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Americans have a near-record level of credit card debt — $1.18 trillion as of the first quarter of 2025, according to the Federal Reserve Bank of New York. The average credit card debt per borrower was $6,371 during that time, based on data from TransUnion, one of the three major credit reporting companies.
Many people don’t understand why a common strategy that can help them pay down that debt — paying bills on time — isn’t all it takes to improve their credit. Separating fact from fiction is essential to help you pay down debt and raise your credit score.
Here’s the truth behind a common credit myth:
Myth: Paying bills on time ensures a high credit score.
Fact: Your payment history is critical to your credit score. However, not all bill payments are treated equally, and making them on time isn’t all that counts.
Your credit score is a three-digit numerical snapshot, typically ranging from 300 to 850, that lets lenders know how likely you are to repay a loan. The average American’s score is 715, according to February data from scoring brand FICO.
Here’s what you need to know about on-time payments and your credit:
Not all debt payments factor into credit scores
“You may be paying rent-to-own, private school tuition, utilities, or internet payments on time every month, and you think it helps your credit score,” said Yanely Espinal, director of educational outreach for financial literacy nonprofit Next Gen Personal Finance. “But a lot of these are not traditional payment types and are not reported to the credit bureaus — so there’s no impact.”
For example, making on-time payments on buy now, pay later, or BNPL, loans may not help your credit score, even though 62% of BNPL users incorrectly believe they will, according to a new LendingTree survey.
While some BNPL providers do report certain loans to the credit bureaus, this is not a universal practice. And BNPL users may see a negative credit impact if they fall behind.
“Some BNPL lenders will report missed payments, which can hurt your score,” said Matt Schulz, chief consumer finance analyst at LendingTree and author of “Ask Questions, Save Money, Make More.”
An easy way to check what payments are and aren’t influencing your credit: take a look at your credit report. You can pull it for free, weekly, for each of the major credit reporting agencies at Annualcreditreport.com.
‘Go for the A+’ on credit usage
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While payment history can account for 35% of your score, according to FICO, it’s not the only factor that matters. How much you owe relative to how much credit you have available to you — known as your “credit utilization” — is almost as important, at about 30% of your score.
Higher utilization can hurt your score. Aim to use less than 30% of your available credit across all accounts, credit experts say, and keep it below 10% if you really want to improve your credit score.
A 2024 LendingTree study found that consumers with credit scores of 720 and up had a utilization rate of 10.2%, compared with 36.2% for those with credit scores of 660 to 719.
“Don’t settle for B+ when you can go for the A+,” said Espinal, who is also the author of “Mind Your Money” and a member of the CNBC Global Financial Wellness Advisory Board. “You want to use less than 10% to really boost your score significantly.”
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