Minimun Payment on Credit Cards

[Anonymous]

Hi,

Does paying only the Minimum Payment every month without paying the entire balance impact my credit score??

[LTomBerry]

It impacts your credit score to the degree it affects your utilization, which is your balance as a percentage of your limit. If you continue to spend and only pay the minimum, your util will creep up and your score will creep down because the balance occupies a larger percentage of your credit limit. If you don't spend any more and you make minimum payments to slowly chip away at the balance, your score will gradually increase. If you make a gigantic payment then your score will quickly jump because the FICO score, as far as utilization is concerned, is just a snapshot of the current numbers; it doesn't care what your balance was last month.

Hope this helps.

[Anonymous]

Hi Kiran,

welcome!

I agree with L on the utilization issue.  

On another somewhat related note, paying only the minimum is noted by the CC issuer. 

I remember being totally shocked when I called in on a GEMB card years ago and asked for a CL.  They refused, and one of the reasons they noted was that I only paid my minimum payment monthly.  I was surprised cuz I thought paying the minimum on time was golden behavior.  The CSR was kind enough to school me (gently) on what CC companies like to see. 

I know that's not what you were asking, but I was just in the mood to share.  Maybe someone else (like me) assumes paying the minimum is enough to keep the CC issuers happy. It's enough to keep you from getting a bad mark (i.e. a late payment) on your credit report - but CC issuers may be looking for more when it comes to building CL's.

[llecs]

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@Anonymous wrote:

I remember being totally shocked when I called in on a GEMB card years ago and asked for a CL.  They refused, and one of the reasons they noted was that I only paid my minimum payment monthly.  I was surprised cuz I thought paying the minimum on time was golden behavior.  The CSR was kind enough to school me (gently) on what CC companies like to see. 

I know that's not what you were asking, but I was just in the mood to share.  Maybe someone else (like me) assumes paying the minimum is enough to keep the CC issuers happy. It's enough to keep you from getting a bad mark (i.e. a late payment) on your credit report - but CC issuers may be looking for more when it comes to building CL's.

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+1...same happened to DW. Citi clearly said "no" to a CLI because we weren't paying enough each month, despite paying 2x the minimum at that time. Macys gave DW a CLD because she was only paying the minimum at one point, or so they said.