Raising fico scores

[Dana]

What is best for raising fico scores? Is paying only the minimum monthly payments on my credit card good or bad for my credit score?

From what I know – as long as the minimum amount is paid by the due date, it won’t affect my credit score. Am I right?

[Xavier]

You are correct, but there are more sides to it

Paying just the minimum amount your credit card requires is good enough for building credit history. If paid by the due date it’s considered as a timely payment, registers as such on your credit report and builds good credit history.
However, there are two side effects to paying only the minimum amount?

1. Not paying the statements in full means that you carry a balance on your card. This increases your balance-to-limit ratio, and when you pass the 35% utilization mark your FICO score starts to take a hit.
2. Paying only the minimum amounts indicate that you’re using more than you can afford to. With time your balance will grow, and eventually you will max your card. This is very bad not only for your credit score, but also for you – as you will face a sudden financing problem.
3. Carrying a balance on your card is costing you a lot of money in interest payments, making your already though financial standing even tougher.

To sum things up – It builds your credit history, but it has other adverse effects on your credit score. My advice is to pay your statements in full, and if you can’t – this is a sign that you need to use it less!

[Author]

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