If you pay the minimum balance on your credit card every month, is you credit effected?
I started a Discover account recently, and I’ve been paying the minimum every month on tim. My girlfriend told me that paying the minimum effects my credit negatively. I thought your credit is only negatively effected if you don’t pay the minimum on time.
Make an ON TIME payment every month regardless. Make sure the card is at or below 30% utilization of the the credit limit, this is what impacts the score. If you have more than 30% of a balance, do your best to bring it down. But always pay on time…
Part of the credit scoring formula relates to the amount of credit you have available, and the credit you have used up. This is the debt/credit ratio.
If your credit is maxed out, it will have a negative effect on your score. It’s not major, and does not come up as any type of negative mark. It just keeps your scores a bit low.
There is a cure. You must first start to get control of your credit, and naturally you need to attempt to get the credit card paid off. So quit using it while you are making payments of as much as possible.
In the meantime, contact Discovery and see if they would possibly increase your credit limit. they will do this if you have a history of paying on time and you have had the card for a minimum of 6 months (a year is better).
If that fails, get a second credit card, but again you need to practice self control. DO NOT use the card. What will happen is the credit bureau will combine the credit and that will help you out.
To avoid hurting your credit score, you are only required to pay the minimum each month. However, it is a good idea to pay more (preferably all), for two reasons:
1) To avoid interest/finance charges
2) So that you can buy more stuff with the card