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Making on-time payments has the biggest impact on your credit score — here's how automating them can help

Paying your bills on time makes up 35% of your FICO score calculation. Autopay is an easy way to make sure it gets done.

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If you're looking for a simple way to improve your credit score, paying your credit card bills on time can help get you there. Your payment history counts as 35% of your FICO score calculation, making it the biggest factor when it comes to achieving good credit

For this reason, experts suggest using autopay for every one of your credit card bills. As long as you know you have the expected money in your checking account each month (to prevent any overdraft fees), autopay is one of the easiest ways to streamline your finances and sleep better at night.

Below, Select speaks to three experts who suggest that automating your credit card payment can help your credit score.

What does automating your credit card payment mean?

Automating your credit card bill means scheduling a recurring payment that automatically withdraws the same amount from your bank account on the same day every month. You can choose a set amount each month (say, $250), or you can choose to pay the statement balance, current balance or minimum payment (which fluctuate every month).

How can automating help?

Chances are, you have more than one bill to pay each month. This can become a lot to keep up with, and autopay helps you simplify.

"If you have trouble keeping track of your bills and making payments on time, it could make sense to automate your credit card payments," Roger Ma, a certified financial planner at lifelaidout® and author of "Work Your Money, Not Your Life," tells Select.

Having a set day on your calendar where your bank account knows exactly what to withdraw can keep you organized and ensure a payment never gets overlooked.

"A statement can easily get buried in the hundreds of emails we receive, thrown away by accident or lost in the mail," says Danielle Harrison, a certified financial planner in Columbia, Missouri.

"Also, life happens, and during a stressful time you don't also want to have to deal with having a missed or late payment on your credit card that could affect your credit score," she explains.

How much should you set as your automatic payment?

It's up to you to choose how much you want to set your autopay for each month. According to experts, this comes down to how much your income is compared to your other expenses.

Ideally, experts say not to charge more on your credit card than you know you can afford to pay off. And when you have plenty of discretionary income, you should definitely pay your balance off to avoid getting hit with high interest fees.

"If you have plenty of cash flow, then I would recommend having the autopay set for the full balance each month so you don't have to worry about remembering to log in and pay it," suggests Shon Anderson, a certified financial planner and president at Anderson Financial Strategies.

But what if you can't cover the full balance on your credit card? At least try to make the minimum on time. Making only the minimum payment on your credit card can add up in additional interest, but sometimes it is all you can do. If you can afford to pay a bit more than the minimum, then consider selecting a set amount to budget each month and electing that option for autopay.

And if your income is variable, automating at least your monthly minimum payment can help you. It will prevent any late payments that may happen and protect your credit from past-due marks. You can always pay more later, but setting autopay to the minimum "can act as a backstop in case you forget to make the payment," Harrison says.

The best credit cards if you can only afford to pay the minimum right now

If you think you will be cash-strapped these next few months and only see yourself making the minimum payment on a credit card, that's OK. Try considering a credit card with an introductory 0% APR period to avoid racking up interest in the near future.

The Citi Simplicity® Card is one of Select's best interest-free credit cards because it offers 0% intro APR for 12 months on purchases from date of account opening and 0% intro APR for 21 months on balance transfers from date of first transfer (after, 19.24% - 29.99% variable APR; see rates and fees). Balance transfers must be completed within four months of account opening. There is an intro balance transfer fee of 3% of each transfer (minimum $5) completed within the first 4 months of account opening. After that, your fee will be 5% of each transfer (minimum $5).

Another option on the list is the Chase Freedom Flex℠, a no-annual-fee credit card, that has a 15-month 0% intro APR on new purchases (after, 14.99% to 23.74% variable APR). Cardmembers can also earn 5% cash back on up to $1,500 in combined purchases in rotating bonus categories each quarter you activate (then 1%), 5% cash back on travel booked through the Chase Ultimate Rewards®, 3% cash back on dining and at drug stores and 1% cash back on all other purchases.

Even if you automate your payments, make sure you still do this

Even if you do automate your payments, Ma says that "it's important to review your monthly statement to verify there were no authorized charges on your account."

It's also wise to look for surprises like increased subscription fees, which cable and internet companies are known for doing annually. Just because your credit card payments are automatically withdrawn from your account each month, don't neglect reviewing them. 

"Make sure you log in regularly to review the charges to make sure they are accurate," Anderson says. "Another way you can review charges and get alerts is to use an aggregation app, like Mint.com."

Don't miss: Here is the best time to pay your credit card bill

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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