Why Simply Paying Bills On Time Isn’t Enough to Improve Your Credit Score

 

As credit card debt in the U.S. nears $1.2 trillion in early 2025, it’s clear many Americans are struggling with managing credit. A common belief is that paying all your bills on time will automatically boost your credit score. However, the reality is more complex.

The Payment History Myth

It’s true that payment history is one of the biggest factors influencing your credit score, making up roughly 35% of the total calculation. But not all payments are reported to credit bureaus. For example, payments such as rent, utilities, or private school tuition usually don’t appear on your credit report. This means even if you never miss these payments, they might not help your credit score.

Financial educator Yanely Espinal explains that many people mistakenly think these regular payments improve their credit because they’re consistent and on time, but if the lender doesn’t report them, they don’t affect the score.

The Buy Now, Pay Later Confusion

Another area where misunderstandings happen is with buy now, pay later (BNPL) plans. While many users assume that making on-time payments through these services benefits their credit, most BNPL providers don’t report positive payments. However, if payments are missed, it can damage your credit score because some lenders do report late payments.

To be sure about what impacts your credit, it’s important to check your credit report regularly. You can obtain a free copy from each of the three major credit bureaus once a week through AnnualCreditReport.com.

Credit Utilization: The Other Major Factor

Aside from payment history, credit utilization plays a critical role—it accounts for about 30% of your credit score. This is the percentage of your available credit that you are actually using. Keeping your credit card balances low compared to your credit limits shows lenders you’re responsible with credit.

Experts suggest maintaining your utilization below 30%, but for the best impact on your score, staying under 10% is ideal. A LendingTree study from 2024 found that people with credit scores above 720 generally keep their utilization near 10%, while those with lower scores use more than 35%.

How to Improve Your Credit Wisely

If you want to see your credit score improve, here are some effective steps:

  • Prioritize paying off credit accounts reported to credit bureaus, like credit cards and loans.

  • Keep your credit card balances low and avoid maxing them out.

  • Monitor your credit reports for errors and dispute any inaccuracies.

  • Be cautious about opening multiple new accounts quickly, as too many hard inquiries can hurt your score.

Conclusion

While paying bills on time is important, it’s only one part of maintaining and improving your credit score. Understanding which payments actually affect your credit, keeping your credit usage low, and regularly reviewing your credit reports are essential habits for building a strong financial foundation. Taking a balanced and informed approach will help you boost your credit health over time.

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