Everyone handles their finances a little bit differently, and there's no one-size-fits-all approach. Maybe you're hands-on and like to maximize multiple credit cards for rewards. Or perhaps you prefer a one-card approach, so you don't have to worry about juggling multiple bills.
No matter your style, one of the simplest ways to protect your credit score is to put your bills on autopay, especially if you're managing multiple accounts. On-time payments is the number-one most important factor for building good credit.
There are usually three options for setting up autopay: 1) pay the minimum payment; 2) set a pre-determined amount that you choose; or 3) pay the statement balance.
When possible, you should pay the statement balance in full — but you don't always have to do it with autopay. In fact, some people prefer to set autopay for the minimum payment, even though they plan on paying off their card in full. This is a protective measure so they never risk missing a due date. Then they use their credit cards similar to a debit card, making sure they never spend more than they can afford and paying off the card in full each time they use it.
Blogger Michael Lacy paid off $21,000 in credit card debt between 2014 and 2015. Now that he and his wife are debt-free, they use their card to earn rewards, but they never carry a balance. As soon as they swipe their card, they open up their banking app and transfer the money from their checking account.
Likewise, author Wendy Fox pays off her credit card as soon as she uses it, and she saw her credit score increase to a perfect 850. She has set up autopay to the minimum amount, but she prefers paying her card immediately since it lowers her credit utilization rate (CUR).
Experts recommend you keep your CUR between 10% and 30%, though some argue you could go even lower. It's important to keep your CUR low, as it's the second-most important factor in determining your credit score.
Paying your credit card off as you spend is ideal if you want to ensure you don't ever exceed 30%.
For example, if you have a $5,000 credit line, you'd have to keep your balance at or below $500 to stay under a 10% CUR. But if you plan on spending $2,000 per month on your credit card, that would bring your utilization rate to 40%. If you pay the balance as you use your card, you never have a big balance lingering on your account.
You can use this strategy with any credit card you use, and it's even easier if your card issuer offers a comprehensive online banking app like the Chase Mobile App, which comes with cards such as the Chase Freedom®.
You won't be charged interest on your balance during your grace period, but there's a chance credit bureaus will see how much you owe. Lenders report your balance at different times throughout the month, often right after the billing cycle closes but before you pay off your balance.
When you wait the full grace period to pay your bill, you might see your CUR increase and that can decrease your credit score by a few points. It's not a huge deal unless your applying for a loan or a new credit card.
If you are concerned about your CUR and maintaining a high credit score, it can be worth taking the time to call your card issuer to find out the date they report your balance to credit bureaus. With this information in hand, you can start scheduling payments before this date so you can make sure you have a low balance reported to credit bureaus.
If you do set up autopay for the statement balance, make sure you're still regularly checking your credit card accounts so you know you're spending within your means and can afford to pay off your bill in full at the end of the month.
Information about the Chase Freedom® has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.