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I feel like this may result in the same unanswered question but I'm gonna ask it anyway just in case we can get a definitive answer.

Does paying off your credit card (before a statement is generated) really have a neutral affect (as opposed to positive or negative) on your credit rating? I see many schools of thought for this, and no real answer.

One side argues that if you pay off your balance before a statement is generated, then your utilization is 0% and your payment history is empty because there's nothing to report to the bureau. Because of this the system assumes you are not using your card, and your score does not increase. (but neither does it decrease.) That seems like it assumes the system is pretty naive.

The other side suggests that as long as you pay it off, the system doesn't care about it being stuck at 0% and a balance of 0, but rather "Paid as Agreed" and boosts your credit score based on that. This way it wouldn't matter if you pay off the card an hour after you used it, or on the due date.

Here's a quote from "thepointsguy.com"

If you choose to pay your credit card account before your statement actually closes, you’ll have a balance of $0. This will then be reported to the credit bureaus. The next month, you do the same thing and again have $0 reported. If you continue on this cycle, your amounts owed (commonly referred to as your credit utilization rate) will remain at 0%, but your payment history will also be nonexistent. Think about it; because you pay your balance before your issuer can even report your balance to the credit bureaus, it appears that you are simply not utilizing your credit card account(s). Remember that your credit score is a reflection of how well you manage the credit line that has been extended to you, so if it appears like you aren’t using your card, there’s no reason for your score to go up.

Can anyone shed any real light on this?

Many Thanks

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  • The question assumes a fact that’s been proven false. A card issuer does not necessarily report the statement balance. My card cuts statements on the 15th, but reports balance as if the last day of month, 30/31st.
    – JTP - Apologise to Monica ♦
    Commented Nov 13, 2018 at 23:56
  • I see, same question applies even with this info though. Regardless of when it reports balance or issues statements, does having a 0 balance at the time either of these happens cause your credit rating to remain unaffected? Reason I'm asking is I moved to a new country (Canada) and am looking to increase my credit rating as I don't have one here yet. I have a credit card, but I don't want to get a year down the line and find my credit score is still bad due to paying off my card before a balance or statement is drawn up.
    – simonw16
    Commented Nov 14, 2018 at 0:02
  • I added the Canada tag, since knowledge of Canada credit scoring is vital to a good answer.
    – JTP - Apologise to Monica ♦
    Commented Nov 14, 2018 at 0:18
  • I always pay of off my credit cards and my credit score is north of 800. The credit report shows the the actual balances, not carried debt.
    – Hilmar
    Commented Nov 14, 2018 at 1:01
  • 1
    It depends on when and what the credit card reports (which may vary). I don't know why anyone would pay off a credit card before the bill, though (unless you really need good credit that month). You're likely (credit cards may vary) not paying interest unless you have a balance on the due date of the bill.
    – xyious
    Commented Nov 14, 2018 at 15:50

1 Answer 1

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While I'm no specialist in the area I've been reading about the same thing beacuse I plan to move to Canada next year. For what I've seen you should keep a low overall utilization of your credit balance, below 35%. You should always pay your bills on time but you may want to pay some of it beforehand so you don't exceed the 35%.

For example: Say you have a 1,000 CAD limit on your credit card and your monthly debits are around C$ 200.00. Then you wanna make a purchase of C$ 500.00, bringing that month total to C$ 800.00. It may be intersting to pay some of it before the end of the month.

Other than that, paying before the actual date should note influence your ratings. The Canadian government have a good site with tips and informationa about it here:

https://www.canada.ca/en/financial-consumer-agency/services/credit-reports-score/improve-credit-score.html

And I would also recommend seeing this video/channel even if not specific for Canada:

https://www.youtube.com/watch?v=t0LHCMcv05Y

That's the closest I got to your question, hope it is helpful.

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  • This is a good reply :) I can't upvote on money.stackexchange as I never ask questions here. Good solid sources, and you seemed to have come to the same conclusion I have too. Keep utilization below 30-35 %, if you bring it under that value before the statement is drawn up I think thats the best position to be in.
    – simonw16
    Commented Jan 4, 2019 at 21:06

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