Does it affect my credit?

Question

I make payments on my credit card instead of paying it in full. I'm 19 years old and will soon be looking for a place to live. Will the fact that I pay payments every month affect my credit history? Is it bad to do so?

Answer 1

If you make at least the minimum payment every month, your credit goes up.

If you fail to make the minimum payment every month, your credit goes down.

If you pay off the entire card in one month, your credit will increase, but not as much as if you pay over several months, because the credit company makes more money off of you the more payments you make.

It is a choice you have to make: you can make minimum payments each month, spend more money on interest than on the thing you spent the money on, and increase your credit more, Or you can pay it all off in one month and save yourself a lot of money on interest.

Either way will increase your credit, just at a different rate.

Answer 2

Well...
If you make payments every month, it's good for your credit *rating*. However, if all you do is make the minimum payments, and you charge in excess each month of what you pay off on the bill, it hurts your ACTUAL credit (or rather, your liability, or debt, or...). This is because finance charges can add up quickly. So it's not bad, unless the slowly-growing amount of money you owe the credit card company bothers you. It would bother me.

It doesn't hurt your credit rating only to make payments. It looks good on your credit report if you make payments in full each month, though. And if you can afford to, it's a better policy, especially if you have high-interest credit card rates.

Edit: From MSN Money Central:
What many people don’t know is that credit scores don’t distinguish between those who carry a balance on their cards and those who don’t. So charging less can also improve your score -- even if you pay off your credit cards each month.
Your credit-card issuer takes a look at your account once every month or so and reports the outstanding balance on that day to the credit bureaus. This snapshot doesn’t reflect whether you pay off that balance a few days later or whether you carry it from month to month.
... Credit scorers and lenders don’t want to see people “artificially” changing their behavior to pump up their scores. Moderation in using plastic is never a bad thing, however, and if the desire for a better score has you using credit more wisely, who’s the loser? Oh, other than the fee-charging, interest-rate-boosting credit-card companies, of course.

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The upshot: paying off your card in full each month will not hurt your credit rating, nor will it cause it to grow more slowly. Of course you have a credit history -- if you get billed by a creditor and you make a payment, they have to report that. This is credit history.

Geez, people... there's a "research" button at the bottom of the "What is your answer?" screen for a reason....

Answer 3

No this is what you WANT to be doing. You are building your credit history - which means it shows over a length of time how long you have been responsible with your payments. The bad thing is paying everything off in full every month - then you show no credit history at all.

Answer 4

None of these answers are fully correct. It is true that as long as you pay each month it shows a good credit history, but there is also a thing called % utilization that is a factor in your credit score.

Example, you have only one card with a $5k limit and you have $4k balance on the card. Your credit utilization is 80%. This is bad, because you have almost utilized all your credit, they don't particularly like that. Typically a 30% utilization or lower doesn't hurt you.

Now another example, you have 5 cards, each with $20k limits. That's $100k of total credit and you have $6k on each of those cards. You have then utilized only 30% of your total credit, which is viewed more favorably, even though your total debt is larger.

Paying each month on time is absolutely key, but utilization is also a factor in your credit report, as well as the length of time you have had the account open.

Hope this helps.

Answer 5

It is actually good for your credit. The bad part is if you have a balance on your credit card(s) that is way out of proportion to your income - or if you miss payments.

One thing to remember about your credit - it is a very valuable tool if you use it correctly. Credit is for buying assets (things that will actively make you money - like a smart house choice, stocks, bonds, property, loans). Cash is for buying liabilities (things that lose money as soon as you buy them, require more money than they bring in to maintain them, or lose value over time the more you use them - examples: clothes, cars, a house while you live in it, electronics, etc.).

P.s. - If you are only making minimum payments - you will never pay it off.

Answer 6

It affects you credit rating AND your wallet.

Paying within the terms of the agreement is all that's needed. In you credit report, your payments will show you as current on the account.

Paying it off every month (and spending more every month) has the same affect and saves you all those interest charges.

The best way to affect your credit rating? Don't spend so much. Save!

Answer 7

No, as long as you pay at least the minimum payment on ON TIME. That's what they look for most....that you're paying on time. It's not bad if you can afford it. I mean, if you're living beyond your means usuing your credit card, then yes it can be bad that you don't pay them in full, but as long as you're not struggling to pay the minimum payment, tehn you should be fine.

Answer 8

it will help build your credit, but make sure you pay more than the minimum payment even if it's just a couple of dollars

Answer 9

It is very good for your credit. Just NEVER pay it late and don't max it out, as that is bad for your credit.

Answer 10

It relies upon if the credit provider does a demanding pull or a mushy pull. demanding pulls will educate on your credit record and could fee you some factors on your credit status, mushy pulls do not educate on your record and could no longer fee you any factors. some credit issuers element in inner account historic past. Paypal (GEMB) will supply will develop to those who run consistent balances merely with suggestions from clicking a button on their information superhighway website. My Dad merely were given a $a million,250 develop very last month on his Paypal mastercard because he has run a $three hundred stability for the terrific 8 months. a lot of human beings attempt to get will develop in this card and may't because they don't look to be making GEMB any money. (save in ideas you'd be desiring to pay your expenditures on time, regardless of how a lot of a stability you secure.) maximum GEMB charge playing cards (usually save playing cards) artwork this way, yet different credit issuers do not unavoidably require you to run a consistent stability with a view to get a credit reduce develop. one element you need to judge is that if a upward thrust will advance your credit utilization percentage. countless situations a demanding inquiry merely to get $three hundred or $four hundred further on your modern reduce isn't properly easily worth the inquiry, yet when that $three hundred-$four hundred can help to decrease your utilization percentage, your score can develop better than it ought to bypass down as a outcome of the demanding inquiry. each and every in certain situations it is better to get yet another card except you've a short credit historic past or once you've countless modern expenditures, yet nonetheless, one better account on your comments ought to decrease your common account age; hence, decreasing your score. IT relies upon (I hate at the same time as human beings supply me that answer and grant no rationalization.) As you've gotten referred to, there are countless issues to contemplate and diverse techniques of searching at issues counting on the specifics of the concern.