Most of us know that maintaining a healthy credit score is crucial for securing favorable loan terms, renting an apartment, and even getting hired for certain jobs. Frequently, I am asked how to improve one’s FICO score? While there are a many ways to improve your FICO score, let’s focus on an effective strategy. The effective strategy to improve your FICO score is to make two payments per month on your credit card bills. Yep, two payments. Read on to learn when these payments should be made, and why.
The first payment should be made before your credit card's closing date. Not sure what that is? It’s the last day of your credit card’s billing cycle (a set period in which you incurred charges). This information can be found on your statement or simply by calling customer service. Making this first payment before the closing date reduces the balance that is reported to credit bureaus. This lower reported balance can positively impact your credit utilization ratio - a key factor in determining your FICO score.
The second payment should be made just before the due date. The due date is the date we are most familiar with, it’s the date your payment is due. Be sure the amount you pay is at least equal to the minimum amount due. You don’t want to risk underpayment. Making this payment just prior to the due date ensures you avoid late fees and interest charges and that you don’t miss your payment. Late fees, missed payments, and interest charges can negatively impact your FICO score. Worse yet, if you are carrying a balance, the fees make paying off your debt more difficult.
By making two on-time payments each month, the first by the closing date and the second by the due date, you demonstrate responsible credit management to lenders and credit agencies. Implementing this simple twice-monthly payment strategy can be an effective way to steadily improve your FICO score over time. Stay on top of your credit card payments and watch your FICO score climb and your debt decrease.
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