Can Two Monthly Payments Raise a Credit Score?

You can save hundred dollars on debt servicing by breaking up your payments into two smaller ones or just adding another payment of some value to the minimum. This tactic, however, could end up costing you money and works best on credit cards, but all loans can benefit. Either way, your score can likely benefit from that extra payment.

Identification

Making more than one payment doesn't benefit your score any more than your regularly scheduled payment, because the FICO score model only cares that you make at least the minimum payment each month, according to Experian, one of the largest credit bureaus in the U.S. This, however, means you will pay more than the minimum, accelerate your debt repayment schedule and reduce your total debt obligation. FICO scores factor in the amount of debt you use compared to your revolving credit line; this can make up 30 percent of your overall score. No what type of loan you have, lenders like to some as little debt as possible.

Considerations

For this plan to work, your two payments must add up to at least the minimum payment amount. As long as your two payments make the minimum, you can prevent significant potential damage to your score, because you guarantee that you will never have a late payment.

Financial Benefits

Credit cards charge interest each day you carry a balance. Paying earlier in the month cuts off some of those interest charges. Take, for instance, a scenario where you have a minimum payment of $100 and break it up into two payments every two weeks. After the first two weeks, you have $50 less on the balance accruing interest. Lower finance charges will give you extra income to pay off debt faster, giving you more money to reduce debt and your credit utilization.

Tip

Making multiple payments is best used in conjunction with online bill paying, because you can set your account to make payments every 14 days. Review your bank and credit card guidelines on multiple payments. Some will charge a penalty for multiple payments on the same bill, especially if you make more than two payments per month.