Does Paying a Bill Earlier Get Better Credit?

Credit scores rate a person's willingness to repay a debt, so you may think that paying bills early would boost your credit score faster than someone who just pays on time. Unfortunately, this is not true. You should pay your bills early, anyway, to avoid accidentally defaulting on your accounts and damaging your credit rating.

Identification

When your creditor reports that your account was paid by the billing due date, this is the only action that matters. Paying a few days early is no different than paying at the last minute in the Fair Isaac risk model (FICO), which most lenders use to rate your credit history.

Benefits

Paying your bills as early as possible avoids the possibility that you might forget to make a payment on the due date. Even if you intend to pay a bill, you can still miss a payment because of circumstances beyond your control, such as a family emergency or technical glitches with your bank account.

Considerations

You may see a faster increase to your credit score by paying bills early. The credit bureaus tend to update their databases every month or so. If your creditor reports your account as paid a few days after this date, it could take longer to update your report than if you paid early. For example, if a bureau updates your report on August 1, and your creditor allows you to pay until August 3, your report probably won't reflect an on-time payment until September. If you paid the bill early, say on July 30, the creditor can report an on-time payment before the bureaus update your report on August 1.

Tip

Set up automatic bill payments if your bank allows it. You can also call a lender and ask them to change the payment due date on your bill to give you another few days to hedge against missing a payment. Maintain a savings account so you can meet your debt obligations even during times of unexpected expenses. If your lender does not impose early payment penalties, paying off an entire account at once increases your credit score faster than if you pay the minimum each month. Also, you pay less in finance charges, so you have more disposable income to tackle other debts.