Generally speaking, paying your monthly bills by credit card can be a good idea as long as you adhere to two rules. Always pay your balance in full and on time each month. Never put bills on a credit card because you can't afford to pay them.
Be aware of any convenience fees you'll incur by paying your bills with credit cards. It's best to use credit only for products and services that won't charge a fee, and using cash, debit or bank transfer for the rest. And, of course, use a credit card only if you know you can pay off the balance each month.
As long as you pay your credit card bill on time and in full each month, you generally won't see a negative impact on your credit score. In fact, regularly paying your credit card on time shows that you're a responsible borrower.
Cell phone, internet, and cable bills can generally be paid with a credit card, and some other recurring expenses like car insurance may be good candidates to "set and forget." Once your credit card bill arrives in the mail, you can pay all of your bills at the same time.
Key points
The most common bills that count toward your credit score are credit cards, car loans, student loans, and mortgage loans. Experian Boost is a free service that gives you credit for paying utility bills, cell phone bills, and even streaming services such as Netflix.
The 15/3 credit card payment hack is a credit optimization strategy that involves making two credit card payments per month. You make one payment 15 days before your statement date and a second one three days before it (hence the name).
In general, NerdWallet recommends paying with a credit card whenever possible: Credit cards are safer to carry than cash and offer stronger fraud protections than debit. You can earn significant rewards without changing your spending habits. It's easier to track your spending.
In general, you should plan to use your card every six months. However, if you want to be extra safe, aim for every three. Some card issuers will explicitly state in the card agreement what length of time is considered to be inactive.
Keeping Your Open Credit Cards Active
While having a zero balance on your accounts is great for your utilization rate, it's also important to keep them open and active. That means you may have to use them for more than just emergencies.
According to the Consumer Financial Protection Bureau (CFPB), experts recommend keeping your credit utilization below 30% of your total available credit. If a high utilization rate is hurting your scores, you may see your scores increase once a lower balance or higher credit limit is reported.
Not using your credit card doesn't hurt your score. However, your issuer may eventually close the account due to inactivity, and that could affect your score by lowering your overall available credit.
"Credit cards typically offer better cash back or rewards (than debit cards), but also typically come with high interest rates and annual fees," Walsh says. Also, because credit card activity is reported to the credit bureaus, missing payments or accumulating a high balance could harm your credit score.
While it may be unconventional to the average consumer, there is nothing that legally prevents you from buying a car with a credit card. As long as your credit limit is high enough, you can put down a down payment or even a complete purchase with enough available credit.
Paying off credit card debt as quickly as possible will save you money in interest but also help keep your credit in good shape.
But this is a damaging myth: lenders and banks don't see this as a sign of active use or creditworthiness, and carrying a balance doesn't help your credit score. In fact, it increases your debt through interest charges and can hurt your credit score if your total card balances are over 30% of your total credit limits.
To build good credit and stay out of debt, you should always aim to pay off your credit card bill in full every month. If you want to be really on top of your game, it might seem logical to pay off your balance more often, so your card is never in the red. But hold off.
Using a large portion of your credit limit—or having a high utilization ratio—can hurt your scores, while using a small portion is best for your scores. For this reason, using your credit card to make a large purchase could hurt your credit if it increases your credit utilization ratio.
Depending on where you're starting from, It can take several years or more to build an 800 credit score. You need to have a few years of only positive payment history and a good mix of credit accounts showing you have experience managing different types of credit cards and loans.
A FICO score of 650 is considered fair—better than poor, but less than good. It falls below the national average FICO® Score of 710, and solidly within the fair score range of 580 to 669.