Quick Tip: How to Easily Improve Your Credit Score With an Early Payment
Signing up for credit cards through partner links earns us a commission. Terms apply to the offers listed on this page. Here’s our full advertising policy: How we make money.
Here’s an interesting tip that might help get you approved when you apply for new cards!
Folks on the myFICO forums report Chase updates the account balances on your credit reports ~5 days after you pay off a balance.
I’ll explain how this can be helpful if you’re applying for new cards!
What’s the Deal?
Link: Credit Karma
Other banks generally report after your statement closes. So if you pay off a balance, it may not reflect on your credit reports for up to ~1 month!
I wanted to see for myself if this is true. I made some big purchases in November on 1 of my Chase cards. And paid it off in full on December 3, 2015 (well before my statement closed).
Within a few days, the payment appeared on my TransUnion and Equifax reports! I checked them through CreditKarma. It’s free to sign-up.
So why is this useful if you’re applying for new cards?
It’s About Utilization!
I’ve written about how applying for credit cards affects your credit score.
When deciding whether to approve you for new credit, banks look at your credit reports and credit score. You’re more likely to be approved if you have a higher score and are NOT carrying a lot of balances on your existing cards.
In fact, 30% of your credit score is based on balances owed, or your utilization.
Folks with high utilization (when your balance is close to your credit limit) can be seen as riskier borrowers. If you’re close to maxing out a card, banks might see that as an indication that you’re having trouble paying it off.
You’re more likely to be approved for new credit if your credit report shows low or zero balances on your other accounts.
So if you’ll soon be applying for new cards, it’s worth making paying off your Chase accounts a priority. That’s because a new zero balance on a Chase card will show up on your credit report very quickly!
That said, banks look at many factors when deciding whether to extend you new credit. But reducing your utilization by paying off your cards could increase your chances of being approved.
Folks on the myFICO forum say Chase will report a zero balance to credit bureaus shortly after you pay off an account.
Most banks don’t report until after your statement closes. But with Chase it only takes a few days (I checked my accounts and found the same thing).
This could be useful if you’ll soon be applying for new cards. That’s because banks like to see low utilization (balances) on your current accounts when they’re deciding whether to extend you more credit.
So it might be a good idea to make paying your Chase cards a priority a few days before you apply for new credit. At the very least, it can’t hurt!
Have you noticed this too? Please share your experiences in the comments!
Chase Sapphire Preferred® CardAPPLY NOW
Chase Sapphire Preferred® Card
Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $750 when you redeem through Chase Ultimate Rewards®.
Enjoy benefits such as a $50 annual Ultimate Rewards Hotel Credit, 5x on travel purchased through Chase Ultimate Rewards®, 3x on dining and 2x on all other travel purchases, plus more.
Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.
With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories
Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
Get complimentary access to DashPass which unlocks $0 delivery fees and lower service fees for a minimum of one year when you activate by December 31, 2024.
18.24% – 25.24% Variable
Either $5 or 5% of the amount of each transfer, whichever is greater.
Editorial Note: We're the Million Mile Secrets team. And we're proud of our content, opinions and analysis, and of our reader's comments. These haven’t been reviewed, approved or endorsed by any of the airlines, hotels, or credit card issuers which we often write about. And that’s just how we like it! :)