It’s one of the cardinal rules of good financial health: Pay off your credit card — in full — once a month.
But even if you diligently zero out your account on the last day of every month, your credit score can still fluctuate. Say you make a large purchase, such as a couch or an international flight, and your balance skyrockets. It could look unfavorable on your credit report should you apply for a loan or mortgage — even if you’re planning to pay it all back in a few weeks.
In a conversation with Al Ko, a senior vice president and general manager at Intuit, on an episode of her “So Money” podcast, financial expert Farnoosh Torabi revealed that she gets around this potential issue by paying off her card immediately after making a large purchase.
When asked how many times a month she pays her credit card bill, Torabi explained:
“Here’s my thing: It’s kind of a trick because I don’t want to have a high debt to credit ratio. Sometimes if I’m applying for a loan, they can check my credit in the middle of the month and they can see that, “Oh my God, Farnoosh went on a shopping spree!” Like if I bought a lot of furniture.
“If I have a really tall balance by the 15th, I’ll just pay it off then even though it’s automatically going to pay off by the 30th because I want to protect my credit score.”
Of course, lacking this attention to detail isn’t going to irreparably damage your credit. A number of things can make your credit score fluctuate: closing old accounts, opening a new card, hard credit inquiries. If you diligently pay your bills and stay out of debt, your score will typically bounce back, even if you only clear your balance once a month.
But it never hurts to improve your finances — especially if you know you’ll be applying for a big loan — so if you have the means, why not pay off large balances right away?