How Making Bimonthly Payments Can Improve Your Credit Score

WisePiggy Editors
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Making bimonthly payments can improve your credit score and save you money.

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It’s well known that making bill payments on time is one of the easiest ways to improve your credit score.  Payment history can account for about 35% of your FICO score, according to myFICO.  Make sure to keep track of due dates to avoid late fees.  One lesser known trick regarding your payments, however, is to split your bills into bimonthly payments (twice a month).  Not only can this improve your credit score, but it can save you money, as well.

Not only can this trick help you manage your finances better, it will also show creditors that you’re a reliable borrower.

How Paying Bills Bimonthly Can Raise Your Credit Score

This tip isn’t suggesting doubling down on your monthly bills (i.e. paying MORE than you owe), it’s actually about splitting your payments in half and paying twice as often.  Here are the steps to take:

  • Itemize your recurring bills.  Make sure to note when they’re due each month.
  • Decide on two days each month to make your payments.  For example, you may choose to pay bills every payday if you’re paid on the 1st and 15th.
  • Add up the costs of your monthly bills and divide it by two.  If you pay $2,000 per month on your bills, you will end up paying $1,000 in the early part of the month, and $1,000 in the later part.  Of course, bills can fluctuate depending on your spending/usage/etc, so your bimonthly payments will fluctuate as well.

How Will Bimonthly Payments Help My Credit Score?

Not only will making multiple monthly payments fix bad credit, it will actually boost your FICO score and save you money.

Reduce your credit utilization by making bimonthly payments.  Ideally, your debt-to-income ratio is less than 36%, according to LendingTree.  The higher the amount of debt that you carry, the more likely lenders will be wary to loan to you.  But with bimonthly payments, your debt-to-income ratio is reduced when the lender applies the payments twice per month (check with your lenders, though, as some mortgage loan services may only apply your payments one time per month unless you have a prearranged bimonthly payment plan).  Your lower debt-to-income ratio means you have more available credit to spend, and thus your credit score is stronger.

Debt actually gets paid down faster.  With a once a month payment plan, you make 12 payments in full each year on your debt (credit card, mortgage, auto, etc.).  However, with bimonthly payments, you’ll actually make 13 full payments each year.  This extra payment each year means you’ll be paying off your debt even faster and you will save you money on interest.

Finally, paying your bills twice a month will help you build stronger financial discipline.  You will be less likely to miss a payment because your bills will be on your mind each payday.  Now the fun part – watching your credit score grow.