in your credit score is your credit utilization rate — the percentage of available credit you're using on your credit cards and other lines of credit. This number is based on your statement balances compared to your credit limit, and you'll want to keep it low.</p>
<p>Writing for Experian, Ben Luthi shares that while some experts want you to keep your utilization rate below 30%, there's no hard-and-fast rule — the lower, the better. His advice? If you're carrying high balances, prioritize paying them down. You could try a debt consolidation loan or a balance transfer credit card, along with a broader debt repayment strategy like the debt snowball or avalanche method.</p>
<p>"If you regularly pay your credit card bill in full but still have a high utilization rate due to low credit limits," Luthi writes, "consider paying your bill shortly before your monthly statement date or making multiple payments to keep your balance low throughout the month."</p>
<p>Having Only One Type of Credit Can Hurt You</p>
<p>Taking on different kinds of credit seems like counterintuitive advice, especially when multiple hard credit inquiries could tell potential lenders that you're already borrowing beyond your means. But having only one kind of credit can actually hurt your score.</p>
<p>Equifax recommends looking at your credit accounts and dividing them into installment credit (fixed loans like a mortgage or auto loan) or revolving credit (credit cards you borrow from and pay off repeatedly). Having only one type can make your credit mix appear static, which can negatively impact your credit in some scoring models.</p>
<p>Now, this doesn't mean you should run out and open new lines of credit just to diversify. But if your only form of credit is a car loan, consider adding a low-interest credit card and using it sparingly (and paying it in full every month). If you only have credit cards, you might look into a small personal loan or a credit-builder loan to round out your profile.</p>
<p>If your score is low or your credit history is thin, look for financial products made especially for people in your situation, like a credit-builder loan or secured credit card to help establish healthy habits and expand your mix responsibly.</p>
<p>Sometimes, Credit Reports Are Wrong</p>
<p>Even if you're doing everything right, your credit report could be working against you. Sometimes there can be inaccuracies or flat-out errors on your report, like failing to show that you've paid off a debt or omitting a new account. Sometimes, these reports don't indicate that you've been a victim of fraud.</p>
<p>At least once a year, sit down with a copy of your credit report and go through it with a fine-tooth comb. The Consumer Financial Protection Bureau (CFPB) provides a detailed list of things you should look for, along with resources for reporting and disputing any mistakes you find.</p>
<p>Even small reporting errors, like an outdated credit limit, can affect your utilization rate and overall score. It's worth the time to correct them.</p>
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<p>Bottom Line</p>
<p>Yes, pay your bills on time, but don't assume that paying immediately after every purchase is your ticket to great credit. Paying early is responsible, but timing, mix and accuracy matter just as much.</p>
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<p>This article originally appeared on GOBankingRates.com: Why a Good Credit Score Isn't Always About Paying Off Every Bill Immediately</p>
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