Will paying my credit card in advance not improve my credit rating?

Question

I generally like putting money on my credit card before making expenditures, as this ensures I won't get charged any interest on any amount and that I can actually afford whatever it is I'm purchasing.

I was told by a financial representative that it actually helps to make a purchase often, even if it's a small one. But will my credit rating improve if I pay it before I actually create any debt (the kind that doesn't earn interest)?

Should I be paying it one day after, instead of any time before? Should I wait for my mail statement to arrive?

Thanks,
Ken

To clarify my question:

Is it bad (or not good) for my credit if I pay before I make the purchase? I've noticed you can have a negative balance (credit) on your card. By doing so, am I not improving my credit?

Thanks for all the responses so far!

I understand that I should be paying my credit card and never carry a balance forward. My question however pertains to whether it is actually 'bad' for my credit if I don't even allow myself to get a balance, by having a negative balance?

"winters in buffalo" has the best answer so far as he actually understands my question -- in response, I have a credit card because I'm trying to build a credit history. By doing this practice, am I not building anything?

Sorry, I should add that "Quite New Here" understood my question as well.

Answer 1

This practice does not establish a credit rating. I was taught this a long time ago. The main purpose of establishing acredit rating is so that you can prove that you are a typr od person who will pay off your debts should you incur one that you are not financially capable of paying in one lump sum- eg a mortgage
If you pay your bill immediately, you have not establish a credit rating, so if you do this for many years and askfor a credit rating, it will come back as UNKNOWN
There should be a record of your purchases of big ticket items that you have paid in 2 to 4 payments etc. Then you hve established a rating.

Answer 2

Winters in Buffalo is completely correct. Your credit card has a grace period for all purchases. Find out what it is, put the money you'd be pre-paying your credit card into an interest-bearing account, make money off them (by letting them loan you the money for free) and pay off the card before the grace period ends and interest accrues. Even better, get a rewards card and play the same game. I've made about $500 using my credit card the past six months.

If you still want to continue your pre-paying practice though, please do not listen to the people telling you that carrying a balance is the only way to improve your credit rating. It is NOT true. One of the largest factors in your score is your debt to credit ratio on your revolving lines (like a credit card). When it is at 0% utilization (as yours is by never carrying a balance), your score is optimal.

A credit rating is nothing more than a snapshot at a particular time of how good of a risk you are. When you have a history of paying all your bills on time, you're a good risk. When you carry credit cards but don't actively carry balances and owe others money, you're an even better risk.

Answer 3

Okay, any credit card is in business to make money! In order
to make money, they lend you their's for a fee (that fee is the
APR (annual percentage rate) they charge you.

You make an agreement with the company to make payments on time. This is a biggee/ never make a late payment or your
credit score drops drastically. Also, a person who pays the
entire amount may be a good risk but not necessarily a
good card customer. Pay it off asap, but always leave them
a little owing or they're investing a lot of time and energy
in you for nothing. They are gambling that you are so
shopping crazy as all Americans, that you will slip into a hole
where you owe them big bucks.

A good credit score gets $10,000. limit (but don't use it).
Pay as you go and leave maybe $25.00 ride.

Answer 4

That practice defies logic.

If you already have the money to cover the cost of whatever it is that you're buying, why not just pay cash? Or, get a check card, which works like a credit card, but instead of borrowing from a third party, draws the money from your checking account instead.

Putting the money on your card in advance is essentially giving the card company an interest-free loan. It's not helping your score any more than paying your balance in full before the due date.

Answer 5

It does not matter when you pay your bill as long as it is not 30 days after it was due. The credit card company will only report "paid on time", "30 days past due", "60 days past due", or "90 days past due". It does not matter if you paid the day before it is due or 20 days past due, it will still be reported as "paid on time"

You do not have to maintain a balance and you do not even have to have a balance, but try to use it every once in a while to avoid having the account closed.

Try to get increases in your credit limit even if you will never need it, it will raise your credit score.

Answer 6

If you can access your account on-line and view what the amount of your outstanding balance is before your statement arrives, then I would say pay it before.

If not I would wait until you get your statement.

Your credit rating or score remains in a positive status when you make your payments on time. It may be a good idea to request a copy now to view your accounts.

Hope this helps.

God Bless...

Answer 7

You build credit by using the credit line adn then making payments on it. You can improve a poor credit rating by showing timely payments on a revolving balance. Paying early is a good way to build credit, but if your credit card has a grace period for purchases, you should use it.

Answer 8

Wait until you get statement and pay it then. You still don't have to pay any interest, but you have paid your account on time and keeps you a good credit rating. I purchase everything on my credit card and pay at the end of the month. It is a good way to know what your budget is.

Answer 9

I'm a senior banker and I will tell you, it won't prevent you from building good credit. As long as you make a payment to money borrowed, your creditors report to the bureaus (3 major are Transunion, Equi Fax, and Experian) and you will build credit over time.

Just remember not to have too many open credit lines. This means you are open to having high debt potential and in the long run it will affect you negatively.

Answer 10

doesn't matter how early you pay it just that you pay it by the date due on your statement...even if it is just the minimum payment. there is no reason you have to keep a balance but as they said frequent purchases with frequent payment to the company will improve your credit score.... good luck