Does Paying a Bill on Your Credit Score Make Your Score Go Up?

Boosting your credit score takes time and patience. In order to boost your score, you must focus on the top areas impacting your credit score each month. Paying a bill on your credit report helps your score to increase as long as the creditor reports to the three major credit bureaus each month.

Credit Score Impacts

Creditors report information to the credit bureaus monthly. Based on the information reported, the credit bureaus calculate your credit score. There are five primary factors influencing your credit score each month which include payment history, amounts owed, length of credit history, types of credit and new credit. At 80 percent of your score, the top three factors to consider when boosting your credit are payment history, amounts owed and length of credit history. If you pay your bills on time, keep your balances low and maintain a positive account history over time, your credit score will go up.

Creditor Reports

Paying a bill can only impact your credit score if the creditor reports monthly to the major credit bureaus. While most credit card companies and lenders report to credit bureaus, there are many household bills you pay each month that do not get reported to the credit bureaus. For example, utility accounts, cell phones, and internet expenses. In most cases, these creditors do not report your account information unless your account is charged off. Once your account is charged off, it negatively impacts your credit score each month until paid in full. After you pay the bill in full, it is reported as paid, but may not fall off your credit report for another seven years.

Amount of Impact

How much you pay on your bills each month is an important factor when attempting to boost your credit score. Generally, the lower your balances, the more your score increases each month. This is due to your credit utilization ratio. Your credit utilization ratio is the amount you charge or owe relative to your credit limit or original account balance. For example, if you have a credit card with a $2,000 limit and charge $1,000, your credit utilization ratio is 50 percent. According to Bankrate, a good credit utilization ratio is 30 percent or below.

Considerations

Making consistent payments on your bills helps to ensure your credit score improves each month. However, ensure your payments are substantial enough to reduce your credit utilization ratio to below 30 percent. If you can't afford making large payments, consider contacting your creditor to increase your credit limit or lower your interest rate. As long as you have a positive account history, your creditor may be willing to negotiate new rates to help you better manage your credit account.