Will Paying Off my Credit Card Bill Help Me Increase My Credit Score?

Will Paying Off my Credit Card Bill Help Me Increase My Credit Score?

Written by Kale Havervold
Fact-checked by Caitlin Wood
Last Updated April 19, 2022

Having a huge credit card bill looming over your head can feel terrible. Instead of letting it sit there and continuously grow, it’s always a better idea to get aggressive about paying off your credit card. In addition to simply having more money to dedicate to other areas of your life, paying off your credit card bill can have other positive effects. Included in these is the fact that it will without a doubt help to increase your credit score. While this may not happen overnight, it could potentially happen quicker than you think.

Click here to learn what happens when you stop paying your credit card bills.  

Why Does Paying Off a Credit Card Increase Your Credit Score?

So why does paying off your credit card bill help so much when it comes to increasing your credit score? Well, it’s because the more you miss or make late payments, the lower your credit score will drop. Another reason is because of a little thing called your credit utilization ratio. This basically looks at how much of your available credit you are using. So if you have a maxed out credit card, you have absolutely no available credit, which is a bad sign. However, on the other hand, you don’t want to have 100% of your credit available, as that shows you aren’t using the credit you have. Instead, aim to use around 30% (or less) of your available credit and pay it off in full each month. This will let lenders know you can responsibly use credit without getting too crazy with it.

For more reasons why your credit score could have dropped, read this.  

However, your credit score takes into account much more than just your credit card payments. In an effort to help you fully understand and be able to help get your credit score sky-high, we will take a look at some other factors that go into deciding what your credit score will be. Before looking at those factors, however, it is important to know what a credit score is and some of the other basics first.

Here are some more ways that your credit cards can impact your credit score.

What is a Credit Score?

A credit score is essentially a summary of all of the different information on your credit report. Your credit report is basically an ongoing record of how you have managed your credit over time. Instead of feeding you a ton of different information and data, it is all calculated and combined into one easy-to-understand number. Your credit score is used by lenders to make a quick and impartial decision about whether to offer you credit or not. Scores can range from 300-900, but the average score is around 700 for most Canadians.

Credit Score Ranges CanadaWhat Factors Go Into Determining Your Credit Score?

Now that you have a better idea of what a credit score actually is, we can begin to look at all of the factors that go into determining your score. In total, there are five main factors that affect your credit score and they are:

Payment History

One of the most important contributing factors to your credit score is your history of payments, for both your credit cards and other credit products. Always make sure you are making payments on time and not missing or being late on many. A few here and there aren’t likely going to make a massive change, but if missing payments or being late becomes a habit, your credit score will surely suffer.


This one is all about comparing the amount of debt you have to the amount of credit you have available. If you are constantly carrying a large balance or maxing out your cards, that will make your credit score quite low. They want to know you can use credit appropriately.

Credit History/Length

The longer a credit card or other account has been opened, the better it will be for your credit score. Credit accounts that are brand new or haven’t been opened for long, aren’t  nearly as good for your credit as the ones you have had for years. This is why it’s important to really think about which card to keep if you want to cancel one. It is always a better idea to keep older ones and cancel your newer ones.

Is it better to have no credit history or a bad credit history? Read this to find out.  

Recent Inquiries

Every time a lender or creditor pulls your credit score to take a look at it, it takes a small hit. So if you apply for a lot of new credit all at the same time, your score could potentially drop quite a bit. Again, this one is fairly straightforward and if you want your score to stay high, be careful how often you apply for new credit in a short period of time.

To learn more about credit inquiries, look here.

Diversity of your Credit

The more variety in the kinds of credit accounts you have open and use, the better your credit score will be. This shows you are responsible and can handle credit of all different kinds from different sources. Of course, if you have many open, ensure you remember to pay them all off and use them responsibly.

As mentioned earlier, when it comes to credit scores, the higher it is, the better off you will be. It can potentially get you a better interest rate and a higher score is a vote of confidence for you that will ensure you can get almost any type of loan you want. As a result, you likely want yours to be as high as possible, but how can you do that? Thankfully, there are many different ways out there to increase your credit score (in addition to paying off your credit card bill and debts quickly).

How to Increase Your Credit Score?

Don’t Apply for too Much New Credit

If too many lenders are looking at or asking about your credit score in a short period of time, it will likely have a negative effect on that score. However, remember that your score isn’t hurt when you ask for information about it, only when others do.

Use Your Credit Card (Responsibly)

If you don’t use your credit card or other credit accounts, you will not grow your credit card. So don’t be afraid to use your card, but just ensure you use it responsibly. This means not spending over your limit and always paying it off. Over time, as long as you are using your card responsibly, it will help to slowly but surely raise your credit card.

Is cancelling a credit card bad for your credit score? Find out here.

Keep Your Balance(s) Low

While you should use your card, it’s best not to go overboard with it. You shouldn’t be using more than 30 to 35% of your available credit each month to show that you do indeed use it, but don’t get reckless. Before any major application for credit such as a car loan or mortgage, it can be a good idea to keep this usage rate even lower to get your score as good as it can possibly be.

Raise Your Credit Limits (If You Can Handle It)

However, if you have a low limit, having low utilization can be tough. In this case, it can be a good idea to raise your credit limit. This will give you more access to funds and more flexibility each and every month. Of course, only raise your limit if you can handle it and not go crazy with the extra spending.

Set Up Automatic Payments

If your problem is remembering to pay bills (or at least remembering to pay them on time), it could be a good idea to consider setting up automatic payments. This will ensure you never miss a payment again and the good news is, most credit accounts allow you to set up automatic recurring payments.

Here’s our guide to automatic payments and transfers.

Pay Bills When They’re Due (Preferably in Full)

You should have a similar day every month when your credit bill is sent out and when it is due. Therefore, you should pick a day of the month a few days after your bill goes out (but before it’s due) and pay your bills in full. Getting on a schedule will ensure you don’t forget and accidentally miss a payment. Of course, paying the minimum is better than nothing, but you should always try and pay your credit off in full each month in order to prevent yourself from eventually carrying a balance over time.

Click here to learn the secret behind your credit card’s minimum payment.  

If you are diligent about the previous points and make sure you are aware of all of the factors that go into determining your credit score, you will be well on your way to a higher score in no time at all.

Rating of 5/5 based on 15 votes.

In his over six-year career as a professional writer, Kale has focused on writing about finance, technology, cryptocurrency, entertainment, and sports. Kale's work has been published on Yahoo, RentHop, the Regina Leader-Post, LoansCanada.ca, and ReboundFinance.com. Kale loves to create a wide variety of personal finance-related content. Including everything from how-to guides to featured articles, to advice pieces and everything in between. Whether he’s writing about the newest piece of technology or providing tips to help people with their finances, Kale is passionate about educating Canadian consumers and making sure they have the information they need to make the best decisions.

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