In your pursuit of improving your credit score in 2023, the “15/3” credit card hack may not be the effective solution it’s touted to be.
Numerous videos across different social media platforms have gained popularity, claiming that splitting your credit card payment into two parts can swiftly boost your credit score. The idea is to make the first payment 15 days before the due date and the second about three days prior.
However, this technique isn’t endorsed by Natalia Brown, Chief Client Operations Officer at National Debt Relief, an organization specializing in consumer debt assistance.
Brown suggests that while making extra payments midway through the month can help lower your credit card balance and subsequently decrease your credit utilization, the specific timing of 15 and three days before the due date doesn’t hold much significance.
Instead, she offers an alternative strategy to focus on.
Pay attention to your credit reporting date
Rather than fixating on the 15/3 timing, prioritize another essential date: your credit reporting date.
Credit card billing cycles typically span from 29 to 31 days, culminating in the statement closing date. The balance remaining on your card at the statement closing date is usually reported to credit bureaus shortly thereafter, although the exact timing varies by card issuer. Checking with your credit card issuer about their reporting practices can provide clarity.
Brown advises aiming to settle your entire balance before this reporting date. By fully or significantly reducing your balance by then, you’ll lower your credit utilization rate before it’s conveyed to credit bureaus.
This is crucial as credit utilization—reflecting the portion of your available credit currently in use—constitutes 30% of your credit score calculation, according to FICO.
Lenders assess how responsibly you manage borrowed funds, which is why experts generally recommend utilizing no more than 30% of your available credit. This showcases your punctual repayment.
If you’re unable to clear your entire balance by the reporting date, Brown recommends attempting to pay at least 10% more than the minimum amount due. This approach can accelerate your progress in reducing the outstanding balance.
Encouragingly, Gen Z and millennial cohorts often possess respectable credit scores.
Scores ranging from 670 to 739 are classified as “good” by FICO. Notably, the average credit scores for Gen Z (ages 18 to 24) and millennials (ages 25 to 40) stand at 679 and 686, respectively, based on the latest data from Experian.
Further, scores ranging from 740 to 799 are categorized as “very good,” while scores above 800 are deemed “exceptional,” according to Experian.
It’s worth noting that while a perfect 850 credit score might be a point of pride, it doesn’t come with substantial additional advantages.
According to Ted Rossman, Senior Industry Analyst at Bankrate.com, once you’ve crossed into the mid-700s on the FICO scale, you should qualify for the most favorable terms on loans. Differentiating between a 760 and a “perfect” 850 score is negligible for lenders.
Rossman asserts, “You don’t need to be perfect.”