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Recent Questions on myFICO Forums: Credit Card Payments and Past Due Accounts

, by Tom Quinn

Does making multiple credit card payments in the month help my FICO® Scores?

In short, not likely.

Credit cards are a type of finance that provides the individual with a revolving line of credit that can be used to make purchases, balance transfers and/or cash advances and require that the loan amount is paid back in the future.  The cardholder can opt to pay the balance owed in full, the minimum payment due as determined by the card issuer, or an amount in between those figures.

At the end of each billing cycle (typically 25 to 31 days), a statement will be created and made available to you that provides you with balance and transactional information.  Your statement will include the balance at the beginning of the billing cycle (what was carried over from the previous month) and detailed credit card charges, and payments, as well as credits and fees made to your account during the billing cycle, will be provided.  Fees and charges are added to the balance from your previous billing cycle, while payments and credits are subtracted to come up with your current balance.

Most card issuers typically report your updated credit card information to the credit reporting agencies about once a month - typically as of the statement date.  As such, making multiple card payments over that monthly period will have no impact on FICO® Scores as the reduction in balance is not being reported to the credit bureaus each time you have made a payment.

Others have shared that they try to optimize their credit card payment strategy by understanding the statement date and paying down balances before or around that statement date. As card issuers' rules can differ, it would be prudent to confirm with your card issuer regarding when it typically reports your updated credit card information to the credit bureaus.

What does past due mean and how does it impact a FICO® Score?

Sounds like an easy question, but there are nuances that can help clarify this status.

When a credit account is past due it means no payment was applied to the account as of the last payment due date. For example, if your payment was due February 1st, you're technically past due if it's February 2nd and no payment has been received.

A past due account can have hard-hitting consequences.  The lender may charge a late fee, increase your interest rate or even eliminate or restrict your ability to use your account.

Typically, you have a bit of time before the late payment affects your credit. Generally speaking, an account that's past due won't surface on your credit report until your payment is 30 days late - but check with your lender, as it may have its own late payment reporting criteria.  As such, getting current on payments as soon as possible is extremely important and might stop the reporting of that past due status to the credit bureau. And be sure to double check the balance owed, as the late fees and revolving interest charged may have increased that amount.

Once a past due status is reported to the credit bureaus, it will very likely have a negative impact on your FICO® Scores.  The degree of impact will vary depending on the other information in your credit report.  A new 30-day past due posting will likely have a larger negative impact on a FICO® Score when there is no other delinquency on the credit report versus a credit report where a history of delinquency has already been reported.

As the severity and frequency of your past due statuses increase, the more these are likely to hurt your credit score.

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Tom Quinn

Tom Quinn is the Vice President of Business Development for myFICO and has over 25 years of experience working with consumers, regulators, and lenders regarding credit related questions and initiatives.