Paying more than motnthly min...

[Bades]

If I have $1000 credit card debt and my monthly min is $10, if I pay more than the min, say $75 here, $100 there etc, but I never actually carry a $0 balance, does that do the same damage to my score as if I were only paying the min?

[jIM_Ohio]

The amount you pay does not directly affect your credit score.

Indirectly (over the long term) it will impact score if the balance on the card changes.

Your credit score is a function of:

1) how much credit you have (total balances on all accounts)
2) how many accounts you have active (for example score will be higher when you make low payments, then go down once loan is paid off because the account closes)
3) making on time payments
4) the percentage of the credit (in #1) you have actually used (on revolving accounts). This is where paying more helps you or paying less hurts you.
5) How long you have had the accounts


In general, if you use 50% or less of the available credit, and make all payments on time, you will show good credit and score will go up.

[Bades]

Originally Posted by jIM_Ohio

In general, if you use 50% or less of the available credit, and make all payments on time, you will show good credit and score will go up.

Even if the payments are the minimum?

[disneysteve]

Originally Posted by Bades

Even if the payments are the minimum?

Yes. How much you pay has no bearing on your credit score. What matters is the stuff Jim listed above - how much of your available credit you are using, if you are timely with your payments, etc.

Everything I've read suggests utilizing no more than 30% of your available credit, not the 50% that Jim mentioned. In fact, lately, I've seen more and more places suggesting 20% or even 10% utilization but I think 30% is fine unless you are really trying to boost a bad score.

[jIM_Ohio]

Originally Posted by Bades

Even if the payments are the minimum?

On time payments matter, not the amount
if you continue using the card, but paying the minimum, your score will eventually go down once you are using more than 50% of your available credit line. It might be less than 50% (as Steve indicated) but its really obvious if you have 50k of available credit and you have used 25k of it, that you are highly leveraged and a credit risk (which makes your score go down).

if you continue using the card and they raise your limit, while still making minimum payments, it would not affect your score as much.

[disneysteve]

Originally Posted by jIM_Ohio

if you continue using the card and they raise your limit, while still making minimum payments, it would not affect your score as much.

If you continue to use your card while carrying an outstanding balance and only making minimum payments, you have a far bigger problem than what your credit score is doing.

You should not be carrying a balance on a credit card. Pay the bill in full each and every month. If you do have a balance for some reason, stop using the card immediately. Don't use it again until you have totally paid off the debt, and then only use it to the extent that you are able to pay the bill in full every month.

[Bades]

Originally Posted by disneysteve

You should not be carrying a balance on a credit card. Pay the bill in full each and every month.

I do, yet my girlfriend can't afford even with loans to pay for school, rent, car etc, and still pay her credit card off in full every month. What would you suggest someone do in that situation?

Aren't credit cards here so people can go into debt temporary

[JoshuaHeckathorn]

Originally Posted by Bades

I do, yet my girlfriend can't afford even with loans to pay for school, rent, car etc, and still pay her credit card off in full every month. What would you suggest someone do in that situation?

Aren't credit cards here so people can go into debt temporary

No - credit cards are not here so you can temporarily go into debt! Treat credit cards like cash, and only buy what you can afford to pay off each month in full and on time. That's the only way to benefit from credit card usage.

As Steve said, if your girlfriend can't afford to pay off her credit card bill in full each month, then she needs to stop using her card until the balance is paid off and her spending has been adjusted to fit within her budget.

[Bades]

Originally Posted by JoshuaHeckathorn

No - credit cards are not here so you can temporarily go into debt!

I know! I was being quite condescending

Originally Posted by JoshuaHeckathorn

she needs to stop using her card until the balance is paid off and her spending has been adjusted to fit within her budget.

Always easier said then done, but you're right, there are things that we could all do to save a little money here and there.

But that's why people have to make hard decisions between quality of life and how much debt they want to get into.

I think school is a lot different though, students don't have full time salaries, so not that I see it as an excuse to be in credit card debt, however it is more of an appropriate time to be in debt, with the notion when you graduate you'll get a job.

This summer she was considering getting a tattoo(there's a whole other arguement there) for around a $100 or so, and I wanted to ring her neck for it, figuratively speaking and she understands the fact that debt is bad, but people hate being told they can't do a certain something.

[jIM_Ohio]

Originally Posted by Bades

I do, yet my girlfriend can't afford even with loans to pay for school, rent, car etc, and still pay her credit card off in full every month. What would you suggest someone do in that situation?

Aren't credit cards here so people can go into debt temporary

why would a STUDENT have a car payment if they have no job?

[minnie1928]

Have you pulled your credit report lately? If not, I'd recommend doing it. That way you can see exactly what is and what isn't reported to the bureaus. Payment amount is not reported, as the others have said.

[greenskeeper]

Originally Posted by Bades

Even if the payments are the minimum?

yes, the way it works is if you pay the minimum or in full they are the same as far as credit score.

Seems messed up in that I pay my only CC in full every month while some bum can make the minimum payment and have the same credit score.

[bjl584]

If you have routinely been paying the minimum on your card, then you are missing the point of what credit is, how you can use it to your advantage, and how dangerous it can be to you financially if you don't understand it.

I don't use credit often, usually only when I travel for work, as I get reimbursed for all my purchases. A lot of people will use credit for rewards. I would, and most others will advise to NOT use credit as a means of "getting by." If you can't afford to pay cash for "it", then don't buy "it". If you already bought "it", and all that you are able to do is make the minimum payment on "it", then you are living above your means. It's time to sell "it."

[cjscully]

Originally Posted by jmsgirl

Google "dave ramsey" and "credit Score" or "dave ramsey" and "debt snowball"- this will help.

Hate to be the one to break it to you but despite his popularity and general knowledge, Mr. Ramsey does not know all and has actually given some bad advice. You could just as easily Google the terms "good credit score", "improve my credit score" and "debt snowball" without including the "dave ramsey" part and get plenty of useful information.

When it comes to finance, being a fanboy can be a problem.

[DebbieL]

Yeah, I also don't get the whole Dave Ramsey worship thing. I don't agree with his idea of paying off the lowest balance debt first. Wrong - put the money towards the highest interest debts first. This way you will come out ahead. His advice seems purely emotional, and for a logical thinker like me it just doesn't fly. I couldn't care less about the so-called "emotional boost" of having one less debt. I care about the overall picture, and how much interest I'm paying. Paying down higher interest first gets me ahead. To me that's a bigger emotional benefit.

PS - I'm not in currently in debt, but if I were I wouldn't follow Dave Ramsey.

[solvemybadcredit]

Originally Posted by DebbieL

Yeah, I also don't get the whole Dave Ramsey worship thing. I don't agree with his idea of paying off the lowest balance debt first. Wrong - put the money towards the highest interest debts first. This way you will come out ahead. His advice seems purely emotional, and for a logical thinker like me it just doesn't fly. I couldn't care less about the so-called "emotional boost" of having one less debt. I care about the overall picture, and how much interest I'm paying. Paying down higher interest first gets me ahead. To me that's a bigger emotional benefit.

PS - I'm not in currently in debt, but if I were I wouldn't follow Dave Ramsey.

I love your theory. I always tell people to tackle the highest amount of debt with the highest interest rate. That's what I believe in. People just put off debt.

On the other hand: making more than the minimum payment is Ok, but if you are paying 75 and the interest cost is 86 monthly for example, then you will still end up paying interest on the top of the interest. If you can afford paying 75 a month, you might have a look at consolidating the card with a personal loan, so therefore you will know how long it will take you to pay off your debt.

It will not damage your credit rating, as well said before, the amount of credit and also prompt payments will have influence on your credit rating, and lenders will look at if you are working on reducing the debt.

[woodie96]

DRs advice works for a lot of people who are in debt because of emotion and impulse. The reason he does it that way is so they can begin to see some progress sooner, rather than just simply going with the highest interest first and working down.
What works for a logical type, may not work for an emotional type, and vice versa. But in the end, the final outcome is to get out of debt. Just may take the emotional type a little longer.

[woodie96]

Sorry about getting sidetracked in my last reply.

To pay above the minimum payment will actually improve your credit score, since after that additional payment, the utilization ratio will be lower.

Probably not low enough to see a change in the credit score, but over time will get better.