Why Paying on the Due Date Could Hurt Your Credit Score?

Credit score, as we know, represents your creditworthiness. Its high value is an indicator that you pay the credit card bills in time. This brings a number of benefits for you, including smooth approvals for loans and further credit cards, a suitable rate of interest charged, and a better relationship status with the lender institutions.

But a good credit score results when you make sure that you pay all bills in time.

Now this normally requires you to make the payment before the due date. However, there are some aspects attached to the right time to pay the credit card bills.

Read on to know the details.

Paying Before the Due Date

Normally, everyone agrees that making payment before the due date is the best thing one can do. It is true as well. It brings benefits like the following:

• A low credit utilization ratio
• No late payment penalties
• Minimized interest rates charged
• Quickly improved credit score
• Financial discipline
• Enhanced creditworthiness
• High chances of getting higher credit limits

It is, but the best thing to do when you own credit card/s.

Paying After the Due Date

Now, of course, if you pay the bill after the due date is over, you're going to suffer the following:

• Penalty for late payment
• A higher rate of interest charged
• A poor credit score
• Card deactivation

Apart from these, there can also be hassles related to debt collection. This includes the companies demanding additional charges, even when they might not be legal.

Your credit report can be marked as a defaulting one.

Paying On the Due Date

This option is something may consider as the most appropriate solution.

However, note that it might not be so.

One of the reasons is, that when you pay your bill on the last eligible or agreeable date, it may still be marked as late payment due to 2-3 days' delay in the processing of the credit payment. This, in turn, may attract penalty and also affect your credit score.

The 'due date' is but the 'last date' for you to make the credit payment. Even if you made the payment in cash, the system could still take a day or two to process the credit amount. This may mark a missed payment for that billing cycle.

What Do We Understand?

What we understand from this is that we need to make the required payment even before the due date, and possibly, more than 2-3 days before that last date.

However, again, there is another aspect to this – pay the full amount, or just pay the minimum amount due for that due date?

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A Yet Another Aspect – Partial or Full Payment?

While paying on the due date can prove disheartening, as it may flag your account as a missed payment for that statement cycle, not paying the full amount by then may also enhance your burden.

What you need to understand is that as you pay only the minimum due amount (before the due date as well), the remaining amount will get forwarded and be shown in your next billing statement. Here, you think you can still pay a minimum or a full amount, but you are not aware that you may actually be paying more and more with time.

As you allow some amount to get forwarded to the following credit card billing cycles, the amounts keep on increasing with the higher interest rates charged on them. Hence, the same amount, if paid at the first cycle itself, would be the same, but now that you have let it get carried forward, it has attracted additions in the form of interests.

Do Not Hurt Your Credit Score

Credit score is gaining more and more popularity, as it helps identify the defaulters. This makes it necessary that you maintain a high and good score to enjoy the perks and avoid financial burdens and penalties.

It can be said, that one must make full payment at least 3-4 days prior to the due date to avoid all possible losses. Paying partial or full amount on the due date may also not save you from lowering down your credit score.

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