I'm trying to build my credit and I was wondering if I should just pay the min. payment due, or if I should make a bigger payment to kind of show "good faith" , so to speak.
2006-06-14 08:58:58 · 15 answers · asked by pockets 2 in Business & Finance ➔ Credit
Always Always Always pay more maybe 1 1/2 times or double. If you just pay the minimum about 60-80% of that is interest and doesn't even make a dent in the balance.
Creditors (Mortgage/Car Companies/Other Credit Cards, etc.) look at your balance compared to your available credit. It's a good rule of thumb to have your balance under 1/2 of what your limit might be. For example if you have a $5,000 limit don't have more than $2,500 charged on the card at any one time. And of course less is better.
This really really helps your FICO score.
2006-06-14 09:05:02 · answer #1 · answered by indystoprealtor 3 · 1⤊ 0⤋
If you are just starting out with credit then you need 6 months of a payment history to establish your credit rating.
You can do that several ways.
1. you can pay off your balance at the end of every month and recharge the next month - this would be preferable
2. divide what you owe by 6 months and make that amount of a payment each month until your balance is paid in full
3. pay a certain amount each month ( say 50.00 even if your minimum is 20.00 ) and make sure you don't charge up to your limit right away.
It is so easy to spend your limit the first month but pace yourself and always pay more than your minimum to ensure the credit line is there for emergencies. OR BETTER don't use until you have a true emergency ( like car repairs or home repairs )
2006-06-14 09:10:15 · answer #2 · answered by bootsjeansnpearls 4 · 0⤊ 0⤋
your credit history is being established as soon as you get the credit card. The credit card company is going to report your card to bureau every month. So paying minimum or not paying will just impact the quality of your credit history.
If you keep paying minimum you wouldnt go delinquent so it would not be negative on ur history but u would pay huge interest.
If u keep using the card and paying in full each month it would still not be negative and u wouldnt have to pay interest.
So all in all dont bother about making min payment. Pay in full each month and you would have a stellar credit score.
Just never be delinquent. If the choice is between not paying and paying min due. Pay the min due. But if u have money always pay in full.
2006-06-16 21:32:33 · answer #3 · answered by vik14_98 1 · 0⤊ 0⤋
NO!!! If you make nothing but the minimum payment each month, it will take you YEARS to pay off the bill. Credit card companies LOVE those folks who only pay the minimum balance, and then are charged the 21% interest on their revolving credit.
The best way to build your credit rating is to make sure you do not OVERSPEND your credit, so that you can pay the entire balance on time every month. Make your payments on time (or even a couple of days early) every time, and watch your credit rating soar. Make one late payment, and watch the fees mount, and your credit rating plummet.
2006-06-14 09:07:32 · answer #4 · answered by Dave_Stark 7 · 0⤊ 0⤋
Continue to use it sparingly, and pay off the complete balance every month. It will build a history of payment, and not leave you in debt. The credit card company won't like it because they're not making any interest/profits on your sales, but it's legal, and it's what the credit reporting agencies look at.
2006-06-14 09:10:31 · answer #5 · answered by Anonymous · 0⤊ 0⤋
pay a little over the minimum in order to establish credit.
I used to pay it all off in full each month for 8 years. later I wanted to add more of a spending limit and was told by the bank/credit card company that I have no credit even though it has been paid off in full each month. make payments to establish credit then after establishing credit pay it off as soon as possible
2006-06-14 10:26:16 · answer #6 · answered by mmcada 3 · 0⤊ 0⤋
If you make one half the minimum payment every two weeks, the savings on interest charged will help to have the balance paid off in less than half the time.
2006-06-14 09:04:52 · answer #7 · answered by Jan R 1 · 0⤊ 0⤋
It's better to charge a little each month and pay it off than to pay the high interest rates being charged and you still establish the payment pattern.
2006-06-14 09:03:00 · answer #8 · answered by Black Fedora 6 · 0⤊ 0⤋
You should try and pay off your credit card in full every month. You don't want to pay the credit companies interest and your credit rating will be fine.
2006-06-14 09:10:07 · answer #9 · answered by Drovla 2 · 0⤊ 0⤋
Dont pay them off to quick. If you have like $1000 on there. Maybe take about 8 months to pay if off. Then turn right around and do it again. Never max them out. If you go and borrow money while you have these c.c and they are maxed out it will make your score lower.
2006-06-14 09:04:43 · answer #10 · answered by bigdog_0032 4 · 0⤊ 0⤋