Do minimum repayments affect Credit score?

arnoldm

We have a Santander CC for cashback on fuel etc., but cover the money spent in a Santander 123 account for the decent interest. We pay the minimum repayment on the CC each month with a view to paying it all off when it reaches its limit. My sister in law reckons that only paying the minimum amount each month will affect our credit score and potential mortgage deals in the future.
I wouldn't normally ever use a CC, but the cashback deals from these cards as advertised on MSE make sense.
Thoughts?
Thanks

HappyMJ

arnoldm wrote: »

We have a Santander CC for cashback on fuel etc., but cover the money spent in a Santander 123 account for the decent interest. We pay the minimum repayment on the CC each month with a view to paying it all off when it reaches its limit. My sister in law reckons that only paying the minimum amount each month will affect our credit score and potential mortgage deals in the future.
I wouldn't normally ever use a CC, but the cashback deals from these cards as advertised on MSE make sense.
Thoughts?
Thanks

It doesn't significantly affect you despite what you might read.

Your credit score is a made up figure by the credit referencing agency to make money out of you. It will be reduced but that has no factor in your mortgage being approved or declined.

DCFC79

If you search the forums you will see that paying £1 more than the min payment is much better.

jamesd

Making only minimum payments is seen as a sign of potential financial difficulties and can have a negative impact on credit scoring, whether that is by a credit reference agency or a lender. Even a penny more than the minimum is sufficient to have the "minimum payment made" flag unset when the payment is reported to the CRA.

Not all cards provide that flag and if you want to be clever you can look for the ones which do and only pay more on those.

Nebulous2

It's unlikely to have much if any impact on anything. If you are on a promotional period then people largely expect it. If you are paying interest it can be a sign of distress. Some people recommend paying £1 more, with no evidence it actually does anything.

I'd pay it off several months before applying for a mortgage. Better to clear the decks as best as you can for that.

[Deleted User]

Important thing is at least minimum payment AND on time.

jamesd

Nebulous2 wrote: »

I'd pay it off several months before applying for a mortgage. Better to clear the decks as best as you can for that.

That depends on whether affordability or LTV will be more challenging. Increasing card debt can improve mortgage acceptance chance or decrease interest rate by getting to lower LTV.

King_Nothing

Deleted User wrote: »

Important thing is at least minimum payment AND on time.

This really. Last time I checked mine, it just had all my debt lumped together to give a total figure, the lower you can get the total figure the better obviously. As long as the card is pard off in full a few months before you apply for a mortgage I wouldn't have thought the fact you only made minumum payments for X ammount of time on it would be that relevant.

HappyMJ

King_Nothing wrote: »

This really. Last time I checked mine, it just had all my debt lumped together to give a total figure, the lower you can get the total figure the better obviously. As long as the card is pard off in full a few months before you apply for a mortgage I wouldn't have thought the fact you only made minumum payments for X ammount of time on it would be that relevant.

Dig a bit further and you get this...

From my credit report on Noddle.

Account start date 29/04/2004
Payment start date 29/04/2004
Repayment frequency Monthly
Promotionl rate Yes
Minimum payment Yes

Account start date 04/06/2003
Payment start date 04/06/2003
Repayment frequency Monthly
Minimum payment Yes

Account start date 27/04/2014
Payment start date 27/04/2014
Repayment frequency Monthly
Minimum payment Yes

It still doesn't make much difference to a mortgage application.

Superscrooge

arnoldm wrote: »

We have a Santander CC for cashback on fuel etc., but cover the money spent in a Santander 123 account for the decent interest. We pay the minimum repayment on the CC each month with a view to paying it all off when it reaches its limit. My sister in law reckons that only paying the minimum amount each month will affect our credit score and potential mortgage deals in the future.
I wouldn't normally ever use a CC, but the cashback deals from these cards as advertised on MSE make sense.
Thoughts?
Thanks

I assume you are not paying interest on your CC? If you are paying interest the interest fees will be more expensive than the money you save on cashback!

As others have said. If it is a 0% card. Minimum payments are almost expected and unlikely to have any effect on credit files.

I always make just minimum payments on 0% cards and have never been refused credit. .