Monthly Archives: January 2016

Using credit cards to pay utility bills and the like

Hello!

I’ve read that using a credit card to automatically pay a utility bill and then turning around and paying that amount back to the credit card company immediately is:

A) a good way to increase a credit score

B) a good way to keep an inactive credit card active

Is this true?

Hello Diane,

A practical guide to increase credit scores:

  1. Do not have a balance of more than 30% of the total credit limit of the card. [e.g. if have a $500 credit card limit, leave a balance of $150.00 or less OR pay the balance down to 30% of the credit limit] [ This shows credit responsibility]
  2. Pay bills ontime, do not be late [ This affects credit worthiness]
  3. When making purchases, pay off balance of purchase and then immediately use card to make another charge. [This helps establish a credit history]

I hope this helps.

Makes sense to me. I would pay the bill using the credit card, then send in the payment right away to the credit card company before you get the credit card bill to make sure they don’t slip in a finance charge. I was thinking of doing the same thing. That way, they credit card is open, you will have a good credit to debt ratio (which means good FICO score), and they can’t close your account.

Now to get the cards paid down so that I can start doing that. 🙂 Have a great rest of the weekend!