Impact of minimum payment

MisterBaxter

I have been trying to build my credit rating back up after some issues a few years back. I have a vanquis card and until recently had been using it for fuel purchases and paying back in full each month.

Recently my wife took out a Santander 123 card so now pretty much all of our routine spending goes through that card (paid in full). In the last couple of months my vanquis card has seen very little use to the point where the last two statements have been for sums less than the required minimum payment. Obviously there was no choice but to pay in full but it also meant I only paid the minimum payment.

If this becomes a regular occurrence is it likely to have a negative impact on my credit rating in the longer term? I don't want the work I have being doing to fade but likewise using the cashback card to earn money simply makes good sense.

d70cw6

dont see how fully repaying a credit card balance each month would negatively impact your credit worthiness.

KennethC

d70cw6 wrote: »

dont see how fully repaying a credit card balance each month would negatively impact your credit worthiness.

You imagine it wouldn't but apparently it does. I was once told, although this was many moons ago that what they like to see is a series of regular payments with no misses on them at all. Now I did do this, again many moons ago, when I was a bit strapped for cash, but never missed a payment and my rating was very good. I now just pay of the amount each month in full.

Thrugelmir

Lenders are looking for borrowers who only repay the minimum. Repaying in full tells very little. Given that all it shows is a recycling of spend through a credit rather debit card.

Repayment of a loan demonstrates good financial management. As loans tend to be for expensive purchases such as cars. So satisfactory completion of an agreement is positive.

MisterBaxter

d70cw6 wrote: »

dont see how fully repaying a credit card balance each month would negatively impact your credit worthiness.

It was more the fact that as well as being payment in full it was also a minimum payment due to the sums involved. I know some people say that only making the minimum payment can be an issue and with everything being done by computer rather than a person it was a case of which takes precedence.

KennethC

Thrugelmir wrote: »

Lenders are looking for borrowers who only repay the minimum. Repaying in full tells very little. Given that all it shows is a recycling of spend through a credit rather debit card.

Repayment of a loan demonstrates good financial management. As loans tend to be for expensive purchases such as cars. So satisfactory completion of an agreement is positive.

I completely agree and this is what I found too.